Rarely does the Second Circuit feel impelled to delve into the law relating to document preservation, the standards used to quantify discovery abuses, and the appropriate sanctions for document destruction. Such detailed jurisprudence is of course better left to the wisdom of the trial courts, subject only to an abuse of discretion review. Given this dynamic, practitioners and clients alike will take notice of the Second Circuit’s recent decision in Chin v. Port Authority of New York & New Jersey, --- F.3d ---, 2012 WL 2760776 (2d Cir. July 10, 2012), where, with one polite sentence, the court halted the momentum of a growing body of law holding that the failure to issue a litigation hold notice is per se gross negligence. Instead, the Second Circuit reasoned, lower courts should adhere to the earlier standard under which the trial court would consider the failure to issue a litigation hold notice as one of several factors in analyzing the totality of the circumstances causing the document destruction. Failure to issue a hold notice is therefore no longer necessarily grossly negligent. With the change brought by Chin, the law is slightly less punitive, but the same common rule of thumb governs: whether plaintiff or defendant, prudent counsel and litigants must remember to circulate the litigation hold letter to the proper personnel promptly.
The Chin Facts -
In Chin, several Asian Americans sued the Port Authority for violations of Title VII of the Civil Rights Act of 1964 alleging that they were passed over for promotion as a result of racial discrimination. During discovery, plaintiffs learned that the Port Authority had not implemented a document retention policy and had not issued a litigation hold letter. Partly because of this error, numerous promotion folders relevant to the claims asserted were destroyed. One of the plaintiffs, Chin, moved in the district court for sanctions in the form of an adverse inference instruction against the Port Authority. Judge Cedarbaum denied the motion and noted that the plaintiffs had "ample alternative evidence" regarding the relative qualifications of the plaintiffs. Significantly, Judge Cedarbaum also found that the Port Authority's destruction of the documents was "negligent, but not grossly so." Chin at *11. After a jury trial, some of the plaintiffs won, but others, including Chin, lost.
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