Getting Ahead of the Document Game
Kristen M. Johnson, Esq.
Schwartz Semerdjian Ballard & Cauley LLP
Six months into litigation, a corporate employee scheduled to have his deposition taken in a couple of days remembers that he has an iPad at home which may contain relevant information that no attorney has reviewed. This type of scenario may not be uncommon for some clients. The scenario may be even more common for clients who do not have recent experience with discovery-intensive litigation or sophisticated document management protocols. When it comes to pre-trial discovery, it is important to think of both defensive and offensive strategies in today’s legal playing field. Technology and electronic discovery generate additional obstacles and considerations which have influenced the scope of this process. At the first indication that litigation may be around the corner, steps can and should be taken to ensure you and your clients are not side-swiped by a discovery request for documents. When meaningful sanctions are an apparent threat for failure to preserve relevant documentation to a lawsuit, getting ahead of this issue will make document preservation a less daunting task. This article explores the spoliation doctrine and recent trends in document preservation requirements in light of advances in everyday technology. The article then discusses specific ways to prepare for document preservation.
Spoliation is generally known as the failure to preserve evidence or produce evidence. It is legally defined 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.” Zubulake v. UBS Warburg (S.D.N.Y.) 220 F.R.D. 212, 217. It is often within the court’s discretion whether to impose sanctions for the destruction of potentially relevant documents. The decision to sanction a party for spoliation depends on several facts. These facts include whether the conduct at issue was intentional, the degree of prejudice in the opposing party, and the availability of alternative evidence. The penalties for spoliation vary widely among states and can include any of the following: (1) evidentiary sanctions; (2) adverse influence instructions to the jury; (3) dismissal of the case; and (4) an independent cause of action for either intentional or negligent spoliation. Various state and Federal acts, most notably the Sarbanes-Oxley, have expanded the reach of the spoliation doctrine from mere litigation matters to pending state and Federal investigations. Incarceration is also a potential penalty for spoliation, such as under the Sarbanes-Oxley. 18 U.S.C. 1519 (imposing fines and prison sentences of up to 20 years for anyone who knowingly alters, destroys, mutilates, conceals, covers up, falsifies or makes false entry in any record, document or tangible object with the intent to impeded, obstruct or influence the investigation or proper administration of any department or agency of the United States). Given the risks associated with spoliation, document preservation is a necessary component of the discovery process.
California’s broad discovery rules dictate the scope of document preservation for discovery purposes. Section 250 of the California Evidence Code provides that a
“Writing” means handwriting, typewriting, printing, photostating, photographing, photocopying, transmitting by electronic mail or facsimile, and every other means of recording upon any tangible thing, any form of communication or representation, including letters, words, pictures, sounds, or symbols, or combinations thereof, and any record thereby created, regardless of the manner in which the record has been stored.
The federal counterpart found in Federal Rule of Civil Procedure 34 follows a similar road scheme in defining the scope of production.
Given the breadth of discovery, clients will need a strategy for preserving relevant writings, drawings, images, or recordings as well as any other sort of data or data compilations stored in any medium from which information can be obtained directly or translated into a usable form. The fact that the volume of electronically stored information and the number of devices it is stored on has vastly multiplied only further complicates developing a discovery plan. The prevalence of mobile devices such as the iPad, iPhone, and Android-based tablets and other smart phones pose significant challenges for lawyers collecting data. With tablets and smart phones, it is important to consider how the device was used to develop a clear plan for the collection of process of the data on it. Smart devices are not just replacements for a PC or laptop. Rather, such devices have a plethora of other capabilities including GPS, cameras, text messaging and voice recording capabilities. These capabilities should shape both how attorneys advise clients to preserve potentially relevant documents and the information attorneys seek from opponents.
Queue the Preservation
It is clear that document preservation is required out the outset of litigation. With respect to pending litigation, the triggering events for a litigation hold are generally more straight-forward than in cases of potential litigation. Specifically, the duty to preserve evidence is triggered by court orders, summonses, and discovery. Once the lawsuit, discovery or some court order or agency demand has been served, a company must place a legal hold on all accessible information related to the lawsuit. Tulip Computers International B.V. v. Dell Computer Corporations (D. Del. 2002) 2002 WL 818061 (noting that “once Dell had knowledge of the case, it had an affirmative obligation to preserve potentially responsive documents”). Pre-litigation or anticipated litigation requires companies to make a judgment call for when the duty to preserve evidence attaches. Although case law has not revealed a discernible pattern regarding when to issue litigation holds for potential or anticipated litigation, some general guidelines are apparent. A leading California case favors placing the litigation hold when the action is contemplated, rather than merely possible. Willard v. Caterpillar (1995) 40 Cal.App.4th 892, 923 overruled on other grounds by Cedars-Sinai v. Sup. Ct. (1998) 18 Cal.4th 1. The following non-exhaustive list of scenarios should be considered triggering events for purposes of placing a litigation hold:
- When notice is provided to an insurance carrier
- When supervisors have substantive conversations about a potential lawsuit
- The date when an administrative agency claim is filed
- The date when counsel is hired on the issue
- There has been partial settlement of a potential claim
- Receipt of a letter from a party threatening legal action
Preparation for Document Based Discovery
The first step when faced with either pending or potential litigation is to issue a litigation hold letter to the client. The letter should provide enough information to permit the client’s employees to identify what documents they need to preserve and the steps they should take to begin preserving them. If electronic discovery or mobile devices are likely to come into play, clients should also be instructed to preserve information on these devises as well. It is also important to ensure that this letter makes its way to all of the employees who are likely to have documents relevant to the dispute. In some areas, failure to issue a litigation hold letter is considered gross negligence. Heng Chan v. Triple 8 Palace, Inc. (S.D.N.Y. Aug. 11, 2005) 2005 U.S. Dist. LEXIS 16520, at *7, No. 03-CIV-6048. At the very least, it is “one factor in the determination of whether discovery sanctions should issue.” Chin v. Port Auth. of N.Y. & N.J. (2d Cir. 2012) 685 F.3d 135, 162. Whether or not a litigation hold letter is required, if one is issued it will put the party and its counsel in a better position down the road if later accused of failing to preserve documents.
A lawyer’s obligation for ensuring document preservation does not end at the issuance of a litigation hold letter. Counsel is also required to oversee the process and seek to ensure that the client personnel comply with the hold. In Zubulake v. UBS Warburg, the court found both the lawyers and UBS responsible for permitting the destruction of key documents. The court stressed that it is not sufficient to issue a litigation hold letter and merely expect client employees to comply with the letter. Rather, counsel is required to take affirmative steps to monitor and ensure compliance.
When trying to ensure compliance with document preservation, it may be helpful to reissue the litigation hold letter so that it says fresh with client employees that are not dealing with the litigation on a daily basis. Additionally, it may make sense to identify key employees who are the most likely to have relevant information and speak with them directly.
Whatever the venue, a well-documented and systemized preservation protocol supplemented with direct contact with key client employees is a great way to get ahead of document preservation. Taking these steps will help to prevent spoliation in litigation.