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Holding onto the Past: Litigation Hold Basics

We hear “out with the old, in with the new” frequently this time of year.  However, if you are a part of a company involved in litigation, you will need to resist the urge to purge.  All companies involved in litigation or aware of a reasonable likelihood of civil litigation or law enforcement action must comply with a litigation hold.

What is a “litigation hold?”

A litigation hold is the preservation of documents, regardless of a company’s standard document maintenance and destruction practices.  Very simply, companies must suspend routine retention policies until litigation is resolved.  To avoid spoliation of evidence, documents relevant to litigation should not be destroyed even if they would normally be discarded in the usual course of business.

When does the litigation hold take effect? 

The mere possibility of a lawsuit does not trigger a litigation hold.  The duty to preserve evidence arises when a company becomes aware there is a reasonable likelihood of civil litigation or law enforcement action.  At the very latest, a duty to adhere to a litigation hold arises when a lawsuit is filed.  However, in many circumstances the duty may arise before litigation is commenced if litigation is reasonably foreseeable.  Courts have described this date as an objective standard, determined by “whether a reasonable party in the same factual circumstances would have reasonably foreseen litigation.”  See Apple Inc. v. Samsung Elecs. Co. (N.D. Cal. 2012) 888 F. Supp. 2d 976, 990, Zubulake v. UBS Warburg LLC (S.D.N.Y. 2003) 220 F.R.D. 212, 216.

What is the scope of a litigation hold? 

A litigation hold does not require a company to keep every piece of paper, email or back-up tape.  However, companies must preserve documents and tangible things it knows, or should know, are relevant in the action.  Such documents include, but are not limited to, unique evidence that may be useful to an adversary, documents reasonably calculated to lead to the discovery of admissible evidence and documents reasonably likely to be requested during discovery.  This duty extends to employees who are “likely to have relevant information –the ‘key players’ in a case.”  Zubulake, supra, at 218.

How should a litigation hold be implemented?

 A company is responsible for making sure its employees preserve evidence, including emails, voicemails, text messages and documents.  Keep in mind, communications between employees will be discoverable, so it is preferable to have a litigation communicated by counsel.  It is also good practice to avoid including any confidential information in communications regarding the litigation hold.

What are the repercussions for failing to preserve evidence? 

The destruction of, alteration of or failure to preserve evidence is referred to as spoliation.  Courts have the ability to impose a variety of sanctions against a party for spoliation of evidence, regardless of whether the spoliation was intentional or negligent.  Spoliation of evidence may result in monetary sanctions, issue sanctions, evidentiary sanctions or, in the case of egregious intentional spoliation, even terminating sanctions.  Therefore, if your company is involved in litigation or litigation is reasonably foreseeable, it is important to take all necessary steps to preserve relevant documents and tangible things and to ensure the litigation hold remains in effect until litigation is resolved.

ABOUT THE AUTHOR

Kate Besch is a graduate of the University of Iowa College of Law. She specializes in general liability defense and business litigation. Contact Kate at 858.263.4115 or kbesch@tysonmendes.com.

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