Second Circuit Determines that a Failure to Issue a Litigation Hold Notice is not Considered Gross Negligence Per Se


[author: James G. Ryan]

Chin v. Port Authority of New York & New Jersey, — F.3d —, 2012 WL 2760776 (2d Cir. July 10, 2012)

After a brief summer intermission, our E-Discovery blog is back under way with a recent Second Circuit decision from July 2012.  In Chin v. Port Authority of New York & New Jersey, — F.3d —, 2012 WL 2760776 (2d Cir. July 10, 2012), the Second Circuit overruled the 2010 decision issued by the Southern District of New York in The Pension Committee of the University of Montreal Pension Plan, et al. v. Banc of America Securities, et al, 685 F. Supp. 2d 456 (S.D.N.Y. 2010).

In Pension Committee, Judge Scheindlin held that “the failure to issue a written litigation hold constitutes gross negligence because that failure is likely to result in the destruction of relevant information.” Relying on that holding in his Title VII discrimination action, plaintiff Howard Chin argued that the Port Authority’s failure to implement a document retention policy during discovery and the destruction of at least thirty-two folders containing information regarding his promotion justified an adverse inference instruction against the Port Authority for spoliation. The District Court, however, disagreed with the Plaintiff and denied that motion.

On appeal, Plaintiff argued that the District Court erred in its decision and that the Defendant’s failure to issue the litigation hold was per se gross negligence as per the holding in Pension Committee. The Second Circuit disagreed and found no abuse of discretion by the lower court.  In doing so, Judge Livingston wrote:

We reject the notion that a failure to institute a “litigation hold” constitutes gross negligence per se.  Contra Pension Comm. of Univ. of Montreal Pension Plan v. Banc of Am. Secs., LLC, 685 F.Supp.2d 456, 464–65 (S.D.N.Y.2010).  Rather, we agree that “the better approach is to consider [the failure to adopt good preservation practices] as one factor” in the determination of whether discovery sanctions should issue.  Orbit Comm’ns, Inc. v. Numerex Corp., 271 F.R.D. 429, 441 (S.D.N.Y.2010).  Moreover, as the district court recognized, see Port Auth. I, 601 F.Supp.2d at 570, a finding of gross negligence merely permits, rather than requires, a district court to give an adverse inference instruction.  See Residential Funding Corp., 306 F.3d at 109; Byrnie, 243 F.3d at 108.

Consequently, the Chin decision places less of a burden on parties to issue litigation holds as they will not be held grossly negligent for failing to do so. Nevertheless, the importance of issuing a litigation hold has not changed for litigants as they ensure that evidence crucial to the case is preserved.  All things considered, the Chin decision simply gives a court more flexibility when determining the penalty against a party for failing to issue a written litigation hold.

If you or your company have any questions or concerns about this topic and would like further information, please email James G. Ryan at

A special thanks to Sean Gajewski, a law clerk at Cullen and Dykman LLP, for helping with this post. 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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