Zubulake IV [Trigger Date] Zubulake v. UBS WarBurg LLC 220 F.R.D. 212 (S.D.N.Y. 2003)

Date and Jurisdiction July 24, 2003 United States District Court for the Southern District of New York Scheindlin, District Judge

Parties Plaintiff: Defendant: Laura Zubulake UBS Warburg LLC Equities trader ($650,000/year) for UBS Suing for Gender discrimination, failure to promote, and retaliation under federal, state, and city law Defendant: UBS Warburg LLC Financial services company, allegedly deleted relevant e-mail correstpondence

Missing Tapes Missing Monthly Backup Tapes Matthew Chapin (Zubulake’s immediate supervisor) April 2001 Jeremy Hardisty (Chapin’s supervisor) June 2001 Andrew Clarke and Vinay Datta (Zubulake’s coworkers) Rose Tong (human resources) Part of June 2001, July 2001, August 2001, and October 2001

Facts Certain isolate e-mails were deleted from UBS’s system After UBS ordered employees to retain all relevant documents UBS told technology personnel to stop recycling backup tapes

Facts UBS attorneys cautioned employees to retain all documents, e-mails, backup tapes potentially relevant to litigation E-mails pertaining to Zubulake (showing duty to preserve) “UBS Attorney Client Privilege” No attorney copied on e-mail and not of legal nature Chapin admitted he feared litigation

Facts August 2002 Backup tapes existed because of UBS’s document retention policy, requiring retention for three years Employees instructed to maintain active electronic documents pertaining to Zubulake in separate files UBS employees did not comply with instructions Tapes were lost which should have been retained No explanation on part of UBS

Issues Regarding eDiscovery “Documents create a paper reality we call proof” It is easier to destroy/delete proof, or change it when dealing with electronic documents This does not always happen on purpose There are consequences for destruction of relevant documents Spoliation – “destruction of significant alteration of evidence, or the failure to preserve property for another’s use as evidence in pending or reasonably foreseeable litigation” Appropriate Sanctions

eDiscovery Legal Framework DUTY – to preserve evidence SCOPE – of what must be preserved REMEDY – appropriate sanction No specific rule numbers – focus on DUTY, SCOPE, and REMEDY

DUTY Notice evidence is relevant to litigation OR Should have known evidence may be relevant to future litigation

DUTY WHEN does duty attach? Definitely when a claim is filed Maybe even before complaint is filed Zubulake argued that UBS should have known evidence was relevant to future litigation 2 reasons: “UBS Attorney Client Privilege” e-mail Chapin admitting fear of litigation “Merely because one or two employees contemplate the possibility that a fellow employee might sue does not generally impose a firm- wide duty to preserve.” “But in this case, it appears that almost everyone associated with Zubulake recognized the possibility that she might sue.” “Thus, the relevant people at UBS anticipated litigation in April 2001.” Duty attached when relevant people REASONABLY ANTICIPATED litigation.

SCOPE Problem with the reasonably calculated to be relevant or requested… Too much discretion? Do normal employees know what would or should be requested in preparation for trial? There is so much information, how should firm know what to keep and what not to keep? System of backup information might not make this easy My thoughts…

SCOPE How much should be preserved? Everything? NO! Not even everything when litigation is reasonably anticipated General Rule: Parties or anticipated parties to lawsuit must not destroy – unique, relevant evidence which might be useful to an adversary Preserve what party knows or should reasonably know is relevant – reasonably calculated to lead to discovery of admissible evidence or reasonably likely to be requested

SCOPE “Key players” Duty extends to documents likely to be used in support of claims or defenses Readily identified documents (“to” filed in e-mails) “relevant to the subject matter involved in the action” All relevant documents in existence at time duty to preserve attaches and anything created after duty attaches must be preserved

SCOPE “Litigation hold” Ensures preservation of relevant documents Does not apply to inaccessible backup tapes EXCEPTION – “key players” documents must be preserved on all backup tapes (accessible or not)

REMEDY Zubulake wants Adverse Inference Instruction Adverse inference instruction to jury usually ends litigation because it is too high of a hurdle to overcome – EXTREME SANCTION!

REMEDY 3 factor spoliation test for Adverse Inference Instruction Party having control over evidence had obligation to preserve at time it was destroyed Records were destroyed with a “culpable state of mind” Destroyed evidence was “relevant” to party’s claim or defense such that reasonable trier of fact could find that it would support that claim or defense

REMEDY Already established, UBS had duty to preserve and first prong is satisfied After that is satisfied, any destruction = at least negligence In this case – not everything was destroyed, only some UBS failure to preserve all potentially relevant backup tapes was merely negligent (not gross negligence or reckless)

REMEDY Backup tapes of Tong – grossly negligent or maybe reckless UBS – unquestionably on notice of duty to preserve Tong was directly related and tapes should have been preserved So, Zubulake satisfied second prong

REMEDY Two factors to show for Relevance prong: UBS destroyed relevant evidence (as that term is ordinarily understood) AND Destroyed evidence would have been favorable to Zubulake

REMEDY Corroboration requirement more necessary when merely negligent than when gross negligent or reckless Merely negligent Cannot infer conduct of spoliator that evidence would have been harmful to him Gross negligent or Reckless Same standard until willful spoliation Willful spoliation Spoliator’s mental culpability itself is evidence of the relevance of the documents which were destroyed

REMEDY Judge thought there is “no reason to believe that the lost e- mails would be any more likely to support her claims.” Low relevance of information from the lost tapes Tong’s August 2001 tape has most likely chance of being relevant But majority of e-mails are preserved on September 2001 tape So, no reason to believe peculiarly unfavorable evidence is only on the missing tapes Zubulake cannot get adverse inference instruction because it “has not sufficiently [been] demonstrated that the lost tapes contained relevant information.”

Conclusion UBS had a duty to preserve the e-mails UBS had requisite culpability Zubulake did not satisfy the 3rd prong of the test Failed to show relevance No adverse inference instruction to jury UBS pays costs of additional depositions as well as costs of re- deposing

Questions At what point should the duty to preserve attach? Any time something might possibly come up in the future? How long should this evidence be stored? What should be the appropriate penalty? Was there a culpable state of mind? Was the information relevant? Should the judge have given an adverse inference instruction to the jury? When is an adverse inference instruction appropriate?