Spoliation — Second Circuit Limits Pension Committee — Holds That Failure to Issue Litigation Hold Despite Notice of a Claim Does Not Per Se Constitute Gross Negligence — Totality of Circumstances Test

Chin v. Port Auth. of NY & NJ, 2012 WL 2760776 (2d Cir. July 10, 2012):

Plaintiffs-appellees, eleven Asian Americans currently or formerly employed as police officers by the Port Authority of New York and New Jersey (“Port Authority”), sued the Port Authority under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., alleging that they were passed over for promotions because of their race. *** After a nine-day trial, a unanimous jury found the Port Authority liable for discrimination against seven of the plaintiffs under all three theories and awarded back pay and compensatory damages to each of those seven plaintiffs. The district court ... also granted equitable relief to certain of the prevailing plaintiffs in the form of retroactive promotions, seniority benefits, and salary and pension adjustments corresponding with the hypothetical promotion dates that the jury apparently selected as a basis for calculating these plaintiffs’ back pay awards.***

We remand for a new trial on damages as to all seven prevailing plaintiffs and for reconsideration of equitable relief to the extent such relief was premised on failures to promote occurring outside the limitations period.***

V. Sanctions for Spoliation

Finally, cross-appealing plaintiff Howard Chin argues that the district court erred in denying the plaintiffs’ motion requesting an adverse inference instruction due to the Port Authority’s destruction of the promotion folders used to make promotions off of the 1999 eligible list. See Port Auth. I, 601 F.Supp.2d 566 (S.D.N.Y.2009). The Port Authority does not dispute that, upon receiving notice of the filing of plaintiffs’ EEOC charge in February 2001, it had an obligation to preserve the promotion folders yet failed to do so. It argues, however, that the district court did not abuse its discretion in denying an adverse inference instruction. We agree.

“[A] party seeking an adverse inference instruction based on the destruction of evidence must establish (1) that the party having control over the evidence had an obligation to preserve it at the time it was destroyed; (2) that the records were destroyed with a culpable state of mind; and (3) that the destroyed evidence was relevant to the party’s claim or defense such that a reasonable trier of fact could find that it would support that claim or defense.” Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 107 (2d Cir. 2002) (internal quotation marks omitted). If these elements are established, a district court may, at its discretion, grant an adverse inference jury instruction insofar as such a sanction would “serve[ ][the] threefold purpose of (1) deterring parties from destroying evidence; (2) placing the risk of an erroneous evaluation of the content of the destroyed evidence on the party responsible for its destruction; and (3) restoring the party harmed by the loss of evidence helpful to its case to where the party would have been in the absence of spoliation.” Byrnie v. Town of Cromwell, 243 F.3d 93, 107 (2d Cir. 2001). Our review of a district court’s decision on a motion for discovery sanctions is limited to abuse of discretion, which includes errors of law and clearly erroneous assessments of evidence. See Residential Funding Corp., 306 F.3d at 107. “[A]bsent a showing of prejudice, the jury’s verdict should not be disturbed.” Id. at 112.

Howard Chin argues that the Port Authority’s failure even to issue a litigation hold regarding the promotion folders at any point between 2001 and 2007 amounted to gross, rather than simple, negligence. We reject the notion that a failure to institute a “litigation hold” constitutes gross negligence per se. Contra Pension Comm. of Univ. of Montreal Pension Plan v. Banc of Am. Secs., LLC, 685 F.Supp.2d 456, 464–65 (S.D.N.Y. 2010). Rather, we agree that “the better approach is to consider [the failure to adopt good preservation practices] as one factor” in the determination of whether discovery sanctions should issue. Orbit Comm’ns, Inc. v. Numerex Corp., 271 F.R.D. 429, 441 (S.D.N.Y. 2010). Moreover, as the district court recognized, see Port Auth. I, 601 F.Supp.2d at 570, a finding of gross negligence merely permits, rather than requires, a district court to give an adverse inference instruction. See Residential Funding Corp., 306 F.3d at 109; Byrnie, 243 F.3d at 108. Even if we assume arguendo both that the Port Authority was grossly negligent and that the documents here were “relevant,” we have repeatedly held that a “case-by-case approach to the failure to produce relevant evidence,” at the discretion of the district court, is appropriate. Residential Funding Corp., 306 F.3d at 108 (quoting Reilly v. Natwest Mkts. Grp., 181 F.3d 253, 267 (2d Cir. 1999)). In this case, the district court concluded that an adverse inference instruction was inappropriate in light of the limited role of the destroyed folders in the promotion process and the plaintiffs’ ample evidence regarding their relative qualifications when compared with the officers who were actually promoted. See Port Auth. I, 601 F.Supp.2d at 570–71. At trial, Howard Chin was able to establish his service record and honors, and Chief Charles Torres testified that Howard Chin was very smart and a good employee. Under these circumstances, the district court did not abuse its discretion in concluding that an adverse inference instruction was inappropriate.

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