July 23, 2014 Articles

Potential Liability Inherent in General Document Preservation Holds

By John Camp and L. Vanessa Lopez

Corporate document preservation, particularly for electronically stored information (ESI), is a frequently litigated topic. Courts have used different approaches to determine the extent to which a corporation has a duty to preserve relevant documents, or, more accurately, the lengths to which a company must go to preserve documents in litigation. Courts have wide discretion in making such determinations, which appear to be very fact-specific. A corporation's own preservation hold may cause a court to impose a duty of preservation where it may not have otherwise existed.

Earlier this year, courts overseeing separate products liability multidistrict litigation (MDL) matters sanctioned the defendants for spoliation of evidence due to the defendants' failure to comply with their own document preservation holds: In re Actos (Pioglitazone) Products Liability Litigation, No. 6:11-md-2299 (W.D. La. Jan. 30, 2014), and In re Ethicon, Inc. Pelvic Repair Systems Product Liability Litigation, No. 2327 (S.D.W.V. Feb. 4, 2014). In both instances, the courts stopped short of issuing the ultimate spoliation sanction—default judgment. The court in Actos sanctioned the defendant by allowing all evidence of bad faith spoliation to go to the jury but deferred its ruling on further sanctions until all the evidence was heard at trial. The court in Ethicon noted that adverse inference instructions should be determined on a case-by-case basis, but in the case before it granted the plaintiffs' request for monetary sanctions and reasonable costs associated with filing their motion for sanctions.

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