03/11/2010

E-Discovery Alert: Written Litigation Holds: Why You Need One

In the world of litigation holds and e-discovery (which require parties to properly preserve and produce electronic evidence for litigation), a landmark decision was issued by Judge Scheindlin of New York, the author of the prior Zubulake decisions. In fact, Judge Scheindlin has entitled the decision "Zubulake Revisited: Six Years Later."

A fact worth highlighting as to the future implication of this decision is that both parties to the litigation were sophisticated entities. In a somewhat unique twist, this decision results from a motion for sanctions by the defendants against the plaintiffs, which establishes that discovery obligations flow both ways. In the litigation hold arena, this twist also required the court to first address when the duty to preserve arose for the plaintiffs. Under the time frame at issue, the court held that this duty began approximately six months before counsel was retained.

Specific Findings of Culpability
The court held that six of the plaintiffs were "grossly negligent" in that they engaged in the following conduct:

• failed to institute a timely litigation hold;
• failed to collect or preserve any documents prior to 2007 (the duty arose in 2003 and the delay was due in part to a court ordered stay from 2004 through 2007);
• delegated search efforts to untrained, unsupervised employees;
• destroyed backup data that may have contained responsive documents; and
• submitted misleading or inaccurate declarations regarding search/collection efforts that had been undertaken.
  As a result, the court provided a spoliation instruction which allowed the jury, if it chose, to assume the documents not produced would have been both relevant and prejudicial. In addition, all of the plaintiffs were required to share in the defendants' cost to pursue the motion, the cost incurred to review and depose those plaintiffs who had provided declarations, and additional discovery as to specific issues was allowed.

Key Issues for Companies
This decision has mandated that, whether considering litigation or responding to a potential claim, companies must institute a written litigation hold in a timely manner. Furthermore, this obligation may arise well before litigation or a formal demand. If a litigation hold is necessary, put it in writing, identify to whom it was issued, and confirm key players and relevant issues are captured. As the matter progresses, keep in mind the list of players and issues may change. When collection efforts are necessary, this process must be given appropriate consideration and the individuals collecting the information must be properly trained and understand the underlying issues. Finally, work with counsel at every stage to keep them informed of your efforts and allow them to provide a guiding hand.

At Stinson Morrison Hecker, our e-discovery team combines litigation, IT, and records management experience along with expertise to consult and advise clients on matters relating to electronically stored information. This group, with members focusing on litigation in all aspects of practice including employment, general business, and other practice areas, acts as an open source for e-discovery best practice standards, vendor evaluation, current technology and compliant record retention policy. 

For more information on this article, please contact Mindy McPheeters.