This is Part 2 in a multi-part blog discussing various core requirements that can serve as the road map to allow a lawyer to fulfill his/her duty of technological competence. [Click here to read Part 1]

2.  Implement Appropriate Preservation Procedures

ESI spoliation remains a real issue that lawyers must confront.  The best way to prevent spoliation is to take deliberate and prompt preservation steps.

So, the first question to ask yourself is has my duty to preserve data arisen?  While different jurisdictions have different rules, the federal standard, and the one New York subscribes to, was announced in Zubulake v. UBS Warburg LLC (“Zubulake IV”), 220 F.R.D. 212, 218 (S.D.N.Y. 2003).  That case stands for the proposition that one’s duty to preserve potentially relevant information begins “once a party reasonably anticipates litigation.”

Assuming your duty to preserve has been triggered, now what?

A lawyer must issue an effective litigation hold notice.  I have written previously on how to draft an effective hold [See Litigation Hold Notices Should Not Cloak the Recipient with Discretion Over What Documents to Preserve, Practical Tips For an Effective Litigation Hold Notice, and Your Litigation Hold Must Be Generally Broad and Specifically Tailored] and refer you to those posts, but note it is critically important that the Hold is clear, comprehensive and provides a resource for questions.  Minimally it should provide custodians with detailed instructions on what they are expected to do upon receipt of the Hold; and ensure that the Hold sets forth the specifics of what information must be preserved, thus limiting any discretion vested in the recipients of the Hold.  Additionally, prior to issuance, an attorney must identify which custodians/entities are receiving the Hold; what third-parties over whom the client has practical control, if any, should receive the Hold; and what procedures will you implement to audit compliance with the Hold.

Have questions?  Please contact me at kcole@farrellfritz.com.

 

I recently wrote about the importance of styling one’s litigation hold in a broad, but sufficiently specific way (See, “Your Litigation Hold Must be Generally Broad and Specifically Tailored”).  Some of you may be thinking, well, that’s all fine and good but what is a litigation hold? Why and when do I need one? And what should a litigation hold say?  If you have any of those questions, then continue reading.

Imagine your client was served with a complaint (or your client received a cease and desist letter or you learn it is reasonably foreseeable your client will be sued).*  What now?

Immediately, alarm bells should sound in your mind signaling you to take steps to preserve information relevant or potentially relevant to the lawsuit (or threatened lawsuit).    To this end, you want to draft and issue a written litigation hold notice (“Hold”).   While an oral directive may convey all the necessary information to the proper people, it is far better practice to paper your instructions.  Not only will a written document allow you to recall (perhaps years later) what information was subject to the Hold and who received the Hold, but it can also serve as a protective mechanism should information identified in the Hold as relevant slip through the cracks and be inadvertently deleted.** Thus, a critical function of the Hold is to serve as the means for proper compliance with one’s document preservation requirements and as the tool to avoid inadvertent destruction of evidence and potential sanctions.

It is helpful to envision the Hold as the catalyst that begins the process by which the client formally notifies key individuals that they must preserve relevant information.  Identifying who should receive the Hold can be a task in and of itself.  If, for example, your client is an individual sued in his/her individual capacity, the task is straightforward.  If, however, your client is a major financial institution with offices throughout the nation, the task of identifying the relevant custodians*** can be daunting.

Once you’ve identified the proper custodians (and who the custodians are for this purpose should be revisited throughout the litigation and supplemented as information is learned) and the sources of information they each may have, you must draft your Hold.   A well-drafted Hold need not be lengthy nor should it be replete with legal-ese.  In fact, the shorter, and more simple the better.  You do not want your audience bogged down in trying to figure out what exactly is being asked of them.  Likewise, you do not want to send a multi-page document if you can streamline the message into two pages or less.  That said, every Hold should contain at least the following information:

  1. Introduction: Explain why a Hold is being implemented so that the recipients understand the importance of compliance.  Explaining the general purpose of the Hold may also help the recipients identify relevant information.  The introduction does not have to detail the lawsuit /investigation /subpoena with granularity.  Rather, a general description is all that is necessary.  For example:

[CLIENT] recently received a subpoena requesting documents relevant to an ongoing investigation by the United States Attorney’s Office for the District of Columbia (hereinafter the “Investigation”). We intend to respond to the subpoena in due course, and we are asking for your help.  Due to this Investigation, [CLIENT] must take all reasonable steps to preserve records related to the 8 topics belowWe are in the process of identifying all paper and electronic documents that may be relevant to the matter . . . You have been identified as a person who has had involvement with the [deal], or may possess relevant documents or communications.  We request your attention and assistance in preserving this relevant information for our attorney’s use as appropriate. The records must be preserved in accordance with this Notice, and must be preserved until released by a subsequent written Release Notice.

