best practices in litigation holds and document preservation · best practices • litigation hold...

Best Practices

in Litigation

Holds and

Document

Preservation

Presented by 2017-18 AABANY Litigation Committee

Speakers

• Vince Chang

Partner, Wollmuth Maher & Deutsch

• Connie Montoya

Partner, Hinshaw & Culbertson

• Brian Song

Partner, BakerHostetler

• Lisa Chan

Associate, Ropes & Gray

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Disclaimers

• Presentation does not constitute:

– Legal advice

– Solicitation of any attorney-client relationship

• Views expressed are solely those of the

speakers, and do not necessarily

represent the views of the speakers’ firms

or their clients

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WHY is document preservation important?

• A proper and defensible litigation hold and preservation plan is the most critical part of the discovery process

• Comprehensive preservation saves money– Allows triage of discovery

– An ounce of prevention is worth a pound of cure

• Failure to properly preserve may distract from merits and risk a “side show”– Costs of litigating preservation issues could

force settlement

– No do-over in some cases

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Overview, cont.

• United States v. Volkswagen AG

(No. 16-20394)

• Zubulake v. UBS Warburg

(S.D.N.Y. 2003)

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Key Cases

WHAT is a litigation hold?

• Process of identifying, locating, and

preserving potentially discoverable

information

– Failure to properly preserve may lead to

sanctions and distracts from the merits

• Confer with opposing counsel as soon as

practicable


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WHEN is the duty to preserve

“triggered”?

• When litigation is “reasonably

anticipated,” the company must suspend

its routine document destruction policy

and put in place a litigation hold

• The duty to preserve may be “triggered”

BEFORE litigation commences

WHEN is the duty to preserve “triggered”?

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“triggered”?

• Credible threat: “Reasonable anticipation of litigation arises when an organization is on notice of a credible threat that it will become involved in litigation or anticipates taking action to initiate litigation” (Sedona Conference, 2007)

• Stedeford v. Wal-Mart, 2016 WL 3462132 (D. Nev. June 24, 2016): Express demand likely to trigger duty, vs. vague statement insufficient to forecast litigation


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“triggered”?

• Factors to consider whether litigation is “reasonably anticipated”

– Nature/specificity of the complaint/threat

– Who is making the claim

– Business relationship between accuser and accused

– Is the accuser litigious?

– Does the party who could assert the claim know she has a claim?

– Strength/scope/value of a potential claim

– Has company learned of similar claims?

– Experience in the industry

– Press/industry coverage of the issue


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“triggered”?

• Some examples of possible trigger events– Complaint filed/Subpoena served/Wells notice

– Pre-litigation demands, discussions, agreements

– Pre-litigation correspondence

– Creation of a list of potential opponents before filing

a lawsuit

– Notice to an insurance carrier

– Claims filed with an administrative agency

– Substantive discussions about potential lawsuit

– Retention of counsel

– Action against others similarly situated


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Counsel’s duties

• When a litigation hold is “triggered,” what

are counsel’s duties?

– Suspend routine document destruction

policies and institute a litigation hold

– Become aware of client’s current retention

policy and information “architecture”

– Reasonably monitor compliance

– Retain and preserve, and ultimately produce

some subset of preserved documents

Counsel’s duties

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Counsel’s duties

• ABA Model Rule 1.1: “A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.”– Comment 8: “To maintain the requisite

knowledge and skill, a lawyer should keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology, engage in continuing study and education and comply with all continuing legal education requirements to which the lawyer is subject.”

Counsel’s duties: competence

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WHO is subject to the litigation

hold?

• Work with in-house counsel to determine which employees are likely to have relevant information

• Don’t forget third parties (vendors) and offsite storage (of hard copy documents and ESI)

– Some third parties have contractual obligations to preserve

– Third parties may have their own automatic destruction policies

WHO should be involved?

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• A “good” litigation hold:– Is in writing

– Is timely

– Describes the matter at issue in language that is readily understood by the custodians, who are likely not lawyers

– Provides specific examples of the types of information at issue

– Identifies potential sources of information and asks custodians to identify others who may hold relevant information

– Suspends routine destruction policies

– Informs recipients of the legal obligation to preserve information

– Informs of potential consequences to the custodian and organization for noncompliance

– Requires an affirmative response

Elements of a litigation hold

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WHAT should be preserved?

WHERE should you look?

• Preservation is guided by reasonableness,

so consider benefit v. burden

– Nature of issues, value of claim

– Accessibility of information

– Probative value of information

– Costs to preserve and store

• Reminder: Let preservation be over-inclusive

• Reminder: This is where it helps to have

conferred with opposing counsel


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• Hard copy and ESI

• Removable media

• Files at home

• Mobile devices

• Cloud/network/shared drives

• Websites and social media

• Personal email/social media accounts?


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WHAT is the difference

between…

• Preserving in place

• Sequestration

• Collection

HOW should the documents and information be prepared and stored?

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HOW should the documents and

information be prepared and stored?

• DON’T just print copies of ESI

• DO work with IT department

– Consider imaging rather than copying

– Metadata concerns

• DO keep documents in native format with

metadata

• DO be aware of employees leaving and

joining the company

HOW should the documents and information be prepared and stored?

