By Jessica C. Mederson and Erica Lee Krennerich

Two judges preeminent in the world of electronic discovery began 2010 with notable opinions addressing conduct and culpability in preserving and collecting documents relevant to litigation. Collectively, their decisions once again emphasize the importance of taking immediate measures to preserve and collect potentially relevant information before it is lost or destroyed. Importantly, these decisions also reflect the disagreement that still exists among courts regarding the adoption of bright-line rules in electronic discovery and the level of culpability required before sanctions or spoliation instructions are merited.

In January, Judge Shira Scheindlin — author of the well-known Zubulake decision — issued what she dubbed “Zubulake Revisited: Six Years Later.” In Pension Committee of the University of Montreal Pension Plan v. Banc of America Securities, 2010 WL 184312 (S.D.N.Y. Jan. 15, 2010), Judge Scheindlin established new standards for what she considered minimally acceptable conduct in preserving and collecting documents and created a four-step analytical framework for evaluating discovery efforts and punishing failures to comply with discovery obligations. Just a month later, U.S. District Judge Lee Rosenthal of the Southern District of Texas, chair of the Federal Judicial Conference Advisory Committee for Federal Rules of Civil Procedure, responded. In Rimkus Consulting Group, Inc. v. Cammarata, 688 F.Supp.2d 598, 2010 WL 645253 (S.D. Tex. Feb. 19, 2010), Judge Rosenthal generally agreed with the analysis of e-discovery preservation and collection issues laid out in Pension Committee, but carefully distinguished the level of culpability necessary to merit an adverse inference instruction and took a different approach on how to give such instructions.

Pension Committee immediately garnered a great deal of attention because it deems a party’s failure to issue a written litigation hold as “gross negligence” as “that failure is likely to result in the destruction of relevant information.” Under the Pension Committee framework, the impact of this bright-line rule is heightened because of the presumptions the court applies when evidence is subsequently lost. When deciding whether the jury should receive an adverse inference instruction regarding the missing evidence, the court held that — for a spoliating party who is found to be grossly negligent or willful in destroying the evidence at issue — the relevance and prejudicial nature of the missing documents may be presumed.

A month after Pension Committee, Judge Rosenthal also addressed charges of spoliation in the Rimkus case. Although that case involved allegations of intentional spoliation instead of gross negligence, the Rimkus decision responded to the guidance laid out in Pension Committee. First, Judge Rosenthal commended Judge Scheindlin’s attempt to provide an analytical framework in Pension Committee. However, Judge Rosenthal cautioned that not all courts would agree with Judge Scheindlin’s use of an adverse inference instruction for findings of gross negligence. She noted that there is a split among the circuits regarding what level of culpability merits such a sanction. The authority for such sanctions is found in the inherent power of the courts to regulate the litigation process, and historically the Supreme Court has linked the exercise of that inherent power to instances of bad-faith conduct that affects the litigation — not gross negligence. For example, the Fifth Circuit generally prohibits the imposition of severe sanctions, such as giving adverse inference instructions, unless there is evidence of “bad faith.” Several other circuits — the Seventh, Eighth, Tenth, Eleventh, and DC Circuit — also hold negligence insufficient for an adverse inference instruction. However, the First, Fourth, and Ninth Circuits do not require bad faith but often emphasize its presence. Accordingly, the failure to issue a litigation hold — on its own — would not result in an adverse inference instruction in these circuits.

Rimkus also addressed the standards governing preservation or discovery conduct and is one of only a few cases to rely on the Sedona Principles in conducting that analysis. The Sedona Principles were created by a group of attorneys and consultants, all experienced in electronic discovery and primarily representing entities with large-scale data collections and significant or frequent litigation, with a stated mission of developing “best practices” for addressing requests for production of computer-based data in civil litigation. Under those principles, what is acceptable “depends on what is reasonable, and that in turn depends on whether what was done — or not done — was proportional to the case and consistent with clearly established applicable standards.” It can therefore be difficult to draw bright-line distinctions between acceptable and unacceptable behavior during the discovery process. Judge Rosenthal observed that this analysis always depends heavily on the facts and circumstances of the particular case.

Finally, Judge Rosenthal distinguished the instruction she would give the jury from the instruction given in Pension Committee. In Pension Committee, which involved only gross negligence, the court instructed the jury that it was bound by the court’s determination that the plaintiffs had destroyed documents after the duty to preserve had arisen, but did not instruct the jury on whether the evidence was relevant or prejudicial. In Rimkus, although there was strong evidence that the defendants deleted and hid relevant emails, the court also found that the plaintiff was able to recover much of the deleted information and the record presented conflicting evidence about why the information was deleted, some of which was favorable to the defendants. The court accordingly refused to create a rebuttable presumption against the defendant or instruct the jury that the defendant had engaged in intentional misconduct. Instead, the Rimkus court instructed the jury to decide for itself whether there was intentional destruction of evidence and, if so, whether or not to infer that the lost information would have been prejudicial.

Both decisions once again illustrate the importance of a party’s conduct in preserving and collecting documents. The Pension Committee decision makes clear that written litigation hold notices are required and suggests that parties err on the side of caution when deciding who should receive the notice and whose information must be preserved and collected. Judge Scheindlin also states that courts expect a high level of e-discovery competence from counsel as they create litigation compliance programs and manage electronic discovery through the life of a case. While Rimkus comports with much of Pension Committee, it clarifies that gross negligence alone will not necessarily result in an adverse inference instruction in several circuits. Rimkus focuses attention on what is reasonable and proportional in a given case, reinforcing the idea that every litigation matter must be viewed on its own merit. Rimkus also suggests that courts should hesitate to impose their findings of misconduct on the jury, but should instead instruct the jury to make its own determination of whether the culpable party intended to destroy the evidence and whether such destruction was prejudicial. While Rimkus is more forgiving than Pension Committee to parties guilty of misconduct in e-discovery, the safest course is to avoid spoliation in all cases through careful and specific consideration of the facts of each case and a close eye to the applicable law in the relevant jurisdiction.

V&E lawyer Erica Lee Krennerich is a partner in the firm’s Complex Commercial Litigation practice group. She has represented large and small companies as both plaintiffs and defendants in a variety of industries. Erica is Co-Chair of V&E’s Electronic Discovery Task Force. She can be reached at +1.713.758.2112 or by e-mail at ekrennerich@velaw.com.