eDiscovery Case Law: A Little More Wiggle Room

If companies have one complaint about eDiscovery, it’s that they are forced to preserve too much data for litigation. In 2011, Microsoft estimated that the ratio of the data it preserves to the data it actually uses in litigation is 340,000 to one. That’s why defining the duty to preserve documents in litigation is a big concern to corporate general counsels. Until recently, the duty to preserve was pretty clear — the moment litigation is possible, your company should stop automated destruction policies and begin preserving all potentially relevant information from relevant parties.
However, that standard is shifting for the first time in a decade. The groundbreaking UBS v. Zubulake case in the early 2000’s is still the most important precedent in this area. In a series of five separate rulings across hundreds of dense pages of balancing tests, U.S. District Judge Shira A. Scheindlin outlined what electronic evidence was discoverable in in litigation. (Judge Scheindlin also tightened and updated on that standard in Pension Comm. of the Univ. of Montreal Pension Plan v. Banc of Am. Sec., LLC, 685 F. Supp. 2d 456 (S.D.N.Y. 2010). Those cases, and many others that followed, held that the duty to preserve documents, including electronically stored information (ESI), arises when litigation is “reasonably anticipated.”
For the most part, courts still follow the Zubulake and Pension Committee standard closely. For example, in Voom HD Holdings, LLC v Echo Star Satellite LLC , (N.Y. App. January 31, 2012) New York State Court’s First Appellate Department applied Sheindlin’s Zubulake standard almost word for word.
A Crack in the Foundation
However, in Chin v. Port Authority of New York and New Jersey, (2d Cir. July 10, 2012) the Second Circuit  softened the standard a bit, arguing that a failure to preserve evidence as soon as litigation is likely is not always immediately sanctionable. The case pits several Asian Americans police officers against the Port Authority of New York in an employment discrimination based on race. During discovery, the plaintiff found that the Port Authority had destroyed human resources records regarding promotions even though litigation was imminent. In the past, the Zubulake standard would have almost certainly meant immediate sanctions were warranted. But because the files were considered relatively unimportant, the court reasoned sanctions were not necessary.
So does this mean companies don’t have a clear duty to preserve relevant records if litigation is likely? No. They still have a clear obligation, but for the first time, there is some room to maneuver. Companies complain that they have to over-preserve for litigation because the Zubulake standard is so broad and onerous. But as long as your company makes an effort to preserve all files that are obviously important to a pending matter, there is finally some relief if you do lose or destroy some potentially responsive documents. Just be ready to prove that the destroyed documents are not obviously important or immediately relevant to a matter.