Unwrapping Zubulake - Part II

Posted by Gregg Mayer on Thursday, February 21st, 2008   

In Part I, we discussed the opening stages of the Zubulake e-Discovery opinions, including the court’s order that UBS restore a sampling of backup tapes to determine the extent of the costs involved in restoring all of the backup tapes. Now we continue with the court’s later opinions.

*Zubulake IV – October 22, 2003

While restoring the backup tapes, UBS and the employees discovered some backup tapes were “missing.” Moreover, some email was deleted even though UBS knew it should have preserved them.

Despite these troubling developments, the judge was still not ready to drop the hammer on UBS. Instead, the judge ordered that Laura Zubulake could redepose certain witnesses to learn more about the missing email and backup tapes. UBS had to pay for those depositions.

In addition, UBS was not yet slammed with any sanctions for spoliation of evidence. As explained by the judge:

Spoliation is the destruction or significant alteration of evidence, or the failure to preserve property for another’s use as evidence in pending or reasonably foreseeable litigation. The spoliation of evidence germane to proof of an issue at trial can support an inference that the evidence would have been unfavorable to the party responsible for its destruction.

Put another way, once a company is under a duty to preserve evidence, if the company fails to do so, it can be sanctioned.

In explaining the duty to preserve, the judge wrote: “The obligation to preserve evidence arises when the party has notice that the evidence is relevant to litigation or when a party should have known that the evidence may be relevant to future litigation.”

This analysis involves two different boundaries: when did the duty to preserve start and what must be preserved. Implementing the process is known as a legal hold.
The judge said UBS had a duty to preserve the missing backup tapes. However, since it appeared the loss of the tapes was at best only negligent, the judge ruled she would not yet give an adverse inference jury instruction since Zubulake had not shown that the lost evidence would have supported her claims.

The additional depositions, though, were scheduled to learn about the apparent deletion of email. UBS was running out of time. The deleted email would prove costly.

*Zubulake V – July 20, 2004

Eight months later, the deleted email resulted in the judge ordering an adverse jury instruction. The reason: since UBS employees deliberately deleted the email, and there was no way to retrieve them, then an adverse instruction was the only way to level the playing field for Zubulake’s day in court.

“The proof is clear,” the judge wrote. “UBS personnel unquestionably deleted relevant e-mails from their computers…”  The judge continued:

At the end of the day … the duty to preserve and produce documents rests on the party. Once that duty is made clear to a party, either by court order or by instructions from counsel, that party is on notice of its obligations and acts at its own peril.

As a result, UBS was found to be a spoliator. To remedy the destruction of evidence, the judge ordered an adverse inference instruction, which read:

You have heard that UBS failed to produce some of the e-mails sent or received by UBS personnel in August and September 2001. Plaintiff has argued that this evidence was in defendants’ control and would have proven facts material to the matter in controversy.
 If you find that UBS could have produced this evidence, and that the evidence was within its control, and that the evidence would have been material in deciding facts in dispute in this case, you are permitted, but not required, to infer that the evidence would have been unfavorable to UBS.
 In deciding whether to draw this inference, you should consider whether the evidence not produced would merely have duplicated other evidence already before you. You may also consider whether you are satisfied that UBS’s failure to produce this information was reasonable. Again, any inference you decide to draw should be based on all of the facts and circumstances in this case.

The adverse jury instruction would make it nearly impossible for UBS to win.     

*Zubulake VI – March 16, 2005

This opinion tidied up what the jury could hear in terms of the prior court rulings, including the prior sanctioning of UBS for spoliation.

The judge ruled the jury would not hear any evidence regarding those prior decisions. Of course, the adverse inference instruction would still be given.

Other orders in this opinion also determined what evidence could be admitted, including preventing Zubulake’s attorney from calling UBS’s attorney to the stand to talk about the e-Discovery issues.

Conclusion

In the end, the jury awarded Zubulake a $29 million verdict in 2005.

As noted above, Zubulake’s precedent-setting rulings on e-Discovery are often cited in other e-Discovery court opinions.  Familiarity with the issues raised in the opinions helps understand future developments of e-Discovery law. 

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