The Road to Sanctions is Paved with Good Intentions

Siddartha Rao

In Sekisui American Corp. v. Hart, Judge Scheindlin issues discovery sanctions, warns counsel that good intentions are not enough

Counsel should take note of the adverse inference instruction sanction Judge Shira Scheindlin issued against the plaintiff in Sekisui American Corp. v. Hart, No. 12 Civ. 3479 (SAS) (FM), (S.D.N.Y. Aug. 15, 2013) (“Sekisui”), an action against former executives for breach of contract. The case signals potential increased risks to litigants who fail to implement proactive hold and preservation policies and should provide guidance to counsel about the need for defensible forensic processes. 

The Sekisui sanctions order is of particular interest because it reversed the memorandum decision of Magistrate Judge Maas who declined to sanction plaintiff, reasoning that sanctions should not issue where spoliation occurred through innocent error and defendants had not shown prejudice.  Sekisui America Corp. v. Hart, No. 12 Civ. 3479, (SAS) (FM) (S.D.N.Y. June 10, 2013).

Judge Scheindlin’s opinion reversing Judge Maas is noteworthy for at least three reasons: 

1. Judge Scheindlin's analysis places the burden with respect to key issues of culpability and prejudice on litigants with preservation obligations.
2. The decision furthers a trend in finding a duty to preserve attaching before the Complaint is filed, using a fact-specific rather than a formalistic test.
3. Judge Scheindlin's criticisms of the proposed changes to Rule 37 of the Federal Rules of Civil Procedure may influence the final form of the rule and push it in a direction that harmonizes the rule with the Sekisui holding. 

For full commentary on the Sekisui sanctions, review our Case Update.