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Gross Negligence Enough for Adverse Inference Instruction

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In 2003, Judge Shira Scheindlin of the U.S. District Court for the Southern District of New York issued five landmark decisions, which have since shaped the landscape of electronic discovery and document preservation. In her Zublake decisions, Judge Scheindlin held that potential litigants have an affirmative duty that requires a party anticipating litigation to refrain from deleting any electronically stored information (“ESI”) that may be relevant to such litigation. A decade later, Judge Scheindlin was once again faced with a question of ESI preservation in the case of Sekisui American Corp. v. Hart, and as she held in Zublake, a presumption of prejudice is appropriate when a party intentionally destroys evidence after the duty to preserve is triggered.

In Sekisui the plaintiff company intentionally destroyed all electronic correspondence for several key witnesses, including the defendants. The court noted that the obligation to preserve ESI that may be relevant to reasonably anticipated litigation should be “quite clear – especially to the party planning to sue.” The plaintiff fired the defendants in 2010 and alerted them that plaintiff would seek damages for breach of contract. Nevertheless the plaintiff failed to initiate a litigation hold until 2012. Indeed, the court noted that the plaintiff’s failure to timely implement a litigation hold was not only “grossly negligent” but also “inexcusable given that Sekisui [was] the plaintiff in this action and, as such, had full knowledge of the possibility of future litigation.”

Regarding culpability, the court held that “[w]hen evidence is destroyed intentionally, such destruction is sufficient evidence from which to conclude that the missing evidence was unfavorable to that party.” Furthermore, malice is not required under Sekisui, because “[i]n the context of an adverse inference analysis, there is no analytical distinction between destroying evidence in bad faith, i.e., with a malevolent purpose, and destroying it willfully [meaning intentionally].”

This case follows the Southern District of California’s Zest IP Holdings case that we discussed in a previous post . Because both cases were decided only a matter of months ago, it is difficult to prognosticate whether they will represent a trend of courts cracking down on spoliators. To this end, because Judge Scheindlin’s Zublake opinions were so widely embraced, even serving as the basis of the 2006 ESI amendments to the Federal Rules of Civil Procedure, it will be interesting to see if courts follow Sekisui with the same loyalty.