ENVIRONMENTAL LAW LUNCHEON
COLORADO BAR ASSOCIATION
September 28, 2005
ON THE DUTY TO AVOID SPOLIATION OF EVIDENCE
Judicial Conference of the United States and
ABA Civil Discovery Standards
Embrace Zubulake-Like Strictures for
Preservation of Electronic Data
John L. Watson and Charles F. Luce
Moye White LLP
In July 2004, trial attorneys throughout the country felt the then somewhat faint tremors from
two decisions rendered on the East coast which began a new era of greatly expanded
responsibilities which companies and their attorneys enjoy regarding the preservation of
electronic information in anticipation of litigation. Like other trial court opinions issued in any
jurisdiction, the district court rulings applied only to the particular parties to the cases. The
shockwaves from the opinions continue to reverberate throughout the federal system, however,
and changes to the federal rules of civil procedure are imminent.
The New Era After Zubulake. Judge Scheindlin’s opinions in her five-part series of rulings in
the Zubulake matter have been embraced by other federal trial judges, by the American Bar
Association in its most recent amendments to the ABA Civil Discovery Standards, and, most
significantly, by the Judicial Conference of the United States in its proposals for the first changes
to the federal rules governing discovery since 1999.
If the proposed changes to the Federal Rules of Civil Procedure 16, 26, 33, 34, 37, and 45
follow the published schedule, the amendments will take effect 17 months from now, on
December 1, 2006.
The Zubulake Five and the Philip Morris Multi-Million Dollar Sanction. The proposed
changes to the federal rules were presaged one year ago on July 20, 2004 in the form of Judge
Shira Scheindlin’s fifth discovery-related opinion rendered in Zubulake v. UBS Warburg, LLC,
No. 02 Civ. 1243(SAS), 2004 WL 1620866 (S.D.N.Y, July 20, 2004)(“Zubulake V”). Judge
Scheindlin, a district judge in the Southern District of New York, has established herself as
perhaps the most knowledgeable and influential federal jurist on ediscovery issues. She also
serves as a member of the U.S. Advisory Rules Committee which developed the proposed
changes to the federal rules.
One wonders if Judge Gladys Kessler had been conspiring with Judge Scheindlin when, one
day later on July 21, 2004, Judge Kessler underscored the importance of the duty to avoid
spoliation by triggering a second tremor in the form of her pre-trial opinion in the District of
Columbia in U.S. v. Philip Morris, USA. The judge imposed a sanction of $2.75 million on
Philip Morris for its failure to properly preserve electronic documents.
The third tremor shot through the system when, on April 6, 2005, a New York jury
awarded Ms. Zubulake $29.3 million in her case against Warburg.
Zubulake –“ A Relatively Routine Employment Discrimination Dispute.” That is how Judge
Scheindlin described the case involving Laura Zubulake, an equities trader specializing in Asian
securities who earned as much as $650,000 a year. At the time she was fired, on October 9,
2001, she was making approximately $500,000 a year. She sued her former investment bank
employer and Switzerland’s largest bank, UBS Warburg LLC (“Warburg”), for gender
discrimination, failure to promote, and illegal retaliation under federal, state, and city law. The
court, in a series of five opinions rendered before trial, addressed the discovery obligations of the
parties, cost-shifting in discovery disputes, and in particular, the duties of and sanctions for
Warburg’s “willful” violation of the duty to avoid spoliation of evidence.
Duty to Avoid Spoliation. The duty to avoid spoliation of evidence is not new. Spoliation has
been defined as “the destruction or significant alteration of evidence, or the failure to preserve
property for another’s use as evidence in pending or reasonably foreseeable litigation.” West v.
Goodyear Tire & Rubber Co., 167 F.3d 776, 779 (2d Cir. 1999). The duty covers all forms of
documents and evidence and imposes obligations to avoid and prevent the loss or destruction of
potentially relevant documents and electronic communications as well as other forms and types
While attorneys and judges have always acknowledged that the duty exists in some form in
relation to electronically preserved data, the timing and scope of the duty is changing
dramatically, particularly as a result of the Zubulake opinions.
