Synventive Molding Solutions v. Husky Injection Molding Systems, 2009 U.S. Dist. LEXIS 105306 (D. Vt. Mar. 13, 2009), involves a hotly contested patent infringement lawsuit. The case is interesting because the court ultimately orders plaintiff to implement a litigation hold as to personnel likely to possess discoverable information. As follow up to the court’s litigation hold order, the court also orders plaintiff to file a sworn declaration, including, among other things, a description of the “nature and extent of the litigation hold put in place in response to this Order, including the individual [ ] personnel affected by the hold.”
For those involved with implementing legal holds the case is a worthwhile read. It also contains an important lesson. When a party accuses an opponent of not implementing a litigation hold, and preservation of evidence is cloudy at best, it is probably a good practice to implement a litigation hold as soon as possible. For a discussion on how to avoid the result in Synventive v. Husky, read our post on Pinstripe, Inc. d/b/a Acctknowledge v. Manpower, Inc., 2009 U.S. Dist. LEXIS 66422 (ND Okla. Jul. 28, 2009) (Extra Effort by Defendant to Recover Deleted ESI After Failure to Issue Litigation Hold Avoids Harshest Sanctions.)
In Synventive v. Husky, defendant filed a motion to compel plaintiff to implement a litigation hold and other relief related to plaintiff’s alleged discovery abuses. During discovery it became clear to defendant that plaintiff was not taking its preservation obligations seriously. In response to the motion plaintiff argued, in so many words, that there was a lack of evidence of a failure to preserve (meaning “hey if we preserved the evidence then who cares how we preserved it.”) It also made an argument that the Federal Rules of Civil Procedure do not contain a rule requiring implementation of a “litigation hold.” The short answer here is that plaintiff was rebuked on both arguments. We will address the arguments in reverse order.
The court rather succinctly dispatched plaintiff’s technical argument that there is no requirement in the Federal Rules of Civil Procedure requiring a litigant to implement a litigation hold:
[Plaintiff’s] argument that the Federal Rules do not require litigants to adopt a "litigation hold," though technically accurate, is ultimately not persuasive. The Second Circuit has observed that 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." Fujitsu Ltd. v. Federal Express Corp., 247 F.3d 423, 436 (2d Cir. 2001). Other district courts in this Circuit have found that this "means that, once a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a 'litigation hold' to ensure the preservation of relevant documents." Jacob v. City of New York, 2009 WL 383752, at *1 (E.D.N.Y. Feb. 6, 2009) (internal quotation marks omitted); see also Treppel v. Biovail Corp., 249 F.R.D. 111, 118-119 (S.D.N.Y. 2008); Heng Chan v. Triple 8 Palace, Inc., 2005 WL 1925579, at *7 (S.D.N.Y. Aug. 11, 2005) ("the utter failure to establish any form of litigation hold at the outset of litigation is grossly negligent.")
Plaintiff also argued that under Zubulake a corporation is not required to institute a company-wide litigation hold and that litigants are “free to chose” their own means of document preservation. The court also dispatched these arguments:
Zubulake states only that litigants are "free to choose" a method to store electronic information, not a general method of evidence retention. Zubulake, 220 F.R.D. [212 at 218 (S.D.N.Y. 2003)] [emphases added]. In fact, Zubulake explicitly says that "[t]he scope of a party's preservation obligation can be described as follows: Once a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a 'litigation hold' to ensure the preservation of relevant documents." Id.
In support of its motion, defendant cited to the deposition testimony of plaintiff’s Vice President Vito Galati. Defendant argued that Mr. Galati’s testimony was clear evidence of the failure to implement a litigation hold. Plaintiff attempted to side step the allegation by arguing “Mr. Galati never actually stated whether an official 'litigation hold' was issued [ ] as a result of this litigation.” The court was not persuaded:
[Plaintiff] underestimates the implications of Galati's testimony. For example, Galati stated that he did not know whether any part of [the company] had adopted a document preservation policy as a result of this litigation, even though "if anyone was aware of whether or not there was a litigation hold on documents," he "would be the one." Galati also indicated that he never personally spoke to anyone at [the company] about retaining documents that might relate to the subject matter of this lawsuit. Moreover, Galati testified that he "can't say that (he's) held onto" all of his own documents relevant to this litigation. This testimony is particularly probative of [the company’s] preservation efforts because Galati is essentially in charge of managing this litigation from within [the company]. (Internal record citations omitted.)
In a last ditch effort to avoid possible sanctions, plaintiff argued that defendant was unable to identify evidence that plaintiff destroyed or failed to preserve a single document. The court simply responded that it was difficult to see how defendant could possibly know whether plaintiff destroyed documents. It is also important to note that plaintiff did not provide the court with concrete evidence of its efforts to discharge its preservation obligation, beyond mere conclusory assertions that it has lived up to its discovery obligations in good faith and to the best of its ability.
In light of the arguments and the testimony, the court issued a court ordered litigation hold. The court’s litigation hold order is applicable to those personnel likely to possess discoverable evidence. To ensure compliance with the litigation hold, the court also ordered plaintiff to file a sworn declaration from an employee with sufficient knowledge describing:
(1) whether any responsive documents, including electronic files, have been destroyed or otherwise lost since February 1, 2007;
(2) the methods used to determine whether any responsive documents have been lost;
(3) the extent to which the quantity or nature of the lost or destroyed documentation is unknowable, and
(4) the nature and extent of the litigation hold put in place in response to this Order, including the individual [ ] personnel affected by the hold.
To obtain a copy of the opinion and order, click here: Download Synventive v. Husky (DVt 2009)