Case Law: Steuben Foods, Inc. v. Country Gourmet Foods, LLC

Court Rejects Pension Committee Spoliation Inference and Declines to Authorize “Fishing Expedition”

Steuben Foods, Inc. v. Country Gourmet Foods, LLC, 2011 WL 1549450 (W.D.N.Y. Apr. 21, 2011). In this business litigation, the defendant sought spoliation sanctions for the plaintiff’s failure to implement a timely written litigation hold. Arguing that the plaintiff’s oral litigation hold was insufficient, the defendant cited three e-mails missing from the plaintiff’s production as evidence that spoliation of relevant documents had occurred. However, noting the record failed to reveal any relevant evidence had been destroyed or lost, the court rejected the defendant’s reliance on Pension Committee that the failure to implement a written litigation hold alone supported a presumption of spoliation. Instead, the court found that the relatively small size of the plaintiff could support its reliance on direct oral communication and that the substantial number of documents so far produced refuted an inference of spoliation. Finding all relevant documents had so far been produced, the court further declined to permit a “fishing expedition” of discovery into the plaintiff’s document preservation actions based on mere speculation.

Commentary

This case is yet another decision issued on the ever-prevalent challenge of proper preservation protocol. We have covered numerous high-profile opinions on this blog and felt this case deserved attention based on its deviation away from the Pension Committee ruling. The court noted in this case that it is not bound by the Southern District of New York ruling and determined that the failure to issue a written litigation hold does not automatically result in the imposition of an adverse inference instruction.

As more courts in jurisdictions across the country issue opinions on preservation, it will likely further cloud the already murky waters. Indeed, through the opinions issued over the past year, practitioners and corporations may be even more confused regarding their duties to preserve, issue and implement litigation holds, and management of retention policies. As Judge Grimm noted in his Victor Stanley II decision, perhaps the best advice is to follow the requirements of the strictest jurisdiction in terms of preservation obligations – certainly an onerous task for any organization to achieve.