'Pippins v. KPMG' Order Highlights Preservation Burdens

Preservation of electronically stored information continues to be a vexing topic for attorneys and their clients. Judicial expectations vary widely, existing precedent is often unhelpful, and the Federal Rules of Civil Procedure (Federal Rules) do not give guidance on the issue. The lack of guidance, coupled with conflicting judicial standards, often causes parties -- mindful that one misstep could lead to sanctions -- to overpreserve.

Acknowledging the growing cry for guidance on the topic of preservation in the Federal Rules, the Discovery Subcommittee of the Advisory Committee on Civil Rules held a mini-conference on preservation and sanctions on Sept. 9, 2011. The subcommittee, chaired by Judge David Campbell, proposed three wide-ranging, alternative rulemaking proposals: a rule setting forth a detailed list of preservation duties with specific guidance on triggers, scope, and sanctions; a rule providing a more general list of such duties without specific guidance; and a rule focusing only on sanctions in the absence of reasonable preservation-related behavior.[FOOTNOTE 1] It is unclear what, if anything, will come from the subcommittee's initial work.

So, in the absence of guidance, what is a party to do? In Pippins v. KPMG, LLP,[FOOTNOTE 2] KPMG thought it had the right approach. Unable to agree with plaintiffs on the scope of preservation, KPMG moved for a protective order to limit the scope of preservation of computer hard drives or to shift the preservation costs to plaintiffs.

Instead, Magistrate Judge James L. Cott of the Southern District of New York issued a Memorandum and Order requiring KPMG to "preserve the hard drives of thousands of former employees" who could fall within an as yet uncertified nationwide FLSA collective and/or a New York state class at a potential cost of millions of dollars to KPMG. KPMG, supported by an amicus brief filed by the U.S. Chamber of Commerce, has since asked U.S. District Judge Colleen McMahon of the Southern District of New York to set aside the Memorandum and Order.[FOOTNOTE 3] McMahon's opinion will be of keen interest to those who are struggling to contain the significant costs associated with e-discovery and eager for guidance.

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Source: law.com
By: H. Christopher Boehning and Daniel J. Toal