The True Cost of Under Preserving ESI


The arguments for the under preserving of ESI are well known and varied.  The most prevalent argument I hear for under preserving is “the more data, email, files etc. we keep, the higher the risk that it will be used against me in litigation”.

This is an argument that assumes that all ESI is somehow harmful and should exist for the shortest amount of time as possible. This is one of the main reasons companies adopt the 30/60 or 90 day retention policy for their employees email accounts.

There are two main problems with this type of thinking. First, for those companies that enforce a 30/60 or 90 day retention policy for their email accounts, in reality they are not lowering their risk of “bad” ESI being used against them. They are simply making it more expensive for them to find that ESI when directed by a discovery request.

Employees do not delete all emails, even when they are running up against a “Clean out your mailbox or it will stop working” message from IT. They simply move that email they want to retain out of their email box into a personal archive or PST. The ESI still exists.

The second problem with this 30/60 or 90 day retention policy is it ignores the fact that ESI can help you in litigation. Having access to all relevant data for a given action will help you in determining what your strategy should be in reacting to the litigation. This is called Early Case Assessment (ECA). Reviewing all relevant data for a litigation can tell you if you should settle the case because you can’t prevail or to fight the litigation because you can prove you position in the litigation.

Creating retention policies for your ESI based on business requirements rather than creating retention policies to flush “bad” ESI will insure ESI is available for business use as well as for review during early case assessment.

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Another Example of the Litigation Hold Being Ignored


Court Finds Failure to Implement Litigation Hold Gross Negligence but Declines to Order Adverse Inference where Plaintiffs Failed to Establish Relevance of the Information Destroyed

ACORN v. County of Nassau, 2009 WL 605859 (E.D.N.Y. Mar. 9, 2009)

In this case, plaintiffs moved for an adverse inference instruction alleging that Nassau County failed to timely implement a litigation hold which resulted in the destruction of potentially relevant documents and that it failed to adequately search for potentially responsive electronically stored information (“ESI”). Finding that plaintiffs did not sufficiently demonstrate that any lost materials would have been favorable to them, the court denied the motion. However, upon the court’s finding that the County’s failure to implement a timely litigation hold amounted to gross negligence, the court awarded plaintiffs their costs and attorney’s fees. Regarding the County’s failure to search for relevant ESI, the court declined to award sanctions in light of the County’s assertions that manual searches were undertaken, but ordered the County to confirm that their responses were complete.

During discovery, plaintiffs raised concerns regarding the sufficiency of the County’s responses. Specifically, plaintiffs noted that the County’s response to interrogatories indicated that “it did not instruct any of the departments named in the complaint to preserve documents until September 12, 2006” – almost a year and a half after the complaint was filed. Moreover, no action was taken regarding the location, protection, or restoration of ESI until December 22, 2006. Accordingly, plaintiffs filed a motion for sanctions, specifically an adverse inference instruction.

A party seeking an adverse inference instruction must establish three elements: “1) that the party having control over the evidence had an obligation to preserve it at the time it was destroyed, 2) that the records were destroyed with a ‘culpable state of mind’ and 3) that the destroyed evidence was ‘relevant’ to the party’s claim or defense such that a reasonable trier of fact could find that it would support that claim or defense.”

Addressing the duty to preserve, the court indicated that once the duty arises, “a litigant is expected, at the very least, to ‘suspend its routine document and retention/destruction and to put in place a litigation hold’” and to take affirmative action to prevent its systems from destroying routine information. (Citation omitted.) In this case, the duty to preserve arose when the complaint was filed in June 2005.

Despite the County’s numerous defenses, including that it was initially difficult to identify relevant individuals to place under hold and that quick action was taken upon denial of the its motion to dismiss, the court found that the County breached its duty to preserve. Addressing the County’s assertion that a verbal hold was placed initially, the court questioned why the analysis leading to the placement of that hold could not also have been used to prevent the destruction of documents in those departments. The court also observed that no evidence of follow up regarding the verbal hold was submitted.

Turning to the County’s state of mind, the court indicated that “in this circuit, this prong of spoliation can be ‘satisfied by a showing that evidence was knowingly…or recklessly destroyed.’” The court determined that “[p]laintiffs’ position is well-supported by case law holding that failure to implement a litigation hold at the outset of litigation amounts to gross negligence.” The court further noted counsel’s obligation to oversee compliance with such a hold once it is placed. Accordingly, the court found that the County’s failure to implement a litigation hold amounted to gross negligence.

Specifically addressing the failure to suspend the routine destruction of ESI, the court noted that despite the County’s failure to explicitly suspend the destruction, it did maintain an automatic back up system. The system, however, had “at least one gap” resulting in the loss of potentially relevant ESI. Finding no indication that the gap was in any way intentional, however, the court found that the County’s failure to preserve email was, at most, negligent.

