Destroying potentially relevant documents or data, whether intentionally or carelessly, can lead to unnecessary headaches and even dire consequences in litigation. Courts have the power to sanction the offending party for such discovery violations, and in certain circumstances may even instruct the jury that it may infer that the destroyed evidence would have been harmful to the destroying party’s case. One step parties may take to avoid such an undesirable situation is to implement a litigation hold.
A litigation hold is a comprehensive undertaking by a party to identify and preserve documents and data, both in paper and electronic form, in that party’s possession, custody, or control. A typical litigation hold begins with a memorandum or other communication from the company’s management or attorneys instructing employees to preserve certain documents and information. Before implementing a litigation hold, a party must first consider the threshold question of whether its duty to preserve documents and information has been triggered.
Courts hold that the duty to preserve arises whenever litigation is “reasonably anticipated.” Thus, “[t]he 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.”1 When such a duty exists, a party is obligated to preserve what it knows (or reasonably should know), is relevant or may reasonably lead to the discovery of admissible evidence, or is reasonably likely to be requested during discovery or is the subject of a pending discovery request. This applies with respect to any party’s claims or defenses in the lawsuit or potential litigation.
A party’s litigation-hold efforts will depend in part on the nature of the case, but in most circumstances will necessarily involve information-technology personnel. Indeed, the proper preservation of electronic documents and data, including emails, is particularly important in the age of electronic discovery. One aspect of electronic discovery is metadata, which is often defined as “data about data.” In the discovery context, metadata includes otherwise-hidden information about a file, such as the date and time the file was first created, last accessed, and last modified, who created the file, and other details that may prove useful in reconstructing a party’s activities. Discovery rules generally do not require parties to preserve electronic data using one single method, however, so parties are free to take different approaches in meeting their preservation obligations. For example, a party may create mirror images of pertinent hard drives or external storage devices, identify specific relevant data for preservation, or take other steps to satisfy its duty to preserve potential evidence.
While the failure to institute a formal litigation hold does not automatically constitute gross negligence for sanctions purposes,2 developing and implementing a litigation hold will aid parties in avoiding allegations of spoliation and related consequences. A party may draw spoliation sanctions, including an adverse-inference jury instruction, when it party destroys relevant evidence with a “culpable state of mind.” The instruction informs the jury that it may infer that the offending party destroyed evidence that was harmful to that party’s case.3 Such an instruction often ends litigation because it is “too difficult a hurdle for the spoliator to overcome.” A party that negligently destroys evidence related to litigation pending in Illinois state court, for example, may also face a negligence claim based on the alleged spoliation.4
Two recent cases out of the U.S. District Court for the Northern District of Illinois illustrate the dangers of failing to safeguard evidence. In the first case, a business owner destroyed all but one box of cigarette-rolling papers after learning his company was being sued for trademark infringement.5 The owner claimed something was wrong with the other papers, and further stated he was “scared.” Notwithstanding the man’s supposed fright, the court imposed an adverse-inference jury instruction, attorneys’ fees, and other penalties.
In a second case, the defendant-company preserved some files from a hard drive, but then destroyed the drive itself.6 The company claimed the hard drive had crashed and was then disassembled. The company then used a computer program to copy some files from the drive before discarding it. The court discovered holes in the company’s argument, however, including the fact that certain files copied from the drive were created after the date when the drive purportedly crashed. The court, having concluded that the company destroyed relevant evidence and then lied to cover its tracks, imposed an adverse-inference jury instruction and barred the company from using any file from the hard drive as evidence at trial.
Although such adverse-inference instructions are an extreme sanction and not given lightly by the courts, the best course is to reduce the risk of spoliation by undertaking reasonable litigation-hold efforts. A party must keep in mind, however, that a litigation hold represents only one tool for facilitating compliance with evidence preservation obligations. Simply issuing a litigation hold memorandum does not automatically satisfy a party’s duty to preserve documents and data. The party must actually locate and preserve pertinent documents and data, and regularly follow up to ensure that any newly-created information is adequately safeguarded. Given the broad expanse of discoverable information in the possession of many companies and individuals today, involving attorneys and other experts in the litigation-hold process from the outset can help prevent costly missteps and otherwise ensure better compliance with discovery obligations.