On January 11th, Judge Schira Scheindlin of the United States District Court, Southern District of New York issued an opinion she entitled “Zubulake Revisited” – named after a series of landmark spoliation opinions she issued six years earlier. Since Zubulake, the Canadian law on spoliation has clearly diverged from that in the United States. While Judge Scheindlin’s recent dissection of corporate preservation processes contains excellent learning for Canadian organizations charged with meeting their preservation duties, it should not be the basis for assessing the merits of Canadian spoliation claims given our more forgiving remedial approach nor should it draw Canadian litigants to distraction from the merits of their litigation.
Judge Scheindlin’s most recent judgment is called The Pension Committee of the University of Montreal Pension Plan, et al. v. Banc of America Securities, LLC, et al. She orders an adverse inference instruction and costs against six plaintiffs who she finds grossly negligent in meeting their preservation duties and costs against seven other plaintiffs she finds guilty of mere negligence. In doing so, Judge Scheindlin describes how a court should use its inherent jurisdiction to control its process to deal with negligent preservation.
Judge Scheindlin says the purpose of a spoliation sanction is to (1) deter litigants from “engaging in spoliation,” (2) shift trial risks to the responsible party and (3) cure prejudice. She holds that a party who negligently destroys records in breach of a preservation duty may face a “severe sanction” such as dismissal, preclusion or imposition of an adverse inference if the other party proves prejudice. In cases of gross negligence, Judge Scheindlin argues for a rebuttable presumption of prejudice.
Compare this to the Canadian position as described by the Alberta Court of Appeal in its October 2008 Black & Decker decision:
In addition [to an inference of fact drawn from willful spoliation], the courts have a broad discretion to fashion remedies to avoid abuse of process, and the court’s rules of procedure are designed to assist the parties in ensuring trial fairness. Obviously, where the goal is to award remedies to even the playing field, the reason for destruction is less important. Generally such remedies are covered, and should be covered, through application of existing practice rules (or the development of further rules) and the exercise of the court’s discretion to avoid an abuse of process or award costs. Intention may not be necessary in those circumstances. But the unintentional destruction of evidence is not spoliation, and it is not appropriate to presume that missing evidence would tell against the person destroying it where the destruction is unintentional and the trier of fact cannot draw the adverse inference that the evidence was destroyed because it would tell against the spoliator.
Black & Decker is the current leading Canadian case on the remedies that flow from the breach of the duty to preserve. Unlike Judge Scheindlin, who says remedies should be granted (at least in part) to deter culpable conduct, the Alberta Court of Appeal suggests that the maintenance of trial fairness should be the primary guide to the exercise of discretion. Furthermore, it warns that that the striking of an action is an extraordinary remedy that must rest on willful misconduct: “While the court always has the inherent jurisdiction to strike an action to prevent an abuse of process, it should not do so where a plaintiff has lost or destroyed evidence, unless it is beyond doubt that this was a deliberate act done with the clear intention of gaining an advantage in litigation, and the prejudice is so obviously profound that it prevents the innocent party from mounting a defence.”
Ironically, Judge Scheindlin does express concern about litigation becoming “a ‘gotcha’ game rather than a full and fair opportunity to air the merits of the dispute.” Our own law has developed in a manner that more fully addresses this concern.
POSTSCRIPT. Following the publication of this post, Judge Scheindlin withdrew her originally-issued order and issued a revised order with clarifications that do not alter the point made in this post. The amending order is here and the consolidated amendment is here. Hat tip to Ralph Losey for covering the breaking news here.