How does one prevent common preservation mistakes, such as failing to flip the “off” switch, the spreadsheet switcheroo, or the fire-and-forget hold, the never-ending litigation hold, or dragooning employees into service as forensic technicians? First, for those who haven’t drank the eDiscovery Kool Aid, a brief primer on the duty to preserve (veterans, feel free to skip to the bullet points!).
In our legal system, once a person or business reasonably anticipate litigation, they have a duty to preserve information relevant to the reasonably anticipated litigation. This includes incriminating (and privileged) evidence that is harmful to the preserving party, as well as information that might be helpful. The preservation duty, to some extent, runs contrary to human nature and puts the litigant in the awkward position of being charged to take care to maintain information and data both harmful and helpful to the litigants cause. This has been the common law for hundreds of years, and spoliation (the destruction of evidence that a party had a duty to preserve) has been an issue all the way back to Dickensian England. See Armory v. Delamirie, 93 Eng. Rep. 664 (K.B. 1722).
This is largely due to human nature- requiring a person to keep something harmful to them runs contrary to their natural desire to prevent incriminating electronic evidence from seeing the light of day. Spoliation is common, and likely was just as common in the pen-and-ink days. Due to the ability to conduct forensic analysis on hard drives and other sources of electronically stored information (as well as the proliferation of electronically stored information), it is now easier to detect and prove spoliation.
This common law duty thereby creates an unusual situation where inside and outside counsel bear responsibility to educate clients on the duty to preserve, and then shepherd clients (who may not want to preserve incriminating data) through the preservation process. This process runs the gamut from deciding when the duty to preserve triggers, to ensuring that data is actually preserved. Given the exponential increase in data, and the diffuse and disorganized nature of most network infrastructures, this is no easy feat. The stakes are high in preservation, as the failure to preserve data once this duty is triggered has serious consequences. Spoliation sanctions, those levied based upon the destruction of evidence, can easily result in a party losing litigation by default. This can, and frequently does, happen simply by letting critical data slip away by operation of automated processes after the preservation duty has triggered.
Pillay v. Millard Refrigerated Services, Inc. is a recent example involving automatic deletion of big data leading to sanctions. The plaintiff, Pillay, alleged that Millard fired an employee named Ramirez because Millard believed Ramirez to be disabled, and then that Pillay was fired for complaining to Millard about Ramirez’s alleged wrongful termination.
Millard used a labor management system, called “LMS[,]” to track its employees’ productivity and performance using performance analytics. In this case, Millard relied upon LMS data to justify the termination of Ramirez and Pillay. Pillay argued that Millard regularly manipulated the LMS data, and propounded discovery for the underlying LMS data to attempt to prove discrimination and manipulation of the LMS data itself- and Pillay then learned that the LMS data was gone! How did this happen?
Pillay was fired in August of 2008. In December of 2008, Pillay’s attorney advised Millard “to preserve evidence and documents” including electronic communications or data related to his clients’ employment, specifically citing “[a]ll communications, documents, emails, or anything relating to Mr. Ramirez’s productivity and work evaluations.” In of July 2010, Millard notified Pillay that the data used to calculate Ramirez’s LMS numbers had been deleted. Millard explained that “the discrete data [that formulates LMS numbers] is automatically deleted after one year” to keep its system operating at an optimal level. Apparently, no one at Millard flipped the “off” switch for the automated purge process, and no one bothered to archive the salient data for Ramirez and Pillay.
Pillay successfully moved for a spoliation inference based on the charge that Millard had destroyed critical evidence- a classic case of a company facing consequences from failing to flip the “off” switch in big data automated purge processes. This is but one of many oft-seen preservation blunders. Below is a listing of the top five common preservation pitfalls, and how you can avoid them.
- Failure to Flip the Off Switch: Most companies have some sort of automatic deletion or overwrite policies or protocols for varying types of data- the alternative would be to drown in data by maintaining everything forever. Things like Internet Protocol (IP) logs, which detail access to computer systems, and big data troves (such as the LMS system in Pillay) are routinely overwritten after set retention periods as a matter of course. The same is true with emails, and electronic files that have no business or compliance value. This deletion is generally perfectly fine, and protected under certain Federal and state law- for example, Federal Rule of Civil Procedure 37(e) provides that “[a]bsent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system.” But these protections evaporate once the duty to preserve triggers- the common law duty to preserve trumps, for example, 37(e)’s protections.
How do you prevent automatic deletion blunders? Loop in information technology personnel in the preservation process, and take the time to understand the various sources of electronically stored information reside, and what needs to be done to flip the “off” switch on any automatic deletion protocols for relevant information. Even if you choose not to flip the off switch, you can typically export and archive the salient data- in the Pillay case, Millard could have at least archived Ramirez’s LMS data and kept the automatic deletion policy in place. This holds true even beyond the “off” switch example- for example, re-issuing laptops from former employees to new employees and wiping the old information (which is the norm in many companies) can also lead to sanctions. “Once a ‘litigation hold’ has been established, a party cannot continue a routine procedure that effectively ensures that potentially relevant and readily available information is no longer ‘reasonably accessible.’” Cache La Poudre Feeds, LLC v. Land O’Lakes Farmland Feed, LLC, 244 F.R.D. 614, 629 (D. Colo. 2007), citing In re Cheyenne Software, Inc., 1997 U.S. Dist. LEXIS 2414 (E.D.N.Y. 1997) (awarding monetary sanctions based on defendants’ destruction of documents stored on computer hard drives; noted that information on those hard drives could have been copied to other relatively inexpensive storage media). Do not rely on information technology staff to understand what is or is not relevant to a claim- that is a legal judgment that should be left to lawyers. Conversely, do not rely on inside counsel or outside counsel to intuitively know the in’s and out’s of a corporate information system- to understand an IT-infrastructure, you must speak with IT personnel. Perfecting preservation requires open and frequent communication between IT personnel and counsel.
