eDiscovery Daily Blog

• May 10, 2011

The Pension Committee case was one of the most important cases of 2010 (or any year, for that matter).  So, perhaps it’s not surprising that it is starting to become frequently cited by those looking for sanction for failure to issue a written litigation hold.

In Steuben Foods, Inc. v. Country Gourmet Foods, LLC, No. 08-CV-561S(F), (W.D.N.Y. Apr. 21, 2011), a U.S. District Court in the Western District of New York declined to follow the Pension Committee decision in the Southern District of New York to the extent that the Pension Committee decision held “that implementation of a written litigation hold notice is required in order to avoid an inference that relevant evidence has been presumptively destroyed by the party failing to implement such written litigation hold.”

Steuben Foods alleged that Country Gourmet breached its exclusive supply contract with Steuben when County Gourmet sold all its assets except the supply contract to Campbell Soup. Campbell sought sanctions against Steuben when several emails were not produced by Steuben and Steuben conceded that its litigation hold procedure had not included a written notice. Steuben’s corporate counsel had orally directed each of eight managers and corporate officers to identify all electronically stored information, including paper documents and email communications, pertaining to Country Gourmet or Campbell and not to discard or delete or otherwise destroy such documents pending the litigation.

Campbell pointed to the Pension Committee decision, Pension Committee of the University of Montreal Pension Plan v. Banc of America Securities, LLC, 685 F. Supp. 2d 456, 476 (S.D.N.Y. 2010), “in which the court found that the absence of a written litigation hold notice supported its conclusion that plaintiffs had been grossly negligent in their obligations to preserve relevant electronically stored documents and that plaintiffs’ document production failures, coupled with the absence of a timely written litigation hold, permitted the inference that relevant documents were culpably destroyed or lost as a result.”

The court declined to infer from the absence of a written litigation hold, as the Pension Committee court did, that relevant documents were culpably destroyed or lost:

“Accordingly, the court in this case declines to hold that implementation of a written litigation hold notice is required in order to avoid an inference that relevant evidence has been presumptively destroyed by the party failing to implement such written litigation hold.”

The court noted that the relatively small size of Steuben with 400 employees “lends itself to a direct oral communication of the need to preserve documents relevant to Plaintiff’s case” and was a reason “why a written litigation hold is not essential to avoid potential sanctions for spoliation.” In any event, according to the court, Campbell was not prejudiced by any failure of Steuben to produce email because Country Gourmet provided copies of the email to Campbell and Campbell could show no prejudice resulting from any claimed negligence of Steuben in not having a written litigation hold.

So, what do you think?  Should a written litigation hold be required in every case?  Would that have made a difference in this one?  Please share any comments you might have or if you’d like to know more about a particular topic.

Case Summary Source: Applied Discovery (free subscription required).  For eDiscovery news and best practices, check out the Applied Discovery Blog here.

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