  1. What is to be Preserved: The Hold becomes a checklist for the specific records you seek to preserve.  It is important that you include not only a broad description of the types of documents you seek, but also identify documents or locations with specificity to the greatest extent possible.  As mentioned in my August 16th post, if you seek to preserve web browsing/search histories you must specify that in your hold. It is likely not sufficient to simply say preserve all ESI. You should also include a temporal limitation for the information you seek to preserve and a description of the relevant categories of information.  In addition to delivering the Hold to key employees who have an involvement in or awareness about the issues in the lawsuit (or threatened suit), it is advisable to send the Hold to relevant personnel in IT and paper records departments who control the ability to suspend normal deletion policies.

Effective immediately, it is critical that none of our employees delete, over-write, or otherwise alter or destroy any documents (print or electronic), records, and data, including without limitation,  [INSERT SPECIFIC DOCUMENTS] . . ., including any drafts of such documents, records, and data, from any device.  Devices that may contain information subject to this preservation include laptops, PCs, handheld devices (such as a BlackBerry or iPhone), and other hardware provided to employees of [CLIENT], including USB drives, shared drives, home computers and/or personal email accounts (if used to store work-related documents), departmental, regional, or local email services, or any other local or centralized storage media which may be accessed by members of your department dated from [INSERT DATE RANGE], and relating in any way to:

  1. Mandatory Preservation: Emphasize that preservation is mandatory, and that failure to comply may compromise the company’s ability to prosecute its claims or defend itself in the lawsuit.

Preservation is mandatory.  Electronically stored information is an important and potentially irreplaceable source of discovery in this matter.  Failure to retain these documents or communications, whether intentionally or accidentally or to ignore this Notice may result in the Company’s inability to prosecute its claims or defend itself in this matter.  Failure to do so could also result in financial and legal penalties against the Company that could negatively affect the outcome of this legal matter. You must take every reasonable step to preserve this information until further written notice.  

I also tend to include the following language in the introduction to ensure we capture the recipient’s attention:

Failure to read and comply fully with this Notice could subject you and [CLIENT] to civil and criminal penalties and could result in disciplinary action

  1. Confidentiality: Stress the confidential nature of the lawsuit and the company’s expectation that employees not discuss the matter with one another or others (i.e., spouses, friends) unless doing so is approved by counsel.  The purpose of limiting one’s ability to discuss the matter is to minimize discoverable communications that could impact the outcome of the lawsuit.
  2. Further Distribution: The Hold should request the names of any additional individuals that the recipients believe may have relevant information and advise recipient(s) not distribute further on their own.

Further Distribution of This NoticeDO NOT DISTRIBUTE THIS NOTICE DIRECTLY. A distribution list is attached to this Notice.  Please notify [NAME] if you believe the Hold should be distributed further.  In addition, please contact [NAME] if you are aware of any relevant records that may be in the possession of someone who previously held your position.

  1. Duration of the Litigation Hold: The Hold should advise that individuals are required to preserve materials until they are notified in writing that the Hold has been released.
  2. Prompt for Questions: The Hold should provide the name and contact information for company counsel or another person designated to provide guidance and answer questions.
  3. Receipt and Acknowledgment: It is advisable to require recipients to respond in writing that they have read the Hold and will comply with its requirements.  I tend to embed both a read receipt in the Hold and an affirmative obligation to respond to me (or in-house counsel) in writing.  Responses can be sent by individual emails, or by embedding a voting button.  It is also wise to track each response and follow up as necessary with non-responsive recipients. 

