Discovery can be an expensive and messy process, particularly for companies with large or complex operations. But in-house counsel can breathe a little easier following the 2nd Circuit's ruling in Chin v. Port Authority of New York and New Jersey, which found that the failure to issue a written litigation hold does not constitute gross negligence per se. In InsideCounsel's October issue, we examine the impact of the decision, which reverses the long-standing precedent established in Zubulake v. Warburg.

What are the facts?

The case dates back to 2001, when 11 Asian-American police officers filed an Equal Employment Opportunity Commission (EEOC) complaint against the Port Authority of New York and New Jersey, alleging that they were passed over for promotions because of their race. In the ensuing 11 years, the case wended its way through the courts, eventually resulting in a victory for seven of the plaintiffs.

The losing plaintiffs appealed the case to the 2nd Circuit, however, arguing that the district judge erred by not telling the jury that the Port Authority had destroyed 32 files containing information that supervisors used to make promotion decisions. The files were lost after the Port Authority did not implement a litigation hold instructing record-keepers to stop routine destruction of documents.

What did the 2nd Circuit rule?

The 2nd Circuit unanimously upheld the trial court's ruling and denied the plaintiffs' request for sanctions, ruling that they had alternative evidence with which to prove their claims. Perhaps most significantly, the court found that failure to institute a litigation hold does not constitute gross negligence per se.

Writing for the court, Judge Debra Ann Livingston outlined a different approach for courts ruling on discovery sanctions. “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…[A] case-by-case approach to the failure[to] produce relevant evidence, at the discretion of the district court, is appropriate,” she said.