By Brad Harris
The latest noteworthy decision regarding spoliation sanctions stemming from preservation failures emerged out of the Second Circuit Court of Appeals on July 10, 2012. In Chin v. Port Authority of New York New Jersey, a counter-claim by plaintiff Howard Chin sought a spoliation sanction of an adverse inference instruction due to the Port Authority’s purported gross negligence for failure to issue a written legal hold. The panel of three judges rejected this claim in what appears to be a rebuff of Judge Shira A. Scheindlin’s Pension Committee ruling. (One recent blog went as far as to call it a “crushing blow” to her ruling.) The Second Circuit’s language seems crystal clear: “We reject the notion that a failure to institute a ‘litigation hold’ constitutes gross negligence per se. Contra Pension Comm.” (*21)
The problem is that Pension Committee does not set the bar for gross negligence as “failure to issue a written legal hold” – that is just one factor in Judge Scheindlin’s opinion. In fact, of the 13 plaintiffs (of 96 in total) that were sanctioned in Pension Committee, seven were found negligent and six were deemed grossly negligent, none of which had issued a written litigation hold.
Much has been written about representing Scheindlin’s “per se” ruling. Yet as in the referenced Orbit Comm’ns opinion, this latest opinion from the Second Circuit does not disavow that representation. The difference in Pension Committee is that in addition to the failure of written notification, the plaintiffs found to be grossly negligent also continued to delete ESI after the trigger event, did not request documents from key players, delegated search efforts without supervision, destroyed back-up tapes relating to key players, and/or submitting misleading or inaccurate declarations. (Pension Committee, p.38).
In brief, the Chin case was an employment discrimination case that was first filed in 2001 in which 11 Asian American police offers sued the Port Authority for being passed over for promotions due to their race. Of the group, four plaintiffs did not prevail at trial and one of them, Howard Chin, argued on appeal that the district court was mistaken in denying the plaintiff’s motion for a sanction of an adverse inference instruction due to the Port Authority’s destruction of promotion records.
The Port Authority, upon learning of the EEOC charge in February 2001, had an “obligation to preserve the promotion folders yet failed to do so.” (Chin, *20) The Second Circuit, rather than weighing the claims of spoliation, was tasked with assessing an “abuse of discretion” by the district court. The Second Circuit affirmed the district court’s determination that despite the Port’s preservation failures, the plaintiffs were able to produce “ample evidence regarding their relative qualifications.” (Id., *21) Therefore, the Second Circuit upheld that “under these circumstances, the district court did not abuse its discretion in concluding that an adverse inference instruction was inappropriate.” (Id., *21)
In a legal system that craves bright lines and Cliff’s Notes, Pension Committee still holds up well for its nuanced and scholarly approach. As Judge Scheindlin described at the 2010 Georgetown Advanced E-Discovery Institute:
The ruling of the Pension Committee was the toughest of cases on this list because we don’t have that intentional destruction…. This is a case, in a sense, that teaches us the most about best practices and preservation, I think, because it’s not the dramatic case…. This is a gray area. What conduct is enough to be reasonable and what’s not?
Unlike a lot of what is being written about Chin v. Port Authority, it actually appears to uphold the standards set out in Pension Committee. The implication that it does not is simply a red herring, and litigants remain well-advised to take their duty to preserve – and claims of negligence and spoliation – seriously.