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Written Legal Holds: Standard Should Not Change Even with Recent Ruling

Created on July 19, 2012

Vice President, E-Discovery

For the past five or six years, legal holds and e-discovery have gone hand in hand. Since the landmark rulings in Zubulake v. UBS Warburg and Pension Committee (S.D.N.Y. Jan. 15, 2010), there has been a precedent set by the court that the issuance of a legal hold was in most cases a mandatory duty to ensure that custodians suspended the destruction of relevant electronically stored information (ESI). Surprisingly, few courts have addressed the semantics of how legal holds should be dispersed – electronically, in writing or via a telephone call.

Much debate has centered around this topic based on Judge Shira Scheindlin's ruling in Pension Committee 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." An automatic, per se ruling of gross negligence for not issuing a written legal hold would in most cases makes the faulty party very susceptible to court sanctions.

The Second Circuit Court of Appeals, who had not addressed this issue, finally took it upon themselves to clarify specific legal hold guidelines in Chin v. The Port Authority (2nd Cir. July 10, 2012). In this employment discrimination case, the Second Circuit ruled that the failure to issue a WRITTEN legal hold does not amount to per se gross negligence, thus overruling the court's decision in Pension Committee.

In Chin, the plaintiff appealed the lower court's ruling which denied the plaintiffs' motion requesting an adverse inference instruction based on the defendant's failure to issue a legal hold leading to the destruction of relevant evidence. The court rejected the appeal, ruling that plaintiff was not hindered by the failure because the plaintiff had other “ample evidence" to prove his claim. In coming to this decision, the court clarified three main points that address when sanctions may be handed out:

  • (1) “The failure to adopt good preservation practices" is only one factor to consider
  • (2) A finding of gross negligence “merely permits" the court to issue an adverse inference instruction
  • (3) The court has discretion to issue sanctions on a “case-by-case approach" when it comes to the failure to produce relevant evidence


Should this ruling change the way legal teams employ their e-discovery process? The answer is unequivocally, “No." While the ruling on its surface may lead some lawyers to think that a written legal hold is optional, there are many factors below the surface that should signal to legal teams otherwise, including:

  • (1) The court still has the discretion to issue sanctions based on its own interpretation of the issues, on a case by case basis.
  • (2) The failure to adopt good preservation practices remains a factor when deciding if sanctions are warranted.
  • (3) Most importantly, the court in Chin, ruled against the plaintiff because it did not think the plaintiff's case was hindered by the destruction of ESI, based on the destroyed evidence's limited value and the abundance of similar evidence to prove its claim.

Even without addressing the facts of this case, the first two factors give the courts a tremendous amount of leeway to rule on motions requesting discovery sanctions. Going back to the basics, courts are looking for legal teams to employ a reasonable e-discovery process which safeguards against losing, destroying or modifying relevant ESI. Establishing a reasonable process for issuing and monitoring written legal holds to relevant custodians of the case is the first of a long line of dominoes in the e-discovery process. When properly implemented, legal holds helps safeguard against accidental deletion of ESI before the data retention policy is suspended, provides the first step for starting a conversation (interview) with key custodians to learn more about the case (identifying keywords, other relevant custodians, etc.) and, finally, provides a streamlined avenue to monitor, track, remind, reissue and release custodians from their hold obligations.

While this ruling may help those few lucky legal teams that fail to issue a legal hold yet still manage to preserve relevant information, for the rest of businesses, big or small, the duty to issue written legal hold should stay the same: Mandatory.

Mike Hamilton, J.D. is a Sr. E-Discovery Analyst at Exterro, Inc., focusing on educating Exterro customers, prospects and industry experts on how to solve e-discovery issues proactively with technology. His e-discovery knowledge, legal acumen and practical experience give him a valuable perspective on bridging the gap between IT and legal teams. You can find him on Google+, Twitter and Linkedin.