Preservation: How Good Is Your Litigation Hold?
There are all kinds of sports analogies in litigation. In baseball, the quality of a pitch depends on how well the pitcher holds the ball. The difference can mean a strike or a home run. The same is true when evaluating how well a party complies with its obligations to identify, preserve and maintain potentially relevant evidence, especially electronically stored information ("ESI"), in the early and later innings of complex litigation.
- The Obligation to Preserve
The law requires anyone, when they become aware of the obligation, to identify, preserve and maintain all documents and evidence potentially relevant to a claim. Specifically, the obligation can be triggered when the individuals or officers of a company become aware of an injury or when litigation can be reasonably anticipated. Often, the obligation arises when one party sends the other a Litigation Hold Letter. A Litigation Hold Letter puts the party on notice of potential litigation and asks them to preserve relevant information ... or suffer the consequences of spoliation. Spoliation, the loss or destruction of evidence, can include sanctions, additional costs and fees, preclusion of evidence and even adverse inference instructions to a jury for a party's failures to preserve evidence properly.
- What to Hold
A party does not have to preserve information not within their possession, custody and control, but to the extent that they can control any third party (like an IT vendor or outside advisor) with potentially relevant information to the claim, then a party must notify and request any such third party to preserve the potential evidence.
Further, a party should identify where and how its own information is located. Usually, a company has key record custodians responsible for storing and saving information. These individuals should receive notice and clear instructions on the need to identify and save potentially relevant information, including ESI. These individuals should be aware that they could even be called to give testimony about their document and data preservation efforts. No one should be permitted to destroy or delete potentially relevant evidence, even if the evidence is helpful to the other party.
To preserve, any automatic deletion programs for email, documents or texts need to be suspended. Any program or policy to re-use, overwrite or destroy backup tapes for servers should also be suspended. Upon receipt of a Litigation Hold Letter, any IT vendor who maintains your computer system should be directed to turn off any deletion programs or any other service that would potentially remove, alter or delete any ESI of the Company.
Before any computer or device (for example, a company cellphone) of any current or departing employee is replaced, updated or destroyed, any potentially relevant ESI needs to be identified and preserved.
- Important Follow Through
The efforts to preserve potentially relevant documents do not have to be perfect, but reasonable, cost-effective steps to identify and protect the information from loss, alteration or destruction can make a big difference as litigation proceeds. After identifying record custodians and alerting them, normal steps can be taken to resume business without destroying or altering any information. For instance, if you or an employee created a personal folder in email, leave it intact and do not try to copy it to a different drive or disk. When the need to collect and produce the information arises, counsel can advise the proper and most cost-effective way to transmit the ESI.
Many parties fail to continue to identify and preserve information as litigation continues. When a discovery dispute arises, how well a party monitors and seeks compliance with a Litigation Hold Letter makes a difference. If there are good faith efforts to comply and preserve, most judges and magistrates will not find a violation. Often, the burden shifts to the other party to show an intentional or grossly negligent violation of a preservation obligation. If the other side is unreasonable, there can even be fee-shifting to require the other side to pay for unreasonable preservation demands.
If you have taken appropriate steps and documented how you regularly checked and tried to avoid any kind of spoliation, then you are less likely to be sanctioned. The first and last pitch matters.
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.
