With Pippins v. KPMG, the Southern District of New York maintains and extends its forward position among jurisdictions nationally in punishing large corporations with broad and expensive preservation requirements. Here, the court has ordered KPMG to preserve over 2,500 hard drives of its current and former employees on the basis that their users are “potential” plaintiffs to a class action. The court found that the members of this group were all “key players,” turning the concept on its head. KPMG estimates the cost of preservation at $600 per laptop, or $1.5M — a steep price to pay for laptops that might contain relevant information of potential parties.
A bright spot in the opinion is the court’s recognition that proportionality plays a role in fashioning a preservation strategy. However, this concept got little application in this case. The court chided KPMG for its “chutzpah” in arguing that the costs would swallow the claim while at the same time refusing to fork over even a single laptop. In the court’s view, without having at least some of the laptops to inspect, the plaintiffs could not possibly establish the “benefit” of preservation, making it impossible for the court to balance benefit and burden under the proportionality analysis.
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