A panel of New York state and federal judges recently convened to discuss the differing standards between New York state and federal law governing the pre-litigation preservation of ESI and to make recommendations to resolve such inconsistencies. The panel’s findings are reported in the publication, Harmonizing the Pre-Litigation Obligation to Preserve Electronically Stored Information in New York State and Federal Courts. The critical issue is determining when a litigant’s duty to preserve ESI is triggered, how that duty is fulfilled, and the potential consequences for breaching the duty. The panel recognized that the disparate treatment that litigants may receive in New York state courts versus federal courts could lead to a great deal of confusion and uncertainty, even for parties that cautiously implement ESI strategies with an eye towards future litigation. For example, the trend in New York federal courts has been in favor of the adoption of per se culpability when determining a litigant’s state of mind. In Zubulake, the court held that once the duty to preserve ESI attached, any destruction of documents would be, at a minimum, negligent. In Pension Committee, the court held that failure to issue a written litigation hold constituted “gross negligence.” State courts, on the other hand, have largely declined to adopt such per se rules, preferring instead to analyze a litigant’s culpability on a case-by-case basis, as the courts did in cases such as Deer Park and Ecor Solutions.
The panel identified three separate mechanisms to resolving the potential conflict of laws and uncertainty for litigants:
- “exercising judicial discretion and respect for the other system by considering the separate bodies of law when deciding specific cases;”
- “adopting procedural rules requiring deference by one court system to the other system’s law governing the pre-litigation duty to preserve ESI,” akin to Federal Rules of Evidence 302 and 501; and
- “determining whether the pre-litigation duty to preserve ESI is a matter of substantive law under the Erie doctrine.
While the first and second mechanisms pertain to the courts’ rule-making authority, the third mechanism — application of the Erie doctrine — offers a practical approach founded upon existing jurisprudence. Under the Erie doctrine, unless there is an express federal law or regulation addressing the retention and/or the destruction of particular ESI, state law would govern the pre-litigation duty to preserve ESI, the scope of the duty, when the duty is triggered, the breach of the duty and the imposition of sanctions. The main issue is whether the general pre-litigation duty to preserve ESI would be considered procedural or substantive in nature. If New York courts were to interpret ESI duties as substantive, then under the Erie doctrine, New York state and federal courts would be bound to apply New York common law as it applies to pre-litigation preservation of ESI and spoliation of evidence sanctions. Application of the Erie doctrine is well-reasoned because the duty to preserve ESI, like the substantive rules espoused by Erie, is grounded in the common law obligation to preserve evidence and the substantive obligation of litigants to avoid tortious conduct. Although there is disagreement among the other federal circuits regarding the application of Erie to the pre-litigation duty to preserve ESI, the panel nonetheless encouraged arguments favoring the Erie doctrine because the Supreme Court had not yet ruled on the issue, suggesting that federal courts in New York would consider the Erie doctrine’s sound and reasoned approach to resolving the potential conflicts between New York state and federal law.