- The Spreadsheet Switcheroo: Typically, companies send out litigation hold notices to individual custodians and IT personnel letting them know to preserve information relevant to a claim, and containing specific instructions particular to a claim. Tracking these litigation holds can be a challenge for large companies and in large litigations. When a company has dozen or more litigations, each with potentially dozens of custodians and sources of information, keeping track of whose information was preserved, who received a hold, and where preserved information resides presents opportunities for error. The same can be true with a single large litigation- for example, it is not uncommon to have tens of thousands of custodians in a Fair Labor Standards Act class action, and to have dozens of non-parties in control of data salient to claims (e.g., payroll companies, cloud computing services, reimbursement vendors). In particular, when Excel spreadsheets are used to track litigation holds by manual data input, mistakes frequently happen. Through human error spoliation can occur because the wrong data is entered into the wrong column or row (i.e., “yes” is entered on the wrong custodian for a field “sent litigation hold[,]” and as a result the custodian is never sent a hold and the data is lost). The solution? Buy or build a scalable litigation hold tracking solution that automates as much of the process as possible- from calendaring follow-ups to custodians who do not respond to holds, to keeping track of who received what hold notice when. The marketplace is full of providers that offer low-cost off-the-shelf litigation hold tracking solutions, as well as companies that are happy to design in-house solutions for hold tracking. This should be done pre-litigation, as triage is typically not the best time to coolly vet various products and options for use on a company-wide basis.
- The Never-Ending Hold: The duty to preserve does not extend into perpetuity. It ends once the reasonable anticipation of litigation ends, which can occur after settlement, at the conclusion of the litigation and the time period to file a notice of appeal has tolled, or at the end of a statute of limitations for a claim. Yet, more often than not, litigation hold notices are forgotten about and never lifted even after the duty to preserve has ended. This is wasteful as often this litigation data has no business or compliance value. The solution is simple- make sure your litigation hold process has a transferrable and systematic process whereby holds are lifted. This process should not be reliant on an individual, if possible, as individuals tend to come and go from employment due to typical attrition or change of counsel- and typically litigation hold tracking solutions include features to help ensure holds are eventually lifted.
- The Fire-and-Forget: Many litigation holds are completely ignored by the recipients. Too often, counsel see sending the litigation hold as a “fire-and-forget” task that is necessary to get off a checklist, forgetting the ultimate point of a litigation hold- to ensure the recipients actually preserve the information in a timely manner. Simply sending the letter often does not accomplish this task- “[i]t is not sufficient . . . for a company merely to tell employees to ‘save relevant documents.’ . . . this sort of token effort will hardly ever suffice.” Samsung Electronics Co., Ltd. v. Rambus, Inc., 439 F.Supp.2d 524, 565 (E.D. Va. 2006). See also Zubulake v. UBS Warburg LLC, 2004 WL 1620866 at *8 (S.D.N.Y. 2004) (“it is not sufficient to notify all employees of a legal hold and expect that the party will then retain and produce all relevant information. Counsel must take affirmative steps to monitor compliance so that all sources of discoverable information are identified and searched.”). How to make sure holds are complied with? Timely, routine follow ups and contact with key personnel to ensure that they have read and will comply with the hold- as well as dealing directly with IT personnel to ensure that necessary information is actually collected. One way to ensure preservation is to ask IT personnel to send or preserve data in a specific location- and then checking to ensure the data is safely within that location.
- Deputizing Custodians as IT Personnel: Frequently, individual custodians are relied upon to collect and preserve their own electronically stored information. Employees are thus deputized as IT personnel and lawyers, and charged with manually selecting and harvesting data salient to a claim. This practice has been criticized both as a “fox guarding the henhouse” practice whereby custodial self-bias would lead to withholding of incriminating information, and as requiring rank-and-file employees to jump in over their heads as to the technical nitty-gritty of collection. In many cases, employees would not even have access to the tools that system administrators would have for preservation. For example, on a Microsoft Exchange Server, typically only an administrator can flag an account on “litigation hold” and prevent the deletion of email, which could also preserve emails that were deleted earlier on by the custodian (as they would reside in a “soft delete” area for approximately two weeks, unbeknownst to the custodian). Finally, custodial self-collection can be distracting and detrimental to a business- if you do not know what you are doing, it can be very time consuming and frustrating to try to collect and preserve electronically stored information. It is not uncommon for custodians who are deputized as IT personnel for self-collection to spend a day or days engaging in collection tasks that would take an IT professional an hour or less. While custodial self-collection is not forbidden or prohibited by law in most circumstances, it is typically not the best practice for the above reasons. The solution is simply to loop in information technology personnel to accomplish collection, and to use information technology employees or consultants to collect data. For small companies, many forensic companies offer relatively low cost “plug-and-collect” devices where even technologically unsophisticated custodians can simply plug in a device and allow the device to automatically conduct a forensically sound data collection.