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January 25, 2011 Articles

Court of Chancery Issues New Guidelines for Preservation of ESI

The Delaware Court of Chancery has issued a notice that follows recent rulings and public statements addressing the spoliation of ESI and the duty to preserve

by C. Malcolm Cochran

The Delaware Court of Chancery has issued a notice reminding counsel of "their common law duty to their clients and the Court with respect to the preservation of electronically stored information ("ESI") in litigation." Court of Chancery Guidelines for Preservation of Electronically Stored Information (Jan. 18, 2011). The notice follows recent rulings and public statements by members of the court addressing the spoliation of ESI and the duty to preserve. See, e.g., Beard Research, Inc. v. Kates, 981 A.2d 1175 (Del. Ch. 2009).

In its notice, the court places the burden squarely on counsel, "including local Delaware counsel," to undertake "oversight of the identification and preservation processes. . . ." The notice states that "at the very minimum . . . parties and their counsel must develop and oversee a preservation process" that "should include the dissemination of a litigation hold notice to custodians of potentially relevant ESI." Following the commencement of litigation, if a hold notice has not already been issued, "counsel should instruct their clients to take reasonable steps to act in good faith and with a sense of urgency to avoid loss, corruption or deletion of potentially relevant ESI." Failure "to take reasonable steps to preserve ESI may result in serious consequences for a party or its counsel."

The court suggests that "[i]n most cases" parties and their counsel (both in-house and outside counsel) should consider at least the following:

  • Taking a "collaborative approach" to the identification and preservation of ESI by "including in the discussion regarding the preservation processes an appropriate representative from the party's information technology function (if applicable)";

  • Developing "written instructions for the preservation of ESI" and distributing those "in the form of a litigation hold notice to custodians of potentially relevant ESI"; and

  • Documenting "the steps taken to prevent the destruction of potentially relevant ESI."

The notice lists several potential "problem areas regarding the preservation of ESI," including "business laptop computers, home computers (desktops and laptops), external or portable storage devices such as USB flash drives . . . and personal email accounts." The court also cautions that counsel "should take reasonable steps to verify information they receive about how ESI is created, modified, stored or destroyed." Counsel are expressly reminded that "the duty to preserve potentially relevant ESI is triggered when litigation is 'reasonably anticipated,' which could occur before litigation is filed." The notice states that parties and their counsel may agree with their adversaries to limit or forgo the discovery of ESI in a case and encourages early conferences regarding the preservation, scope, and timing of discovery of ESI.

The court identifies in the notice ("[w]ithout endorsing or commenting" on their merits) two examples of resources available to practitioners providing further guidelines for the management of e-discovery: The Sedona Guidelines: Best Practices & Commentary for Managing Electronic Information in the Electronic Age, and Conference of Chief Justices: Guidelines for State Trial Courts Regarding Discovery of Electronically-Stored Information.

Keywords: litigation, commercial, business, preservation, electronically stored information (ESI), Delaware, Court of Chancery

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