In its opinion VOOM HD Holdings LLC, v EchoStar Satellite L.L.C., in which the defendant had appealed from the trial court’s grant of plaintiff’s motion to impose sanctions for the spoilation of evidence, the First Department of the Appellate Division (in between NY’s state trial level courts, unintuitively called Supreme Courts, and NY’s highest court, the Court of Appeals), held…
“This case requires us to determine the scope of a party’s duties in the electronic discovery context, and the appropriate sanction for failure to preserve electronically stored information (ESI). We hold that in deciding these questions, the motion court properly invoked the standard for preservation set forth in Zubulake v UBS Warburg LLC (220 FRD 212 [SD NY 2003]; Pension Comm. of the Univ. of Montreal Pension Plan v Banc of Am. Sec., LLC., 685 F Supp 2d 456, 473 [SD NY 2010]), which has been widely adopted by federal and state courts.
In Zubulake, the federal district court stated, ‘Once a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a litigation hold’ to ensure the preservation of relevant documents’ (Zubulake, 220 FRD at 218). The Zubulake standard is harmonious with New York precedent in the traditional discovery context, and provides litigants with sufficient certainty as to the nature of their obligations in the electronic discovery context and when those obligations are triggered.”
The entire opinion is worth a careful read. Although the First Department noted that it previously “adopted the Zubulake standard when reviewing a motion for spoliation sanctions involving the destruction of electronic evidence” it had not previously addressed the issue of when a party reasonably anticipates litigation and the resulting duties and obligations that flow from this determination.
Although the defendants and Lawyers for Civil Justice, via its amicus brief, urged the court to reject the Zubulake standard requiring a litigation hold “[o]nce a party reasonably anticipates litigation” on the grounds that the standard is “vague and unworkable because it provides no guideline for what ‘reasonably anticipated’ means” the court disagreed. Stating that “to adopt a rule requiring actual litigation or notice of a specific claim ignores the reality of how business relationships disintegrate.”
The court states that “EchoStar and amicus’s approach would encourage parties who actually anticipate litigation, but do not yet have notice of a ‘specific claim’ to destroy their documents with impunity.: In response the court dismissed defendant’s arguments “that the Zubulake standard represents a departure from settled law or that the standard is unworkable are manifestly without merit.”
In short, the court found that “[t]he ‘reasonable anticipation of litigation,’ as discussed by Zubulake and its progeny, is such time when a party is on notice of a credible probability that it will become involved in litigation.” Case closed?
The First Department summed things up stating:
“Once a party reasonably anticipates litigation, it must, at a minimum, institute an appropriate litigation hold to prevent the routine destruction of electronic data (see Pension Comm. of the Univ. of Montreal Pension Plan, 685 F Supp 2d at 473). Regardless of its nature, a hold must direct appropriate employees to preserve all relevant records, electronic or otherwise, and create a mechanism for collecting the preserved records so they might be searched by someone other than the employee. The hold should, with as much specificity as possible, describe the ESI at issue, direct that routine destruction policies such as auto-delete functions and rewriting over e-mails cease, and describe the consequences for failure to so preserve electronically stored evidence. In certain circumstances, like those here, where a party is a large company, it is insufficient, in implementing such a litigation hold, to vest total discretion in the employee to search and select what the employee deems relevant without the guidance and supervision of counsel (id.).”
And there you have it. Despite its critics the Zubulake standard has gained another convert in New York’s First Department, which covers all of Manhattan.