When and What
Courts have consistently held that a party’s duty to preserve attaches when that party has reason to anticipate litigation. See Zubulake, 220 F.R.D. at 216 (“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.”). See also Silvestri v. Gen. Motors Corp., 271 F.3d 583, 591 (4th Cir. 2001) (“The duty to preserve material evidence arises not only during litigation but also extends to that period before the litigation when a party reasonably should know that the evidence may be relevant to anticipated litigation.”); Griffin v. GMAC Commercial Finance, LLC , 2007 WL 521097, at *3 (N.D. Ga. Feb. 15, 2007) (duty to preserve arises in “pending or reasonably foreseeable litigation”) (emphasis added).
In other words, a party must preserve evidence when the party “has notice that the evidence is relevant to litigation—most commonly when suit has already been filed, providing the party with express notice, but also on occasion in other circumstances, as for example when a party should have known that the evidence may be relevant to future litigation.” Griffin, 2007 WL 521907, at *3. The notice required “does not have to be of actual litigation, but can concern ‘potential’ litigation.”
The duty to preserve extends to evidence that a party knows or should know may be relevant to the litigation or anticipated litigation. See Beard Research, Inc. v. Kates, 981 A.2d 1175, 1185 (Del. Ch. 2009); Cedar Petrochem., Inc. v. Dongbu Hannong Chem. Co., 2011 WL 182056, at *15 (S.D.N.Y. Jan. 14, 2011). Stated practically, when a party knows or should know that material may be relevant to current or future litigation, it should preserve it.
The court in Frey v. Gainey Transportation Services, Inc. held that the duty to preserve is not triggered where the evidence is merely “part of the puzzle.” 2006 WL 24437871, at *8 (N.D. Ga. Aug. 22, 2006). In Frey, the plaintiff’s attorney sent the defendant’s safety director a detailed letter demanding preservation of specified documents and asserting that any destruction would be considered spoliation. After receiving the plaintiff’s pre-litigation letter but before the plaintiff actually filed suit, the defendant deleted potentially relevant electronic data in the normal course of business. Because the lost data was “not crucial” to the plaintiff’s claims, the court held that the defendant had no duty to preserve it.
Whether a party has reason to anticipate litigation, or whether it should know that material may be relevant to current or future litigation, depends on the facts and circumstances of each individual case. See Kates, 981 A.2d at 1185. The well-worn standards that are easy to articulate in the abstract can sometimes be challenging to apply in the real world. While “[t]he broad contours of the duty to preserve are relatively clear,” on a more specific level, “the duty cannot be defined with precision.” Zubulake, 220 F.R.D. at 217; Victor Stanley v. Creative Pipe, 269 F.R.D. 497, 523 (D. Md. 2010).
In environmental litigation, the preservation obligation is even more complicated. Clients with environmental issues operate in highly regulated, litigation-riddled environments. Whether it is the threat of Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) actions, challenges to air, water, or waste permits or licenses by public interest groups, or even common-law nuisance claims, the anticipation of some sort of litigation is a common, even daily occurrence for companies in many diverse industries. Under the general duty-to-preserve standard, it could be argued that this near-constant risk requires the indeterminate retention of extraordinary amounts of data and information.
As a matter of practicality, however, this cannot be the case. Courts have held that there is no “general duty to preserve documents, things or information, whether electronically stored or otherwise.” Creative Pipe, 269 F.R.D. at 522–23. A duty to preserve that effectively requires companies within heavily-regulated industries to preserve every document, forever, when there is even a suggestion of litigation arguably conflicts with this general principle. As Judge Shira Scheindlin stated “[m]ust a corporation, upon recognizing the threat of litigation, preserve every shred of paper, every e-mail or electronic document, . . . The answer is clearly, ‘no.’” Zubulake, 220 F.R.D. at 217.
An unlimited duty to preserve also contradicts the related doctrine of proportionality in discovery. See Creative Pipe, 269 F.R.D. at 522–23 (explaining the doctrine of proportionality by stating that “the scope of preservation should be proportional to the amount in controversy and the costs and burdens of preservation”); Thompson v. U.S. Dept. of Housing & Urban Dev., 219 F.R.D. 93, 97–99 (D. Md. 2003) (“[C]ourts have acknowledged the need to employ the Rule 26(b)(2) cost-benefit balancing factors to determine just how much discovery of electronic records is appropriate in any given case, . . .” ). See also Fed. R. Civ. P. 1 (explaining that the federal rules are intended to provide for “the just, speedy, and inexpensive determination of every action”).
As the district court in Victor Stanley, Inc. v. Creative Pipe, Inc. explained, “whether preservation . . . is acceptable in a case depends on what is reasonable, and that in turn depends on whether what was done—or not done—was proportional to that case . . . the scope of preservation should somehow be proportional to the amount in controversy and the costs and burdens of preservation.” 269 F.R.D. at 523 (emphasis in original). See also The Sedona Conference Commentary on Proportionality in Electronic Discovery, 11 Sedona Conf. J. 289 (2010) (“The burdens and costs of preservation of potentially relevant information should be weighed against the potential value and uniqueness of the information when determining the appropriate scope of preservation.”).