When One Reasonably Anticipates Litigation. Judge Scheindlin held that Warburg’s duty to
preserve emails, electronic data and other evidence attached in April 2001. She held that, even
though the plaintiff did not file her initial charge of gender discrimination with the EEOC until
August 16, 2001, certain key employees at the company were “on notice” of possible litigation as
early as four months earlier in April. One Warburg manager admitted in his deposition that he
feared litigation as early as April 2001, and other managers exchanged emails expressing similar
concerns around the same time. Zubulake IV, 220 F.R.D. at 217.
Litigation Hold and Instruction to Preserve. At the point when one “reasonably anticipates
litigation;” a company has a duty to (1) affirmatively suspend its routine document retention and
destruction policies, and (2) instruct employees to preserve evidence.
Litigation Hold Only the Beginning of Counsel’s Obligations. Perhaps the most significant
expansion on the duties of counsel comes from Judge Scheindlin’s admonitions that, after
imposing the “litigation hold,” both in-house and outside counsel must: (1) develop a thorough
understanding of the client’s computer systems, both active and stored data systems - the so-
called “data retention architecture;” (2) monitor compliance with the client’s preservation duties
as well as locate relevant information; and then (3) continue to ensure preservation and
In Judge Scheindlin’s words,
This will invariably involve speaking with information technology personnel who can
explain system-wide backup procedures and the actual (as opposed to theoretical)
implementation of the client’s recycling policy. ... It will also involve communicating
with the “key players” in the litigation in order to understand how they stored
information. ... Counsel must also make sure that all backup media which the party is
required to retain is identified and stored in a safe place. ... In cases involving a small
number of relevant backup tapes, counsel might be advised to take physical possession of
backup tapes. ... In other cases, it might make sense for relevant backup tapes to be
segregated and placed in storage.
Financial Sanctions. Judge Scheindlin held that, “Because UBS’s spoliation was willful, the
lost information is presumed to be relevant.” The court imposed financial sanctions on Warburg
and ordered the company to: pay for re-deposition of relevant company personnel; restore and
produce relevant documents; pay for the re-deposition of certain personnel, generally; and pay
“all reasonable expenses, including attorney’s fees” incurred by Zubulake in connection with the
motion to compel. Tape restoration, alone, cost in excess of $275,000.
Adverse Inference Jury Instruction. More devastatingly, however, the judge also gave the
following adverse inference instruction to the jury:
You have heard that UBS failed to produce some of the e-mails sent or received by UBS
personnel in August and September 2001. Plaintiff argued that this evidence was in
defendant’s control and would have proven facts material to the matter in controversy. If
you find that UBS could have produced this evidence, and that the evidence was within
its control, and that the evidence would have been material in deciding facts in dispute in
this case, you are permitted, but not required, to infer that the evidence would have been
unfavorable to UBS. In deciding whether to draw this inference, you should consider
whether the evidence not produced would merely have duplicated other evidence already
before you. You may consider whether you are satisfied that UBS’s failure to produce
this information was reasonable. Again, any inference you decide to draw should be
based on all of the facts and circumstances in this case.
Summary – the Company’s and Counsel’s Obligations Under Zubulake. When you
“reasonably anticipate litigation,” a party and its attorneys have a duty to (1) affirmatively
suspend routine document/email retention and destruction policies – the “litigation hold;” (2)
instruct employees to preserve evidence; (3) interview IT personnel and learn the data system;
(4) interview key employees and monitor compliance; (5) locate relevant information; and (6)
continue to ensure preservation and disclosure.
