2nd Circuit adopts nuanced approach to discovery sanctions

New approach considers relevance of lost evidence and attempt to preserve

In 2001, 11 Asian-American police officers filed an Equal Employment Opportunity Commission (EEOC) complaint against the Port Authority of New York and New Jersey claiming that they were passed over for promotions based on their race. After litigating the case for 11 years, seven of the plaintiffs prevailed at trial in the Southern District of New York. Both the Port Authority and the losing plaintiffs appealed to the 2nd Circuit.

The losing plaintiffs argued that the district judge erred in not instructing the jury that the Port Authority had destroyed evidence and that it should assume that the evidence would have been unfavorable. At issue were folders that contained information that supervisors used to make decisions about promotions of police officers in the late 1990s. The Port Authority failed to implement a litigation hold at the outset of the litigation, and as a result, at least 32 folders were lost or destroyed.

Inflexible Standard

Chin comes as a huge relief to corporate litigants, which have been living in fear of making a mistake in discovery. Under the influential 2005 decision in Zubulake v. UBS Warburg and 2010 decision in Pension Committee v. Banc of America Securities, both authored by Southern District of New York Judge Shira Scheindlin, failure to issue a written litigation hold—a document informing record keepers of the litigation and instructing them to stop routine destruction of documents—was considered per se gross negligence. A party that failed to issue a hold was subject to automatic discovery sanctions, including an adverse inference instruction that the jury should assume that the records would have been unfavorable to the party that destroyed them.

Adele Nicholas

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