## Facts

- Kyle Pippins and other current and former KPMG Audit Associates sued KPMG in federal court, asserting overtime and wage claims under the Fair Labor Standards Act and state law based on alleged misclassification as exempt employees.
- The case was at an early stage; no class (or collective) had yet been certified, but the potential group included roughly 7,500 Audit Associates.
- Audit Associates used KPMG-issued laptops during their employment, and the laptops’ hard drives potentially contained work documents and other electronically stored information bearing on what Audit Associates did and how they worked.
- Plaintiffs sought preservation of the laptop hard drives for the putative group, asserting the drives could contain evidence relevant to job duties and hours worked.
- KPMG moved for a protective order seeking to limit its preservation obligation, arguing that preserving all drives for thousands of individuals would be expensive and disproportionate to the likely evidentiary value.
- Plaintiffs responded that KPMG should preserve the drives unless and until there was a meaningful basis (such as a reliable sample and supporting information) to show that full preservation was unnecessary.
- Magistrate Judge Cott denied KPMG’s requested relief and required KPMG to preserve the hard drives pending further order or agreement on a sampling approach.
- KPMG objected to the magistrate judge’s ruling, and District Judge McMahon reviewed the objections under the deferential standard applicable to non-dispositive discovery orders.

## Issues

1. Whether the magistrate judge clearly erred or acted contrary to law by requiring KPMG to preserve the hard drives from Audit Associates’ KPMG-issued laptops despite KPMG’s proportionality and cost objections.
2. Whether, on the record presented, KPMG had shown sufficient burden and disproportionality to justify limiting preservation to a subset or sample of hard drives at that stage of the litigation.

## Decision

- The district court denied KPMG’s objections and upheld the magistrate judge’s order.
- KPMG was required to continue preserving the Audit Associate laptop hard drives while the case proceeded, at least until further court order or an agreed, supportable sampling methodology.

## Legal Principles

- A party’s duty to preserve evidence arises when litigation is reasonably anticipated and extends to relevant ESI within the party’s control.
- Rule 26 proportionality considerations can apply to preservation disputes, but a party seeking to narrow preservation must present specific information supporting its burden arguments and proposed limits.
- Courts may consider sampling as a way to manage large-scale ESI problems, but a sound sampling plan generally requires enough information to evaluate what the sources contain and what would be lost if preservation were reduced.
- When reviewing a magistrate judge’s non-dispositive discovery ruling under Rule 72(a) and 28 U.S.C. § 636(b)(1)(A), the district court will not overturn the ruling absent a showing that it is clearly erroneous or contrary to law.

## Conclusion

In Pippins v. KPMG LLP, the Southern District of New York upheld a magistrate judge’s order requiring KPMG to preserve the hard drives from thousands of Audit Associates’ KPMG-issued laptops in an overtime misclassification suit, rejecting KPMG’s request to limit preservation on proportionality grounds because KPMG had not made a sufficiently concrete factual showing to justify cutting back preservation or adopting a reduced-preservation sample at that early stage.


Pippins v. KPMG LLP, 2011 WL 4701849 (2011)