• all documents from or to the identified employees or potential
witnesses, including emails, text messages, telephone
voicemails, and other information stored in electronic format
should be preserved;
• all documents and information relating to the subject matter of
the litigation should be preserved; and
• all documents and information relating to any claim or defense
of any party to the litigation should be preserved.
In tandem with preparation for compliance with a litigation
hold, businesses should examine their routine document
destruction policy. From a litigation perspective, most businesses
preserve too much, rather than too little. The result of an
ineffective document destruction policy is that harmful or
detrimental information, which could have been destroyed in the
normal course of routine deletions prior to a litigation hold, still
exists at the time a hold is put in place. Once a litigation hold is in
effect, this information must be preserved, and may eventually be
produced to opposing parties.
Depending on the systems in place, it may not be sufficient to
delete information from a server periodically. If information is
captured in off-site backup tapes or on employees’ individual hard
drives or other electronic devices, it still exists.
Risks of failing to comply
Parties who fail to properly preserve relevant electronic
information may be held responsible for spoliation of evidence by
the court in which a lawsuit is pending. Spoliation is “the
destruction or significant alteration of evidence, or failure to
preserve the property for another’s use as evidence in pending or
reasonably foreseeable litigation.” [FRCP Rule 26(f).]
Penalties for spoliation of evidence include:
• monetary sanctions;
• an award of attorneys’ fees to the injured party;
• an adverse inference instruction to the jury, advising the jury to
assume that the destroyed evidence was unfavorable to the
destroying party;
• witness exclusion;
• default judgment or defenses or claims stricken; and
• waiver of attorney-client privilege in cases where the
destruction was found to be willful.
Except for avoidance of attorney-client privilege, the court does
not need to find that the destruction of evidence was intentional.
In the past few years, numerous high-profile companies have lost
cases or have been fined up to millions of dollars for their failure to
adequately preserve electronic evidence. The formal
implementation of the new rules is expected to make the courts less
sympathetic to smaller companies that engage in spoliation.
Additionally, although these rules are limited to the federal courts
at present, it should be anticipated that state courts will follow suit
within a few years.
Ensuring compliance
Because of the serious risks of noncompliance, businesses should
take steps to establish and routinely evaluate their compliance policies,
and monitor whether any changes in electronic systems warrant any
policy changes. An open line of communication between individuals
responsible for dealing with litigation and IT department
representatives familiar with company systems is vital to this process.
