Facts
- Laura Zubulake, a former UBS Warburg director and equities salesperson, sued UBS alleging gender discrimination, failure to promote, and retaliation under federal and New York law.
- Before and during the litigation, relevant evidence included employee e-mails and materials stored on active systems and backup tapes.
- Once litigation was reasonably anticipated, UBS’s counsel issued preservation directions to some employees to retain relevant e-mails and documents.
- Certain key custodians were not effectively notified, did not comply, or deleted responsive e-mails despite preservation instructions.
- Counsel did not timely or specifically coordinate with information technology personnel to stop routine recycling of backup tapes or to sequester backup media likely to contain relevant messages.
- As a result, some potentially relevant e-mails were permanently lost and some backup tapes were overwritten.
- Zubulake moved for sanctions based on UBS’s failure to preserve and produce relevant electronically stored information (ESI), including after prior court involvement in e-mail discovery disputes.
Issues
- When does the duty to preserve ESI attach in anticipation of litigation, and what steps must a party take to implement a litigation hold?
- What affirmative preservation and supervision duties do counsel have with respect to identifying custodians, data sources, and backup media?
- Whether UBS’s loss and nonproduction of e-mails and backup-tape data constituted sanctionable spoliation, and what sanctions were appropriate given fault, relevance, and prejudice.
Decision
- The court held that UBS had a duty to preserve relevant ESI once litigation was reasonably anticipated and was required to suspend routine destruction practices and institute a litigation hold.
- The court found UBS and its counsel failed to ensure adequate preservation and collection, including failures to identify and monitor key custodians and to preserve backup media likely to contain unique relevant evidence.
- The court determined the loss of e-mails and backup-tape evidence was sanctionable spoliation, supported by findings of at least negligence and resulting prejudice.
- The court imposed sanctions, including an adverse inference instruction permitting the jury to infer that destroyed e-mails would have been unfavorable to UBS, and monetary relief shifting certain costs associated with the discovery failure and sanctions motion.
Legal Principles
- The duty to preserve arises when litigation is reasonably anticipated, not only after a complaint is filed.
- Upon that trigger, a party must suspend routine document retention/destruction and implement a litigation hold to preserve potentially relevant information.
- Preservation obligations extend to ESI held by key players and, when relevant information may be unique or otherwise unavailable, to backup tapes or other backup media.
- Counsel must take affirmative steps to manage preservation: identify key custodians and data sources, issue clear and specific instructions, coordinate with IT, and monitor compliance through follow-up.
- Spoliation sanctions turn on the party’s culpability, the likelihood that the lost evidence was relevant, and the prejudice to the requesting party; an adverse inference may be warranted where these factors support it.
Conclusion
The court sanctioned UBS for failing to preserve and produce relevant ESI, holding that anticipated litigation triggers a litigation hold and that counsel must actively supervise client preservation efforts, including custodians’ e-mail and potentially unique backup-tape evidence, with adverse-inference and monetary sanctions available for resulting spoliation.