United States District Court for the Southern District of New York , 2004District Justice Scheindlin

Zubulake v. UBS Warburg LLCZubulake V

Parties Parties to the suit:

Laura ZubulakeUBS Warburg, LLC

Also relevant to this decision: Attorneys for UBS

In-House CounselOutside Counsel

Employees of UBS Supervisors and Co-Workers of ZubulakeHuman Resources Personnel

Procedural HistoryZubulake I

UBS ordered to pay for restoration of sample of back up tapes

Zubulake IIIUBS ordered to pay for restoration of 16 tapesZubulake showed UBS failed to maintain all relevant

information in active files During restoration, back up tapes missingFound emails on tapes missing from active files

Zubulake IVZubulake sought sanctions for UBS’s failure to preserve

back up tapes and because of deletion of relevant emails

Without evidence that lost tapes favorable to Zubulake, Court ordered additional depositions conducted at UBS expense for questioning regarding emails discovered on back up tapes

Relevant FactsZubulake was employee of UBS

Alleges gender discrimination

Certain UBS employees on notice of potential suitApril, 2001

Zubulake brought EEOC claimAugust 16, 2001

Zubulake instituted suit against UBS February 15, 2002

UBS Counsel Action

August, 2001 (when EEOC claim filed)UBS In-House counsel gave verbal instructions

to UBS employees not to destroy or delete potentially relevant material“Preserve and turn over to counsel” Included electronic and hard copy filesNot specifically mention back up tapes

UBS Outside counsel met with “key players” in litigationReiterated In-House counsel instructionsEmails specifically mentioned as documents to be

preserved

UBS Counsel Action February 22, 2002 and September 25, 2002

After Federal suit instituted In-House counsel sent reminder emails

regarding destruction and deletion of documents

August, 2002After Zubulake requested information stored

on back up tapesOutside counsel instructed UBS IT personnel

to stop recycling back up tapes

UBS Employee ActionMultiple Employees deleted relevant emails

Some emails retrieved from back up tapesAt least one email lost completely

Deleted after warnings issued by counsel to retain relevant documents

Back up tapes missingSome retained documents, not produced

Kim was never asked to produce files to counsel

Tong’s “archive” files were misunderstood and not produced

Produced after Zubulake IV depositions

Rules at IssueFederal R.C.P. 26

Duty to DiscloseFederal R.C.P. 30

Depositions Federal R.C.P. 34

Producing Documents and ESIFederal R.C.P. 37

Failure to Disclose/CooperateSanctions to be Imposed

Spoilation

Destruction or alteration of evidenceFailure to preserve property for another’s

use as evidence in pending or reasonably foreseeable litigation

Can support an inference that evidence would have been unfavorable to party responsible for destructionAdverse Inference- what Zubulake seeks in

this case

Adverse InferenceTo get adverse inference instruction, party must

show: Party with control of evidence had obligation to

preserve it at time it was destroyedEstablished duty in Zubulake IV

Records were destroyed with “culpable state of mind” In NY, include ordinary negligence

Destroyed evidence was “relevant” to party’s claimDefinition of relevant in this instance includes assumption

that evidence destroyed would have been favorable to party seeking inference

If destruction was done negligently, must prove relevanceIf destruction was done in bad faith, relevance assumed

Analysis Did UBS and Counsel take all necessary steps to

ensure relevant data was preserved and produced? If not, did UBS act willfully when deleted/ failed to

produce?Preservation Obligations:

Litigation holdCounsel must oversee compliance Counsel must become fully familiar with client’s

data retention policies/procedures Counsel must ensure preservation

NOT enough to simply explain to client, must actually oversee

AnalysisPreservation Obligations

Counsel has continuing dutyRequirement reasonable Client must bear responsibility at some point for failure to

preserve

Steps for Counsel to TakeIssue litigation hold (when litigation reasonably

anticipated)Communicate directly with key players in

litigationDirect all employees produce copies of relevant

active files Includes ensuring back up media identified and safe

AnalysisUnder standards existing at the time, counsel

acted reasonably when instructing UBS However, counsel did not communicate

effectively Hold not issued to all necessary employeesNot all employees asked to produce documentsFailed to protect back up tapes

UBS employees acted in contravention of instructionsDeleted emails AFTER instructed to saveRecycled back up tapes prematurely

Ultimately…

Duty to preserve/produce is UBS’s

Counsel gave instructions, UBS acted against instructions

UBS acted willfully when destroyed information Lost information presumed relevant

Sanctions

Goal: restore Zubulake to position would have been in if UBS had acted in accordance with rules

SanctionsJury will be given an adverse inference

instruction regarding emails deleted after August, 2001 and emails irretrievably lost when back up tapes recycled

UBS must pay for depositions required by late production

UBS must pay for costs of motion

Conclusion

Counsel has certain obligations to discharge production duties during discovery phase

Once Counsel has completed steps, party that acts contrary to instructions acts at its own peril

QuestionsDoes this opinion shift the

discovery/production burdens inappropriately to the attorneys, as opposed to the parties?

Should there be a difference in the obligations placed on In-House counsel as opposed to Outside counsel?

Will technology training become a CLE requirement for attorneys practicing under the Federal Rules of Civil Procedure?