March 2007 NEW RULES FOR PRODUCTION OF ELECTRONIC DATA IN LITIGATION: PART II As we discussed in our February 2007 Newsletter (which may be found on our website at www.lawatddp.com), the courts in recent years have been struggling to develop new rules for the preservation and production of electronic information and data relevant to the issues posed in litigation. The question regarding when a duty to preserve electronic data, such as information stored in a data base or email correspondence, arises has been the focus of discovery disputes in several federal and state courts. In other words, at what point does a duty arise to preserve electronic data. As most businesses routinely destroy data and files, including electronically stored data, in the ordinary course of business, the event that will trigger the obligation to preserve such data is important. A series of federal court decisions from the U.S. District Court for the Southern District of New York, known as the Zubulake decisions, has attracted significant attention on the issue of when the duty arises. In those decisions, the court held that the duty to preserve electronic data arises at the time “a party reasonably anticipates litigation.” The court further stated that, once litigation is anticipated, a party “must suspend its routine document retention/destruction policy and put in place a ‘litigation hold’ to ensure the preservation of relevant documents.” However, when a party “reasonably anticipates litigation” is not a clear guideline. The filing of a complaint, which commences the lawsuit, is certainly an event that will place any party named in the case on notice to preserve relevant information. However, by the time the complaint is filed, relevant information may have been destroyed. For that reason, other courts have held that the duty to preserve electronic information can arise before the filing of a complaint. Some courts have taken the position that a party is sufficiently on notice to preserve information upon receipt of a demand letter. Other courts have held that informal complaints, such as a complaint made to a supervisor by an employee, provide sufficient notice that the routine destruction of information must cease and a litigation hold must be installed on relevant documents and information. While the courts continue to define when a potential litigant should place a hold on possibly relevant information, it is prudent that reasonable steps be taken to preserve and protect possible relevant information, whether on paper or stored electronically, as soon as a party becomes aware that a current dispute could end up in court.
Historically, the party in litigation is responsible for identifying and preserving relevant information. However, the current trend is placing more responsibility on the parties’ legal counsel to ensure the preservation of information. In order to satisfy his or her obligations to preserve information, early in the litigation process counsel should undertake several actions to assist the client in establishing a litigation hold strategy. These actions should include a discussion with the client regarding the client’s data system and information retention and destruction policies; notifying employees and IT personnel that preservation efforts should be implemented; monitoring on a regular basis the preservation efforts; and communicating with the opposing parties regarding the information deemed relevant. In addition, when appropriate, counsel should consider taking control and possession of the information to provide additional assurances that the information will be preserved. Although the parameters for preservation of electronic information are not yet settled, a party’s good faith and diligent efforts to preserve relevant information, once a party is on notice a dispute may result in a lawsuit, will help protect the party from allegations of spoliation and possible sanctions later in the case.
This Newsletter is provided for information purposes only. Accordingly, the information is general in nature and is not intended to address a specific issue or problem. The reader should seek legal counsel of his or her choice for specific problems. The receipt of this Newsletter does not create an attorney-client relationship with the author or the law firm of Dean, Dunn & Phillips LLC.
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