Finally, an unbridled duty to preserve is inconsistent with the idea that only a specific, credible threat of litigation, not simply a general one, gives rise to the duty to preserve. InCache La Poudre Feeds LLC v. Land O’ Lakes, Inc., 244 F.R.D. 614 (D. Colo. 2005), outside counsel for the plaintiff called the defendant’s general counsel almost two years prior to filing a lawsuit alleging trademark infringement. The plaintiff’s counsel subsequently wrote the defendant’s general counsel a letter to “put [defendant] on notice of our client’s trademark rights . . . and to determine whether this situation can be resolved without litigation.” Id.at 622. Because the plaintiff’s letter did not threaten “impending litigation,” but instead “implied that her client preferred and was willing to explore a negotiated resolution,” the court held that the defendant’s duty to preserve evidence was not triggered until the filing of the complaint. The court explained that “a party’s duty to preserve evidence in advance of litigation must be predicated on something more than an equivocal statement of discontent by the other party.” See also The Sedona Conference Commentary on Legal Holds, 11 Sedona Conf. J. 267, 269 (2010) (explaining that “[t]he duty to preserve requires a party to identify, locate, and maintain information and tangible evidence that is relevant to specific and identifiable litigation” and that “[a] reasonable anticipation of litigation,” which triggers the duty to preserve, “arises when an organization is on notice of a credible probability that it will become involved in litigation) (emphasis added).
Nevertheless, the seriousness with which courts view the duty to preserve and the sanctions levied against violators of that duty is enough to give many companies and their counsel pause: In a constant litigation environment, just when does litigation preservation begin or end?
Duty to Preserve in Environmental Litigation
The duty to preserve evidence—and the critical questions of when and what—has been evaluated in environmental litigation. It is clear that the general rules regarding preservation of evidence apply with equal force in these types of cases. See Innis Arden Golf Club v. Pitney Bowes, Inc., 257 F.R.D. 334, 339–340 (D. Conn. 2009) (rejecting the plaintiff’s argument that a different preservation analysis applies in CERCLA litigation).
Moreover, as in other areas of the law, when the duty to preserve is triggered is a fact-intensive inquiry in each case. At least one court has held that engaging environmental consultants and legal counsel triggered a duty to preserve relevant evidence. In Innis Arden, the plaintiff engaged an environmental consulting firm to provide a proposal for remediating the plaintiff’s contaminated property. The engagement letter with the consulting firm “demonstrated that [plaintiff] contemplated the possibility of seeking recovery of its remediation costs from the responsible parties and that [the consultant] would tailor its sampling program to that end.” Id. at 336. The plaintiff subsequently hired legal counsel to advise the company on cost-recovery efforts under CERCLA. The plaintiff’s duty to preserve evidence was triggered by its engagement of its consultant and legal counsel: “The fact that [plaintiff] was working to identify the parties responsible for the PCB contamination and then to pursue recovery of costs establishes that litigation was reasonably anticipated from the very beginning of the investigation and remediation process.” Id.at 340. Further, because the plaintiff “knew that [its consultant’s] investigation sampling was a critical part of possible cost-recovery litigation,” the duty to preserve this evidence attached, at the latest, when “counsel was actively involved in the investigation and analysis of the samples in preparation for legal action.” Id.
Likewise, relevancy continues to be the key inquiry in the “what evidence” analysis in environmental litigation. In a case involving the migration of PCE-contaminated groundwater from property owned by the defendant onto property owned by the plaintiff, the plaintiff sought sanctions against the defendant for allegedly intentional destruction of evidence.AmeriPride Servs., Inc. v. Valley Industrial Serv., Inc., 2006 WL 2308442, (E.D. Cal. Aug. 9, 2006). After the commencement of litigation, the plaintiff served a Rule 34 notice requesting an on-site inspection of the defendant’s facility to examine certain areas where the plaintiff alleged releases of hazardous substances had occurred. The requested inspection was scheduled to occur one day after construction of a new government-ordered groundwater-treatment system commenced. The defendant objected to the inspection, which did not occur as requested, and construction began on the new groundwater-treatment system. During construction of the system, two wastewater pipes were broken and approximately 110 tons of soils were removed from the construction area. No samples were taken of the materials inside the pipes prior to their disposal. The soil was randomly sampled to determine whether it needed to be disposed of as a hazardous waste. During construction, the plaintiff’s counsel sent several letters to counsel for the defendant, advising the defendant of its spoliation concerns. The plaintiff subsequently served revised Rule 34 requests to inspect the defendant’s facility and ultimately inspected the facility almost four months after the construction of the new groundwater system was completed.
The court held that the defendant’s duty to preserve evidence had been triggered:
[The defendant] was well aware of the nature of [the plaintiff’s] claim and should have known that evidence removed from the facility was relevant to the pending action. To compound the matter, [the defendant] was explicitly given notice that [the plaintiff] sought to inspect the very evidence that was removed and discarded.
Id. at *5. Because “one of the key issues in the pending case is whether [the defendant] discharged PCE into the soil” and the “removed evidence would have either revealed that there were no leaks and thus, no on-going contamination . . . or that there were leaks and that there was on-going contamination . . . the removed soil and pipes were clearly relevant to the pending action.” Id. at *6. Although the defendant should have known of the relevance of this evidence, the letters and notices from the plaintiff put the defendant on actual notice that the “evidence was important” to the plaintiff. As a sanction, the court held that it would instruct the jury that the removed pipes leaked PCE into the soil and groundwater and that this contamination caused the contamination on the plaintiff’s property. The court prohibited the defendant from presenting any evidence to rebut the instruction.
Still, the question remains and appears not to have been directly addressed in the context of environmental litigation: What of the companies whose daily business involves a threat of litigation? If the general rules are not more carefully refined—and actions such as the engagement of environmental consultants and legal counsel trigger a duty to preserve—courts are imposing, in practice, an obligation that, in theory, they reject. Only time will tell whether a more nuanced understanding of the realities faced by these companies will prevail.
Keywords: litigation, environmental litigation, young lawyers, Zubulake, duty to preserve
Meaghan G. Boyd is a senior associate in the Atlanta, Georgia, office of Alston & Bird LLP. She is a cochair of the Young Lawyers Subcommittee for the Environmental Litigation Committee.