United States: Federal Court Provides A $3 Million Reason To Comply With Duty To Preserve ESI

After years of decisions, the issues surrounding the preservation of electronically stored information (ESI) seem almost old hat. It is well known that, upon notice of a claim or commencement of litigation, a party needs to implement a litigation hold. However, a recent federal court decision reminds that an effective litigation hold depends on an inherently uncertain factor – employees' actual compliance – and gives Wisconsin businesses a $3 million reason to get it right.

So, how can a party to litigation avoid finding itself on the receiving end of a sanction order like Plantronics? Below are a few guidelines:

  • Ensure that all employees, even high-level executives, are aware of the severe repercussions that can result from deletion or failure to preserve ESI.
  • Consider implementing automatic back-up procedures from the time the litigation hold is imposed to ensure that ESI is retained even if one bad actor disregards the hold.
  • If destruction of ESI is discovered, promptly and thoroughly explore the issue with a forensics expert, and take all practicable steps to preserve or recover the deleted ESI. Had Plantronics spent the few thousand dollars necessary to complete its forensic review, it may have avoided millions of dollars in sanctions.
  • If recovery of deleted ESI is impossible, be forthright and acknowledge the extent of the loss with opposing counsel and the court. The court may still impose some form of sanctions, but they are likely to be much less severe if the party owns up to the issue and cooperates in attempting to resolve it.

Under Rule 34 of the Federal Rules of Civil Procedure, a party may request production of documents and ESI in another party's possession, custody, or control. As a corollary, a party has a duty to preserve evidence over which it had control and reasonably knew or could reasonably foresee was material to a potential legal action. Typically, a party to a lawsuit satisfies this duty to preserve relevant documents and ESI by issuing a litigation hold and suspending normal document retention and destruction policies. As one company recently learned, establishing a litigation hold and implementing protective measures is just the first step. Effective monitoring and compliance with the litigation hold is essential to avoid punitive sanctions, and quick and candid action is required when a company learns that an employee has disregarded the hold. See generally GN Netcom, Inc. v. Plantronics, Inc., No. 12-1318-LPS, 2016 U.S. Dist. LEXIS 93299 (D. Del. July 12, 2016).

The GN Netcom decision effectively illustrates the importance of monitoring and complying with litigation holds. GN Netcom alleged that its competitor Plantronics violated antitrust laws and tortiously interfered with GN Netcom's business relations in an attempt to monopolize the market. Even before the lawsuit was filed, Plantronics promptly issued a litigation hold and conducted training sessions to ensure compliance. When the lawsuit was filed, Plantronics updated the litigation hold, conducted additional training sessions, and sent quarterly reminders to custodians requiring affirmative acknowledgment of compliance with the hold. On paper, it did all the right things.

Deleting "Sloppy" E-Mails Despite Compliance Training

Despite these efforts, a senior Plantronics executive deleted relevant emails and asked his subordinates to follow suit. On at least three occasions after the lawsuit was filed and the litigation hold was in place, that employee instructed his team to delete emails relating to competition with GN. The executive deleted more than 40 percent of his own emails, and in fact, double-deleted them, removing the emails from both his legal hold folder and his deleted items folder. The executive later testified that, "he was not attempting to suppress or withhold evidence," but "was concerned about inappropriate or 'sloppy' language in the emails, which would reflect poorly on Plantronics." The executive also claimed to believe that the emails were still somehow being preserved by Plantronics' back-up systems.

Upon learning of this conduct, Plantronics' in-house counsel took immediate steps to resolve the issue, such as putting that employee's assistant on a litigation hold, engaging a forensics expert to recover deleted emails, and agreeing to produce documents from additional custodians. The forensics work revealed that the executive had deleted tens of thousands of emails and that several thousand of those emails were likely responsive. Despite this report, Plantronics did not (for budgetary reasons) complete the work necessary to restore backup tapes fully, and its attorneys and other witnesses obfuscated about the deletion and whether the deleted emails had been recovered. GN Netcom ultimately engaged its own expert to determine the scope of the deletion and, based on that analysis, filed a motion for sanctions.

Acted in Bad Faith?

In considering the motion, the court looked to Federal Rule of Civil Procedure 37(e), as recently amended on December 1, 2015. The rule specifically addresses sanctions for spoliation of ESI and provides that if ESI is lost because a party fails to take reasonable steps to preserve it and it cannot be restored or replaced through additional discovery, the court may impose sanctions necessary to cure the prejudice. Under the revised rule, if a party acts in "bad faith" – with the intent to deprive another party of the information's use in the litigation – the court may instruct the jury that the information would have been unfavorable or even enter default judgment. Before the amendment, courts in the Seventh Circuit likewise imposed sanctions on the offending party for bad faith destruction of ESI. See, e.g., Malibu Media, LLC v. Tashiro, No. 1:13-cv-00205-WTL-MJD, 2015 U.S. Dist. LEXIS 64281 (S.D. Ind. May 18, 2015).

Plantronics did not dispute that the deleted emails should have been preserved and could not be recovered. Nonetheless, it argued that sanctions were inappropriate because it initially took reasonable steps to preserve ESI and had no intent to deprive GN of discovery, and GN had not demonstrated prejudice. The court rejected these arguments and imposed severe sanctions, including attorneys' fees and a penalty of $3 million!

While acknowledging that Plantronics attempted to prevent loss of information after learning of the deletion, that did not excuse its executive's initial misconduct. Moreover, the court was not convinced that Plantronics took sufficient steps to recover the deleted emails, noting the failure to complete the forensic study and restore certain backup tapes. The court attributed bad faith to Plantronics (as opposed to just the employee), concluding that the deletion was not done for personal reasons, the employee was a high-level executive, and Plantronics was not sufficiently concerned about the deletion once it was discovered.

Punitive Monetary Sanctions

After finding that GN Netcom was prejudiced by the loss, the court issued sanctions. The court found, "that Plantronics' high degree of fault, its bad-faith intent to deprive GN of responsive documents, and the prejudice it has caused to GN's case — along with the difficulties it has created for GN in 'getting to the bottom of the deletion story' and its (at times) unwillingness to acknowledge wrongdoing — further merit punitive monetary sanctions ... in the amount of $3,000,000 on Plantronics, payable to GN." In addition to attorneys' fees, the court held open the possibility of future evidentiary sanctions and ordered that an adverse inference instruction be given to the jury, permitting the jury to conclude that the deleted emails would have been unfavorable to Plantronics.

As the GN Netcom decision shows, imposing a litigation hold, conducting training sessions, and sending periodic reminders does not satisfy the duty to preserve ESI where an employee deliberately disregards the hold.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions