This post comes to us from Wachtell, Lipton, Rosen & Katz. This post is based on a Wachtell Lipton client memorandum by Maura R. Grossman.
In an important new decision, Judge Shira A. Scheindlin of the United States District Court for the Southern District of New York has expanded upon her well-known Zubulake V opinion (229 F.R.D. 422 (S.D.N.Y. 2004)), setting forth crucial guidance for all parties to litigation as to their obligations to preserve and collect all potentially relevant records – whether paper or electronic – once litigation is reasonably anticipated, and providing an important example of the extremely serious consequences of failing to do so.
Pension Committee of the University of Montreal Pension Plan v. Bank of America Securities, Case No. 05 Civ. 9016 (SAS), involves an action under both the federal securities and New York State laws by a group of investors seeking to recover more than a half billion dollars in losses alleged to have resulted from the liquidation of two hedge funds in which they were investors. In her opinion, Judge Scheindlin closely reviews the discovery efforts of 13 plaintiffs and finds their failure to institute timely, written litigation hold notices, and their careless and indifferent collection efforts, resulted in the loss or destruction of evidence. Finding their conduct to be negligent or grossly negligent, Judge Scheindlin imposed sanctions, including a rebuttable adverse inference instruction, monetary fines, and, for two plaintiffs, limited additional discovery involving the search of their backup tapes.
