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TOP 7 Things to Remember about Discovery Obligations from Pension Committee of the University of Montreal Pension Plan v. Banc of Americasecurities LLC, 2010 WL 184312 (S.D.N.Y. Jan. 15, 2010)

In January 2010, the Southern District of New York issued an important decision regarding the obligations of parties who expect to be involved in a lawsuit to preserve and gather evidence. Here are the top 7 things to remember from that case:

1. "[T]he failure to issue a written litigation hold constitutes gross negligence because that failure is likely to result in the destruction of relevant information."
2. "[T]he failure to collect records - either paper or electronic - from key players constitutes gross negligence or wilfullness as does the destruction of email or certain back up tapes after the duty to preserve has attached."
3. "[F]ailure to obtain records from all employees (some of whom may have had only a passing encounter with the issues in the litigation) ... likely constitutes negligence."
4. "[T]he duty to preserve evidence arises when a party reasonably anticipates litigation." In the plaintiff's case, this occurs before the litigation starts, since the plaintiff knows it is coming.
5. The relevance of the lost evidence and the prejudice to the innocent party may be presumed by the court in cases of bad faith or gross negligence.
6. Possible sanctions include, "from least harsh to most harsh - further discovery, cost shifting, fines, special jury instructions, preclusion, and the entry of default judgment or dismissal (terminating sanctions)."
7. Contemporary standards for an adequate litigation hold require that the hold "direct employees to preserve all relevant records - both paper and electronic - [and] ... create a mechanism for collecting the preserved records so that they can be searched by someone other than the employee."