Judicial Boxing Match?
With the Winter Games in high gear, it is hard not to think of the headline for the main card of an e-discovery boxing match between two federal judicial heavy hitters:
Rosenthal vs. Scheindlin
The introductions of a boxing announcer come to mind reading Judge Rosenthal's recent opinion in Rimkus v. Cammarata, 07-cv-00405 (SDTX Feb. 19, 2010) and her subtle (or not so subtle depending on how much is read into her opinion) critique of Judge Scheindlin's very much discussed opinion in The Pension Committee of Montreal, et al. v. Banc of America Securities, et al., 05 Civ. 9016 (SDNY Jan. 15, 2010). And in this corner, at the forefront of e-discovery, legal holds and the duty to preserve all relevant evidence... hailing from the toughest city in the world - New York... Ms. ESI... Judge Scheindlin. And in this corner... mover and shaper of the Federal Rules of Civil Procedure... Champion of the Safe Harbor... hailing from the toughest state in the Union - Texas... Ms. FRCP amendments... Judge Rosenthal.
Maybe I feel like a boxer as I fight my way through the lengthy opinions of these two very capable jurists. Added together they equal a book at 228 pages. For the uninitiated you may feel like you just got beat up after reading them yourself. Certainly a warning is appropriate: Don't try this at home -- more like don't try this in your case!
All kidding aside, these two opinions present the current state of spoliation law in the context of two cases utterly at the ends of the spoliation spectrum. In Rimkus we have what appears to be the intentional deletion of e-mail to cover the tracks of a defecting group of employees that set up a competing forensic engineering business. Someone once told me business breakups can be like a divorce with all reason thrown out the window as the parties fight over ever inch. In the Pension Committeewe have the other end of the spectrum -- a group of investors that find themselves out $550 million dollars and doing their best to find a responsible party. Both cases involved long drawn out battles over spoliation. In the middle is the law of preservation and spoliation that applies equally to both cases. Both judges agree on the basic duty to preserve evidence once litigation is initiated or reasonably anticipated. Where the boxing gloves come out is over what to do when you have spoliation and little or no evidence of "bad faith."
Back to our main event. Judge Scheindlin throws a right hook at litigants, forcing them to bear the burden of forcing the court to grapple with boxes of spoliation motion papers. Issue a written litigation hold or face sanctions in the Southern District of New York. Judge Rosenthal, to the chants of "Lee Lee Lee" emanating from corporate America, throws a left hook. Absent clear evidence of "bad faith" a party should not be subject to harsh sanctions. The hook is followed by a jab -- the requirement of bad faith and actual prejudice prevails outside the Second Circuit. And then, a right cross for the knock out -- sanctions absent a showing of bad faith may even violate the Supreme Court's holding in Chambers v. NASCO, Inc., 501 U.S. 32, 49 (1991) (a court's inherent power to sanction is linked to the bad-faith conduct that affected the litigation.) The announcer can not believe what he is seeing and calls the final blow. "Rosenthal brings a right hook from the Alamo downtown to the chin of Scheindlin. The right hook from Rimkus:
The circuit differences in the level of culpability necessary for an adverse inference instruction limit the applicability of the Pension Committee approach. And to the extent sanctions are based on inherent power, the Supreme Court's decision in Chambers may also require a degree of culpability greater than negligence.
Back to reality, it may not be a knock out punch, but it certainly is a counterpoint to the trend toward negligence supporting sanctions when a party negligently fails to preserve evidence in response to litigation or anticipated litigation. Read together, the cases present a comprehensive analysis of the state of legal hold duties and the risks involved for failing to properly implement a litigation hold. The common thread of both these cases, however, is the burden on the court imposed by litigants fighting about spoliation. The lesson, if you do not want to get hurt, do not get into the ring. In other words, take reasonable steps to preserve evidence and create a trail for the court to audit. Fighting over who saved what when through depositions, affidavits and computer experts is expensive.
To read a detailed analysis of the Rimkus opinon and obtain a copy of the opinion, click here.
To read a detailed analysis of the Pension Committee opinion, obtain a whitepaper analysis and a copy of the opinion, click here.