In Consolidated Edison Co. of New York & Subsidiaries v. United States, 90 Fed. Cl. 228 (Fed. Cl. Oct. 21, 2009), Judge Marian Blank Horn ruled that plaintiff did not anticipate litigation prior to the migration of its email system and could not be sanctioned as a result.

Plaintiff brought a clam to recover funds allegedly overpaid to the Internal Revenue Service for the 1997 tax year.  In turn, the defendant filed a "Spoliation of Evidence Claim" alleging that plaintiff destroyed emails in 2000 when it migrated from an older email system to Microsoft Exchange. To support its claim, defendant relied on a 1997 memorandum, drafted by plaintiff's in-house tax attorney, evaluating the inherent risks and consequences involved in plaintiff's tax strategy. 

The court held that the memo in itself was insufficient to trigger plaintiff's litigation hold responsibilities. The court noted that not all disagreements with the IRS would lead a taxpayer to anticipate litigation.  In fact, the majority of audits and other IRS investigations never end up in litigation. In the absence of evidence of bad faith, the court found defendant failed to demonstrate that any relevant emails were destroyed as part of the 2000 email-system migration, or that defendant was prejudiced.