The Zubulake Five. Here are citations to Judge Scheindlin’s five opinions. Zubulake I, 217
F.R.D. 309(S.D.N.Y. 2003)(addressing the legal standard for determining the cost allocation for
producing e-mails contained on backup tapes); Zubulake II, No. 02 Civ. 1243, 2003 WL
21087136 (S.D.N.Y. May 13, 2003)(addressing Zubulake’s reporting obligations); Zubulake III,
216 F.R.D. 280 (S.D.N.Y 2003)(allocating backup tape restoration costs between the parties);
Zubulake IV, 220 F.R.D. 212 (S.D.N.Y. 2003)(ordering sanctions against Warburg for violating
its duty to preserve evidence). Zubulake V, 2004 WL 1620866 (July 20, 2004).
U.S. v. Philip Morris, USA and the Multi-Million Dollar Sanction. In the U.S. government’s
case against the “Group of Nine” tobacco companies, Judge Kessler premised her sanctions
opinion on the government’s Motion for Evidentiary and Monetary Sanctions Due to Spoliation
of Evidence. The Court’s First Case Management Order was issued on October 19, 1999 and
required the “preservation of all documents and other records containing information which
could be potentially relevant to the subject matter of the litigation.”
Despite this Order, the defendants deleted electronic mail which was over sixty days old,
on a monthly system-wide basis, for a period of two years after October 19, 1999. In addition, in
February 2002, the defendants learned of inadequate compliance with both the case management
order, as well as the company’s own internal document retention policies. It was significant to
the judge that it then took the company another four months, until June 19, 2002 to notify the
Court and the government of those failures
On July 21, 2004, Judge Kessler ordered Philip Morris to pay $2,750,000 into the registry
of the Court– an amount premised on a sanction of $250,000 for each of eleven (11) culpable
company employees. Philip Morris had identified eleven corporate managers and/or officers
who had failed to comply with the “print and retain” policy related to emails.
ABA Amendment to Civil Discovery Standards. In 1999, the ABA first adopted its Civil
Discovery Standards to serve as guidelines to assist parties, counsel and judges in civil
discovery. Amendments adopted in August 2004 embrace the Zubulake standards which relate
specifically to electronic discovery and address preservation duties and cost shifting in relation to
electronic discovery. The standards are accessible at the ABA website:
Federal Rules of Civil Procedure – Proposed Amendments Concerning Electronic
Discovery. The Committee on Rules of Practice and Procedure of the Judicial Conference of the
United States approved the recommendations of the Advisory Committees on Civil Rules and
published proposed amendments for Civil Rules 16, 26, 33, 34, 37, and 45. The public comment
period for the proposed amendments ended on February 15, 2005. The proposals are accessible
at the U.S. Court System’s website: www.uscourts.gov The rules will become effective in
some form on December 1, 2006.
Civil Rule 16 (Pretrial Conferences; Scheduling; Management) (establishes process for the
parties and court to address early issues pertaining to the disclosure and discovery of electronic
Civil Rule 26 (General Provisions Governing Discovery; Duty of Disclosure) (requires parties to
discuss during the discovery-planning conference issues relating to the disclosure and
discovery of electronically stored information).
Civil Rule 33 (Interrogatories to Parties) (expressly provides that an answer to an interrogatory
involving review of business records should involve a search of electronically stored
Civil Rule 34 (Production of Documents and Things and Entry Upon Land for Inspection and
Other Purposes) (distinguishes between electronically stored information and "documents").
Civil Rule 37 (Failure to Make Disclosure or Cooperate in Discovery; Sanctions) (creates a
"safe harbor" that protects a party from sanctions for failing to provide electronically stored
information lost because of the routine operation of the party's computer system).
Civil Rule 45 (Subpoena) (technical amendments that conform to other proposed amendments
regarding discovery of electronically stored information)
Links. Federal Rules: www.uscourts.gov/rules/comment2005/CVAug04.pdf
ABA Advisory Standards: www.abanet.org/litigation/taskforces/electronic/home.html