Finally turning to relevance, the court indicated that when requesting an adverse instruction, there are two avenues to showing the relevance of allegedly spoliated information: “First it may be inferred if the spoliator is shown to have a sufficiently culpable state of mind” and “[t]he second way is for the moving party to submit ‘extrinsic evidence tending to demonstrate that the missing evidence would have been favorable to it.’” In this case, plaintiffs’ arguments regarding relevance were limited to a statement in a footnote and the submission of five emails purported to establish that other contemporaneous documents were likely destroyed. The court’s analysis of the emails, however, did not support the same conclusion and plaintiffs’ motion for an adverse inference was denied.

In light of its finding of gross negligence arising from the County’s failure to timely implement a litigation hold, though, the court ordered the County to pay plaintiffs’ costs for making the motion, including reasonable attorney’s fees.

The court then turned its discussion specifically to the County’s failure to timely search for potentially responsive ESI. The County admitted that it did not possess the resources to locate and access non-email ESI. Accordingly, plaintiffs argued that it was clear that the County never conducted a search for relevant ESI. However, the County asserted it had instructed “the primary custodians and about 15 other individuals” to search their electronic documents and produce what was responsive.

In determining sanctions, the court noted that “Plaintiffs had not provided any case law suggesting that a ‘manual’ search of electronic files does not satisfy a party’s discovery obligations.” The court also noted, however, that the County had provided differing information regarding the number of persons told to conduct a manual search. Thus, defendants were directed to review and supplement their prior discovery responses and, if they were determined complete, to provide plaintiffs a letter to that effect. No monetary or other sanctions were awarded.

The main questions this case reminds me of is:

  1. Do you have a tested litigation hold policy and procedure in place?
  2. Who in your organization is responsible for implementing it?

This case write up and the full brief can be found at eDiscoverylaw.com

The Know IT All’s Guide to eDiscovery


My new ebook, The Know IT All’s Guide to eDiscovery, is now available free from Mimosa Systems. You can find it here:

http://go.mimosasystems.com/pages/campaigns/na09-ebook-knowitallguide-mimosa-website/index.html?Campaign_Id=12233&Activity_Id=11607

These days IT folks needs to have a pretty good grasp of eDiscovery requirements–you may need to find specific files that contain certain words sent to or from a particular person and within a specified date range. Can you do that now?

It’s full of the information you need to successfully plan for eDiscovery in your company–written especially for the IT audience. Your meetings with legal will never be the same.

Upcoming eDiscovery Seminar


Rigorous legal standards have been established covering what electronic information can be discovered and the form in which it must be presented. Failure to comply can result in significant adverse court judgments, including sanctions, financial penalties, and allowing the opposition access to your information assets.

Please join MicroAge, Mimosa Systems and Snell & Wilmer L.L.P. on Wed March 18 in Phoenix AZ for an informative seminar to become familiar with the e-Discovery legal and technical standards and learn how to develop sound information management practices. Be proactive – and provide your organization with a competitive advantage!

Attend this seminar to learn:

  • The current regulations and industry requirements from industry experts
  • How to prepare your organization to comply with regulations and the best practices for electronic document retention
  • Strategies for corporate governance and enterprise risk management that optimize your cost structure

This seminar is intended for:

  • HR Professionals
  • General Counsels
  • Chief Information Officers
  • IT Directors

Speakers:

Bill Tolson
Director of Legal and
Regulatory Solutions
Mimosa Systems

Joshua Woodard
Partner
Snell & Wilmer L.L.P.

Mark McKeever
Chief Operating Officer
MicroAge

Knowing The Technology Assists in Discovery


But not all lawyers are technologically incompetent. Ralph Losey recently commented in his eDiscovery Team Blog (http://ralphlosey.wordpress.com/) “Some experts believe that attorney incompetence in e-discovery is so widespread that it presents a massive ethical crisis across the entire legal profession.”

In my travels around the country I have found this to be true…and I’m not just talking about corporate counsel. Many Plaintiff’s attorneys have the attitude that knowledge of eDiscovery strategies and even more, knowledge of a defendant’s technical infrastructure is not whats going to win a case.

Based on comments and records from many of the successful plaintiff’s lawyers I have dealt with, that is far from the truth. Many cases, including famous ones, have been won or lost on how eDiscovery requests are created and how defendants react to them.

A Plaintiff’s strategy should include not only collecting data that bolster their case but also constructing a discovery request that takes advantage of the defendant’s data infrastructure weak points. A defendent’s strategy should include putting processes, procedures and automation in place ahead of time to shore up their infrastructure records management inadiquicies.