Common Sense Standard For When Litigation Holds Begin Provides An Earlier Requirement Than Is Often Used

September 2010

When should a litigation hold be initiated? Plenty of prior cases provide an impractical answer; namely, a litigation hold is triggered when litigation is reasonably foreseeable. This has been similarly described as when there is notice of a credible threat of litigation. With the benefit of 20/20 hindsight, opposing parties and courts provide answers under this vague standard, but how does one obtain this clairvoyance without the benefit of hindsight?

Although it might be easy to conclude that it is safer to begin a litigation hold, instituting and continuing these procedures is expensive. Additionally, like the boy who cried wolf when no danger was around, legal counsel cannot make too many false calls that a litigation hold is required. In such event, the users who must continue to maintain the hold might be inclined to not take this requirement seriously.

Siani v. State University of N.Y. at Farmingdale (E.D.N.Y., Aug. 10, 2010) provides a practical bright-line answer to this recurring issue. Plaintiff Siani is an accounting professor who represented himself in an age discrimination case. Professor Siani sought an adverse inference finding based on his employer’s destruction of electronic records after he had written a letter to the University’s President. The letter occurred about a year before a lawsuit was filed. The letter expressed concerns about:

“… facts and circumstances that support a prima facie case of age discrimination, disparate treatment and retaliation … [I will] be pursuing several paths of investigation, including the SUNY Discrimination Complaint Procedure and FOIA requests.”

The letter did not come from a lawyer and does not expressly threaten litigation. Nevertheless, Siani contended that this letter should have initiated a litigation hold. The University did not start a litigation hold based on this letter, but did start a litigation hold once Professor Siani filed an EEOC complaint in July 2008.

Quoting the often-used standard from Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 216 (S.D.N.Y.2003) (aka Zubulake IV), which in turn quoted Fujitsu Ltd. v. Federal Express Corp., 247 F.3d 423, 436 (2d Cir.2001). the Court’s analysis started with the common but vague rule which follows:

“a duty to preserve evidence ‘arises when the party has notice that the evidence is relevant to litigation or when a party should have known that the evidence may be relevant to future litigation.’”

A Litigation Hold Should have Occurred

In applying these rules, the Court did not agree with either party’s suggestion as to the start of the litigation hold. Instead, the University was held to the simple standard that the employment of an attorney who invoked the work product privilege also began a litigation hold obligation. In the Court’s words:

“Siani claims, first, that the defendants ‘admit’ that the duty to preserve arose in early 2008, when outside legal counsel was retained by the defendants for matters relating to Siani's allegations of ongoing discrimination and involving a FOIA request. In support of this claim Siani points out that in January 2010, the defendants argued that certain documents dated February 2008 were protected by the work product doctrine, having been prepared ‘in anticipation of litigation.’ The defendants argued that Siani had raised ‘concerns that he was a victim of ongoing age discrimination’ at a meeting in January 2008, and that ‘[l]itigation was therefore reasonably foreseeable’ as of that date. If it was reasonably foreseeable for work product purposes, Siani argues, it was reasonably foreseeable for duty to preserve purposes. The court agrees. The defendants argue that Siani ‘has cited no authority as would support a spoliation sanction being imposed based on a legal argument that was made by counsel regarding the attorney client work product.’ The defendants, conversely, have cited no authority that would countermand the common sense conclusion that if the litigation was reasonably foreseeable for one purpose in January 2008, it was reasonably foreseeable for all purposes.”

The Court’s standard is consistent with the statutory definition of work product protection in Rule 502, Federal Rules of Evidence, as follows:

“’work product protection’ means the protection for materials prepared in anticipation of litigation or for trial, under applicable law.”

Stated otherwise, if there is sufficient anticipation of litigation for the work product privilege to be applicable, then there must also be sufficient anticipation of litigation for a litigation hold to be triggered. This is a more stringent standard than is routinely employed, particularly by defense counsels who are just being employed. Practically every litigator believes that ALL of their work, communications, actions, thoughts, and mental impressions are protected by the work product privilege, but few lawyers will automatically connect this privilege to the requirement of a litigation hold.

… But Defendant Escapes Adverse Inference Instruction due to Luck

Although winning the point that the Defendants failed to implement a required litigation hold, Siani did not obtain his desired adverse inference instruction because the adverse inference instruction has additional requirements. Again quoting Zubulake IV, the Court specified the standard for an adverse inference instruction, as follows:

“A party seeking an adverse inference instruction (or other sanctions) based on the spoliation of evidence must establish the following three elements: (1) that the party having control over the evidence had an obligation to preserve it at the time it was destroyed; (2) that the records were destroyed with a ‘culpable state of mind’ and (3) that the destroyed evidence was ‘relevant’ to the party's claim or defense such that a reasonable trier of fact could find that it would support that claim or defense.”

The Court concluded that the above second step necessary for an adverse inference instruction was also met because of a few missteps that amounted to ordinary negligence. In the Court’s words:

“A showing of breach of the duty to preserve is only the first step in the imposition of an adverse inference ruling. A party seeking spoliation sanctions must also show that the relevant records ‘were destroyed with a culpable state of mind.’ … The fact that they [the Defendants] delayed the hold for months past the time when they could reasonably have anticipated the litigation does not per se amount to gross negligence. If a delay of any length was tantamount to gross negligence and thus illustrative of a culpable state of mind, there would not be two separate elements for the plaintiff to prove. But there are two elements, and establishing a breach of the duty to preserve is separate from establishing a culpable state of mind. …

The defendants did make efforts to institute and enforce a litigation hold. … Still, some logs and documents were deleted, albeit in the context of routine clean-up procedures, and routine file destruction procedures were not suspended. Thus, there was negligence, if not gross negligence, in the implementation of the preservation efforts, and the culpable state of mind requirement is satisfied in this Circuit by a showing of ordinary negligence.”

However, Siani lost his desired adverse inference instruction because he failed the third test (i.e., relevance). In some cases, relevance is inferred because of the discarding party’s culpable state of mind. Since the Court found the University to have been guilty of only ordinary negligence, the Court was unwilling to infer the necessary relevance. Consequently, the Court required Siani:

“…to submit ‘extrinsic evidence tending to demonstrate that the missing evidence would have been favorable to it.’ … Courts should take care not to hold the movant to ‘too strict a standard of proof regarding the likely contents of the destroyed evidence.’”

Siani established that entire sent and received email collections for certain relevant employees were missing during periods where the Court concluded a litigation hold should have been in effect. Additionally, both named defendants and non-party employees admitted to routinely deleting emails they deemed irrelevant to the discrimination complaint. Using the destruction that the Court already had before it, the relevancy requirement necessary for an adverse inference should not have been difficult for Siani to demonstrate. However, the Court indicated that Siani did nothing to demonstrate the likely relevance of the deleted data. Instead, Siani relied on his gross negligence argument and related inference that the Court already rejected. Consequently, the Court denied the adverse inference instruction.

Siani’s pro se status was likely his undoing. Competent legal counsel with a reasonable budget would have taken the additional step of showing the likely relevance of the destroyed information, rather than assuming that this step was unnecessary.

The case is of great importance because it presents a common sense standard that is different than current practice by many lawyers. If legal counsel wants to assert a work product privilege because litigation is anticipated, then the client must begin a litigation hold. The real reason the defendant was not hit with an adverse inference instruction in this particular situation is the plaintiff was representing himself, and so stopped short of proving his case.

Fulcrum Inquiry performs financial investigations and computer forensic examinations.