Scheindlin revisits Zubulake.

• Position: E-DISCOVERY

Six years after her e-discovery ruling in Zubulake v. UBS Warburg, U.S. District Judge Shira Scheindlin has revisited and revised that landmark decision in her ruling in another case.

In Zubulake, Scheindlin ruled that failing to preserve backup documents during discovery could be considered gross negligence. In a recent case, Pension Committee of the University of Montreal Pension Plan v. Banc of America Securities LLC, the federal judge imposed sanctions on 13 investors for deleting e-mails and destroying records in their lawsuit over the collapse of two hedge funds.

In 2004, 96 investors filed a lawsuit to try to recoup $550 million after two British Virgin Islands-based hedge funds failed and were liquidated. They accused the funds' former directors, administrators, auditor, and the prime broker and custodian of securities violations. One of those entities named in the lawsuit, Citco Fund Services, was hired as administrator but resigned, according to Courthouse News Services.

During discovery, Citco accused the plaintiffs of not producing all relevant documents. Citco requested the case be dismissed, but Scheindlin said she could not find ample evidence of blatant misconduct on the part of the plaintiffs.

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However, the federal judge did agree with Citco that the missing documents were relevant to the litigation and that the investors failed to preserve key electronic records. Thirteen of the shareholders "continued to delete electronic documents after the duty to preserve arose, did not request documents for key players, delegated such efforts without any supervision from management, destroyed backup data potentially containing responsive documents of key players, and submitted misleading or inaccurate declarations," her ruling states.

The...