January 31, 2012 Articles

Must Legal Holds Be Written to Avoid Spoliation Sanctions?

Steuben Foods shows that Pension Committee's rule of per se gross negligence and associated inference of spoliation will not necessarily be followed

by Paul M. Kessimian and Travis J. McDermott

In today's e-everything world and its concomitant terabytes of reproducing data, the timing and nature of the litigation hold is of critical importance. A fundamental question in this area is whether or not a litigation hold must be in writing to avoid spoliation sanctions. In 2010, Judge Scheindlin of New York's Southern District held that a party's failure to issue a written litigation hold notice was tantamount to per se gross negligence. See Pension Committee of the Univ. of Montreal Pension Plan v. Banc of America Securities, LLC, 685 F. Supp. 2d 456 (S.D.N.Y. 2010). As gross negligence, such failure justified an inference that relevant evidence was destroyed and that the opposing party was prejudiced—and, consequently, sanctions were appropriate, unless the party could rebut the presumption. Though the decision provided greater clarity in an opaque area of law, it has been far from universally accepted, even within the very district that issued the opinion. See, e.g., Orbit One Communications, Inc. v. Numerex Corp., 271 F.R.D. 429, 440–41 (S.D.N.Y. 2010) (rejecting a presumption that relevant and prejudicial material was destroyed absent the issuance of a written litigation hold and requiring some showing that relevant information was lost).

Premium Content For:
  • Litigation Section
Join - Now