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HOW should the documents and

information be prepared and stored?

• Lift a hold when:

– Relevant statute of limitations expires

– Settlement and payment

– Judgment and no appeal within time for

appeal

• Document lifting the hold:

– Agreement with adversary

– Direction from court

– Internal notes re: reasons for lifting

Lifting a litigation hold

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HOW to ensure compliance?

• FRCP 37(e):– If electronically stored information that should have

been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery, the court:1. upon finding prejudice to another party from loss of the

information, may order measures no greater than necessary to cure the prejudice; or

2. only upon finding that the party acted with the intent to deprive another party of the information’s use in the litigation may:A. presume that the lost information was unfavorable to the party;

B. instruct the jury that it may or must presume the information was unfavorable to the party; or

C. dismiss the action or enter a default judgment.

Spoliation

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• Old Rule 37(e): “Absent 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.”

• Problems (per Advisory Committee Notes 2015):

– Different standards for sanctions and curative measures being applied in different federal circuits• Extreme sanctions based on finding of negligence alone

– Excessive effort and money spent on preservation

Spoliation: motivation for change

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• Loss of information:1. ESI “should have been preserved in the anticipation or

conduct of litigation”• Keim v. ADF Midatlantic, LLC, 2016 WL 7048835 (S.D. Fla.

Dec. 5, 2016)

2. ESI is “lost”• CAT3, LLC v. Black Lineage, Inc., 164 F. Supp.3d 488

(S.D.N.Y. 2016)

3. Loss was due to a party’s failure to take “reasonable steps to preserve”• Best Payphones, Inc. v. City of New York, 2016 WL 792396

(E.D.N.Y. Feb. 26, 2016)

• Feist v. Paxfire, Inc., 2016 WL 4540830 (S.D.N.Y. Aug. 29, 2016)

4. ESI cannot be “restored or replaced through additional discovery”

Spoliation analysis: step 1

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• A finding of “prejudice”

– Eshelman v. Puma Biotech., Inc., 2017 WL

2483800 (E.D.N.C. June 7, 2017) “lost”

• Court may order “measures no greater

than necessary to cure the prejudice”


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• “[I]ntent to deprive”

– Living Color Enter., Inc. v. New Era

Aquaculture, Ltd., 2016 WL 1105297 (S.D.

Fla. Mar. 22, 2016)

• Upon finding of intent, court may order

sanctions


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• Evidence preclusion

– CAT3, LLC v. Black Lineage, Inc., 164 F. Supp.3d 488 (S.D.N.Y. 2016)

• Adverse inference

– Permissive vs. mandatory

• Monetary fine

– GN Netcome, Inc. v. Plantronics, Inc., 2016 WL 3792833 (D. Del. July 12, 2016)

• Default judgment

– Omnigen Research v. Yongqiang Wang, 2017 WL 2260071 (D. Or. May 23, 2017)

Spoliation: sanctions

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• Work with IT and HR

• Document the process

• Expect that documentation may be produced or used to prepare a 30(b)(6) witness

• Documentation should include:

– How search was conducted

– Which files were searched

– Who was asked to search

– What custodians were told

– Extent of supervision


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WHO should ensure

compliance?

• Either in-house counsel or outside

counsel, or someone at their direction

– Depends on nature and complexity of case

– Written record of compliance, follow up,

questions and responses

– Periodic certifications

– Audit and sampling ability

– Notification alone, with no follow up, is NOT

sufficient!

WHO should ensure compliance?

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Counsel’s duties

• Model Rule 3.4(a):

– A lawyer shall not “unlawfully obstruct another’s access to evidence or unlawfully alter, destroy or conceal a document or other material having potential evidentiary value. A lawyer shall not counsel or assist another person to do such an act.”

• E.C. 7-27 of N.Y. Lawyer’s Code:

– “Because it interferes with the proper administration of justice, a lawyer should not suppress evidence that the lawyer or the client has a legal obligation to reveal or produce.”

Counsel’s ethical obligations

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• How do you deal with a client who

intentionally violates the litigation hold and

deletes his emails? What if the client was

only negligent?

• If the client has deleted his emails, is

there still a way to get those emails back?

• What do you do if the destroyed

documents were likely attorney-client

privileged or attorney work product?

Issues with compliance

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• Do you have a duty to disclose your

client’s spoliation to the court or opposing

counsel?

• What are the potential consequences to

the client of spoliation?

• What are the potential consequences to

you if your client engages in spoliation?

Issues with compliance

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Best practices

• Litigation hold should be in writing

• Identify custodians and data managers

most likely to have relevant information

• Provide guidance on how to preserve

• Review periodically and update as new

information comes to light

• Addresses features of relevant

information systems that may prevent

retention

Best practices

Best practices, cont.

• Document the process, not just the policy

• Monitor regularly and require affirmative

responses

• Provide for releasing or terminating the

hold when the matter is resolved

• Address departing employees and new

hires

• Discuss with opposing counsel and get

agreement, if possible

Best practices

Best practices, cont.

• Questions?

Conclusion

best practices in litigation holds and document preservation · best practices • litigation hold...

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