Chapter § 3.03 Management of e-Data in Litigation
| Jurisdiction | United States |
| Publication year | 2020 |
§ 3.03 Management of e-Data in Litigation
[1] Effective and Defensible Litigation Hold Procedures
When litigation, government investigations, or third-party subpoenas are pending or reasonably anticipated, a legal duty arises to preserve potentially relevant evidence and suspend routine disposition practices.145 The obligation to preserve arises when a party has notice, either actual or implied by the circumstances, that material in its custody or control is relevant to reasonably anticipated litigation involving that party.146 This legal duty is separate from the obligation to retain business records pursuant to the company’s document retention program, because this duty requires that all relevant materials be preserved, regardless of whether they constitute records.147 For example, an email exchange from one employee commenting on another’s dress usually is not a business record. However, if a litigation hold were in place because of a sexual harassment lawsuit, such an email would have to be preserved.
The duty to preserve electronic evidence may attach before litigation begins and there are sanctions for the failure to preserve that evidence.148 “The obligation to preserve evidence arises when the party has notice that the evidence is relevant to litigation or when a party should have known that the evidence may be relevant to future litigation.”149 Anyone who anticipates being a party or is a party to a lawsuit must not destroy unique, relevant evidence:150
“Sanctions may be imposed against a litigant who is on notice that documents and information in its possession are relevant to litigation, or potential litigation, or are reasonably calculated to lead to the discovery of admissible evidence, and destroys such documents and information. While a litigant is under no duty to keep or retain every document in its possession once a complaint is filed, it is under a duty to preserve what it knows, or reasonably should know, is relevant in the action, is reasonably calculated to lead to the discovery of admissible evidence, is reasonably likely to be requested during discovery, and/or is the subject of a pending discovery request.” 151
When a party reasonably anticipates litigation, a company must suspend its routine record retention program and issue a written litigation hold.152 The party should take reasonable steps to preserve potentially relevant documents.
A preservation notice should be issued when a concrete set of facts and circumstances would lead to a conclusion that litigation or an investigation is imminent or should otherwise be expected. One recommendation is that companies implement a process by which they anticipate such circumstances and evaluate them to determine whether routine disposition practices should be suspended.153 The legal department should have a separate checklist of circumstances by which it considers whether a preservation obligation has been triggered, the steps needed to identify the scope of the obligation, and the measures that must be followed to meet the obligation.154
The notice should be issued to all “key players,” that is, those individuals likely to control, possess, or have access to relevant materials or information about the matter.155 Thus, the company must identify the persons who should receive the preservation notice. Reasonable efforts should be made to reach appropriate custodians of affected records and individuals who may have other relevant materials.156
When determining who should issue the preservation notice, courts generally place much responsibility on a company’s senior management.157 Courts have found companies at fault when senior management failed to communicate preservation notices or failed to take an active role in establishing the company’s records retention policy, which should include preservation notice and litigation hold procedures and guidelines.158 And counsel appears to have an affirmative duty to ensure that corporate senior management does its job. As noted in Zubulake V, “[a] party cannot reasonably be trusted to receive the ‘litigation hold’ instruction once and to fully comply with it without the active supervision of counsel.”159 Six years later, the Second Circuit reiterated this duty, sanctioning plaintiffs in part for placing preservation decisions in employees’ hands without adequate counsel supervision.160 The court then noted that not every employee would require hands-on attorney supervision, but that attorney oversight of the process is important.161
When issued, the preservation notice should inform an entity’s personnel about the need to preserve relevant materials. The notice should include enough factual information about the pending or potential lawsuit, investigation, or subpoena for recipients to...
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