In sum, a Hold should include at least the above essential information and should be drafted in a clear and comprehensive fashion such that recipients understand what is being asked of them.   The Hold will serve as the means for proper compliance with the client’s document preservation requirements.

* Different jurisdictions have different rules as to when one’s obligation to preserve information arises.  The most common standard however, and the one embraced in New York state and federal courts alike, is “Once a party reasonably anticipates litigation…”

** Because the inadvertent destruction of relevant evidence can (depending on the circumstances) lead to judicial sanctions or a judgment against the client, a Hold committed to writing will empower you to defend yourself and the client should inadvertent destruction occur.   

*** For purposes of this blog, “Custodians” is used to refer to the individuals / sources (i.e., shared drives, file cabinets) most likely to have potentially relevant information (i.e., related to the claims or defense in the lawsuit).

In Eshelman v. Puma Biotechnology, Inc., No. 7:16-CV-18-D (E.D.N.C. June 7, 2017), Magistrate Judge Robert B. Jones, Jr., denied Plaintiff Eshelman’s motion seeking a jury instruction in response to Puma Biotechnology Inc.’s (“Puma”) failure to preserve (or identify in its litigation hold notice the need to preserve) internet web browser and search histories.  In denying Eshelman’s request, Judge Jones concluded that Eshelman was “not entitled to [either] a sanction pursuant to Rule 37(e)(1)” or “an adverse jury instruction as a sanction pursuant to Rule 37(e)(2).”

Case Background & Holding

This lawsuit involved alleged defamatory statements made by Puma in an investment presentation.  Eshelman brought a lawsuit and soon thereafter Puma issued a Litigation Hold Notice (“Notice”).  That Notice defined “documents” broadly to include electronically-stored information (“ESI”) but failed to reference specifically internet browser / search/or viewing histories.   The Notice did, however, advise Puma employees to err on the side of preservation if uncertain as to whether they were in possession of potentially responsive documents.   In May 2016, a few months after the allegedly defamatory investor presentation, Eshelman’s counsel sent a letter to Puma’s counsel requesting that Puma preserve, as relevant to this dispute, “web browser histories” of individuals involved in the drafting of the January 7, 2016 presentation.  Eshelman renewed this same request a few weeks later in his first demand for documents.

Puma’s counsel responded to the discovery demand that due to the internet browser the Company uses (i.e., Google Chrome®)  web browser history is automatically deleted after 90 days.  And so, the web browser history sought in the document demand was no longer available, nor did it exist at the time of the May preservation letter issued by Eshelman’s counsel.  Upon receipt of this response, Eshelman moved for “a jury instruction to mitigate the harm caused by the defendant’s failure to preserve electronically stored information.”

Judge Jones denied Eshelman’s motion concluding that “the plaintiff has not established one of the threshold elements of Rule 37(e)—namely, that the lost ESI ‘cannot be restored or replaced through additional discovery. . . .’”

Because Judge Jones believed “other avenues of discovery are likely to reveal information about the searches performed in advance of the investor presentation” the Judge concluded Eshelman was “not entitled to a sanction pursuant to Rule 37(e)(1).” Specifically, the Judge opined that Eshelman could seek information about the internet searches performed by the individuals who prepared the investor presentation through deposition testimony.

Moreover, Judge Jones further determined that a sanction was not warranted under 37(e)(1) or (2) because: (1) “the plaintiff has failed to make a sufficient showing of prejudice to support relief under Rule 37(e)(1)” and (2) Eshelman “failed to show that the defendant acted with the requisite intent to deprive him of the ESI in order to support the imposition of an adverse jury instruction under Rule 37(e)(2),” noting that “[a]t most, the circumstances indicate the ESI was lost due to the defendant’s negligence, but do not suggest the presence of intentional conduct. Negligence, however, will not support an award of sanctions under Rule 37(e)(2).”

Conclusion

This case serves as an important reminder that one’s legal hold notice must be drafted in a robust way (i.e., calling for all documents) that is also sufficiently granular such that it specifies exactly the types/categories of documents sought to be preserved.  Drafting an effective hold notice is an art that requires great thought.  Form/template notices –while a good starting point – should not be relied upon blindly.  Stay tuned for a coming blog on drafting effective hold notices.