Volume 1, Number 3
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Avoiding the Hammer of a Spoliation Inference: Preservation of Electronic Communications
Lawyers representing clients that may become involved in litigation must act promptly when he or she becomes aware of a potential claim. Failure to take “reasonable precautions” may later result in severe penalties, including monetary sanctions and adverse inferences. Given the recent notoriety of a series of decisions in the Southern District of New York in the Zubulake v. UBS Warburg case, consultation with clients, to determine whether circumstances exist that require action to preserve evidence – particularly electronic discovery, or e-discovery -- should be considered immediately.
One of worst things that can happen in litigation is a finding of spoliation, or a spoliation inference given to a jury. Spoliation is defined generally as the destruction or significant alteration of evidence, or the failure to preserve property for another's use as evidence in pending or reasonably foreseeable litigation. A New Jersey court recently wrote: “The duty to preserve potentially relevant evidence is an affirmative obligation that a party may not shirk. When the duty to preserve is triggered, it cannot be a defense to a spoliation claim that the party inadvertently failed to place a ‘litigation hold’ or ‘off switch’ on its document retention policy to stop the destruction of that evidence.” Courts will consider four factors: (i) whether the evidence is in the party's control; (ii) there is actual suppression or withholding of the evidence; (iii) the evidence was relevant to claims or defenses; and (iv) it was reasonably foreseeable that the evidence would be discoverable.
Upon awareness of a potential claim, counsel should implement a “litigation hold” on its document retention policy concerning e-mails and other electronic documents. Information technology departments must become involved in the process to alter automatic deletion rules, which allow e-mails to become inaccessible or to be deleted, so that documents can be preserved. The entire universe of electronic files must be considered – are there shared directories? Back-up tapes? Counsel must understand their client’s electronic systems.
A detailed memorandum should be sent to all employees who may have discoverable information. Here is one example, but it should be carefully tailored to the appropriate situation:
______________ was recently sued with respect to ___________ with __________. In connection with defending the law suit and the pursuit of counterclaims, _______ is required to preserve all documents and information relating to the actual or potential issues in dispute. Accordingly, we need to gather up files (including electronic files) relating to ______ and related matters.
Also you must immediately cease all destruction, discarding or deletion of documents, information and files (including electronic files) relating to __________ and related matters, and to this extent ________'s document retention policy is suspended until further notice. You also should immediately inform any employees you supervise (including administrative assistants) of the situation and the need to preserve the relevant documents and information. For this purpose, the term "documents" includes final documents, drafts, correspondence, handwritten notes, videotapes, audio tapes, computer files, disks and emails.
If your email system has automatic purging, you must print out any relevant emails (with attachments) before they are purged. You will be notified when normal document retention procedures may be resumed.
We will coordinate with you soon as to the next steps in the document and information collection and response process. In the meantime, if you have any questions concerning whether a particular document should be retained, please err on the side of saving the document. If you have any questions concerning this email, or receive any inquiries from third parties regarding this matter, please contact ___________.
REMOVAL, TRANSFER, ALTERATION, DISPOSAL OR DESTRUCTION OF DOCUMENTS COVERED BY THIS DIRECTIVE IS PROHIBITED BY YOU WITHOUT PRIOR WRITTEN APPROVAL BY ME.
Along with Zubulake and a series of other, similar cases, it represents an apparent trend in the courts, even before new, proposed rules concerning discovery of electronic data become effective, to impose harsh sanctions on parties that fail to take effective precautions to preserve electronic data, such as e-mails, when they become aware that a claim may be asserted, even before litigation is actually commenced. Even if a party is merely negligent in failing to preserve such evidence, and even if there is no proof of “bad faith” in the destruction of such evidence, these cases suggest that some courts may nevertheless sanction that party, if the destroyed evidence can be shown to be relevant. Foresight, thought planning, and coordination and coordination will save money in the long run and avoid the risk of discovery sanctions.