Litigants who fail to meet e-discovery obligations run the risk not only of being sanctioned, but also of being subject to a court order compelling them to retain an e-discovery vendor. While the use of e-discovery vendors is becoming a common practice, it may add considerable expense to the already costly discovery phase of litigation. Additionally, compelled retention of a vendor may reduce litigants’ control over their own document production.
Recently, the New York Supreme Court, Appellate Division, First Department considered whether to adopt and apply the Zubulake standard for the spoliation of electronically-stored information (“ESI”) to a claim for spoliation of an audiotape recording or whether existing New York spoliation doctrine was sufficient. Strong v. City of New York involved a June 30, 2009, accident in which an NYPD vehicle collided with another vehicle, jumped the sidewalk curb and struck five pedestrians, including plaintiff, Kevin Strong. Within 30 days of the accident, three plaintiffs commenced personal injury actions and these were consolidated for trial. On September 21, 2009, less than 90 days after the accident, the City joined issue and interposed the “emergency operation” defense, claiming the police officer’s vehicle was an authorized emergency vehicle engaged in an emergency operation at the time of the accident and, therefore, the City could only be held liable if the officer had acted with reckless disregard for the safety of others.
Who’s Paying For This? First Department Requires the Producing Party to Initially Bear the Costs of Production in U.S. Bank N.A. v. GreenPoint Mtge. Funding, Inc.
For the second time this year, New York’s First Department, Appellate Division, has adopted e-discovery standards articulated in Zubulake v. UBS Warburg LLC, 220 FRD 212 (S.D.N.Y. 2003). On January 31, 2012, the First Department’s decision in Voom H.D. Holdings LLC v. EchoStar Satellite LLC, 2012 N.Y. Slip Op. 00658 (1st Dep’t 2012) adopted the Zubulake standard concerning when a party’s preservation obligations are triggered. Read a blog posting on the Voom decision here. Most recently, on February 28, 2012 the First Department held in U.S. Bank N.A. v. GreenPoint Mtge. Funding, Inc., 2012 NY Slip Op. 01515 (1st Dep’t 2012), that, consistent with Voom’s “adopt[ion] [of] the standards articulated by [Zubulake] in the context of preservation and spoliation, [it was] persuaded that Zubulake should be the rule in this department, requiring the producing party to bear the cost of production to be modified by the IAS court in the exercise of its discretion on a proper motion by the producing party.”
New York’s Appellate Courts Surface on Litigation Hold – First Department Confirms Reasonable Anticipation of Litigation Requires Implementation of Litigation Hold
New York’s First Department Appellate Division is the first New York state appellate court to expressly adopt the “reasonable anticipation trigger” articulated in Zubulake v. UBS Warburg LLC, 220 FRD 212 (S.D.N.Y. 2003): “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.” Id. at 218. On January 31, 2012, the First Department affirmed the November 9, 2010 Order of the Honorable Richard B. Lowe III which awarded an adverse inference sanction to plaintiff, Voom HD Holdings LLC (“Voom”) against defendant EchoStar Satellite, L.L.C. (“EchoStar”). Voom H.D. Holdings LLC v. EchoStar Satellite LLC, 2012 N.Y. Slip Op. 00658 (1st Dep’t 2012). The First Department found the Zubulake standard to be “harmonious” with existing 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.”
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.
Different Approaches to Cost Shifting in New York State and Federal Courts for Production of Inaccessible ESI
In Spring 2009, the Joint E-Discovery Subcommittee of The Association of The Bar of the City of New York issued a Manual for State Trial Courts Regarding Electronic Discovery Cost-Allocation, highlighting the different approaches taken by state and federal courts in New York. One key difference is how they approach cost shifting when it comes to the production of inaccessible ESI.
On October 28, the Gibbons E-Discovery Task Force hosted its fourth annual full day E-Discovery Conference, with more than 100 clients, in-house counsel and other contacts in attendance. Devoted to the latest developments in electronic discovery and corporate information management, this program included speakers who are among the most respected names in the e-discovery field, including former United States Magistrate Judges John Hughes and Ronald Hedges, e-discovery authority Michael Arkfeld, and representatives of leading corporations and e-discovery service providers. Among the Gibbons attorneys who presented and moderated panels were Task Force Chair, Mark S. Sidoti, Chair of the firm’s Employment Law Department, Christine A. Amalfe, and Task Force members, Luis J. Diaz, Phillip J. Duffy, Scott J. Etish, Lan Hoang and Jeffrey L. Nagel.
The Gibbons E-Discovery Task Force will host its fourth annual full day E-Discovery Conference on October 28, 2010, in the firm’s Newark, NJ office. Devoted to the latest developments in electronic discovery and corporate information management, this program will include speakers who are among the most respected names in the e-discovery field, including former United States Magistrate judges John Hughes and Ronald Hedges, e-discovery authority Michael Arkfeld, and representatives of leading corporations and e-discovery service providers.