Cheat Sheet: What Chin v. Port Authority means for in-house counsel

The 2nd Circuit makes life easier for companies by introducing a more lenient approach to discovery sanctions


Discovery can be an expensive and messy process, particularly for companies with large or complex operations. But in-house counsel can breathe a little easier following the 2nd Circuit’s ruling in Chin v. Port Authority of New York and New Jersey, which found that the failure to issue a written litigation hold does not constitute gross negligence per se. In InsideCounsel’s October issue, we examine the impact of the decision, which reverses the long-standing precedent established in Zubulake v. Warburg.

What are the facts?

What did the 2nd Circuit rule?

The 2nd Circuit unanimously upheld the trial court’s ruling and denied the plaintiffs’ request for sanctions, ruling that they had alternative evidence with which to prove their claims. Perhaps most significantly, the court found that failure to institute a litigation hold does not constitute gross negligence per se.

Why was this ruling significant?

The Chin ruling upended the precedent District Judge Shira Scheindlin set in her rulings on Zubulake v. UBS Warburg (2005) and Pension Committee v. Banc of America Securities (2010). In those decisions, Scheindlin ruled that failure to issue a litigation hold was per se gross negligence and that parties that did not issue written holds could face automatic discovery sanctions. Among those sanctions was the threat of an adverse inference instruction, meaning that the jury should assume that lost records would have been unfavorable to the destroying party.

What does the decision mean for general counsel?

The 2nd Circuit’s ruling makes life easier for in-house counsel, who previously had to fear sanctions even if their organizations had tried to preserve all relevant documents. “Chin says that if you act to preserve documents reasonably, competently and in good faith, you should not be subject to dire sanctions,” says Robert Owen, a partner at Sutherland Asbill & Brennan. “It recognizes that there are a lot of different ways to reach a good result.”

Alanna Byrne

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Adele Nicholas

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