As the era of electronic document discovery unfolds, the risks to parties in litigation continue to escalate. For the past few years, courts have been putting litigants to the task of preserving documents, when a party reasonably knows or should know that a dispute may lead to a lawsuit. When a party has reason to believe that it may have a dispute with someone, that party must place a litigation hold on relevant information, so that it may be preserved, discovered, and produced. This means that documents — including electronic ones — must not be destroyed, as they may be relevant. Failure to discharge this duty may result in sanctions, such as the imposition of costs or even in judgment against the non-complying party.
Costs can be substantial
Courts are placing a duty on litigating parties to produce copies of relevant electronic evidence and arrange for the segregation and safeguarding of any archival media such as backup tapes, as well as metadata, disk drives, and the like. In one example, the failure to discover and consistently produce data after the party had certified that it had produced all documents responsive to discovery requests from the opposing party contributed to an adverse verdict of $1.4 billion.
Another court recently imposed a drastic remedy in a case in which the defendant had been put on notice that certain categories of documents were relevant, and therefore had a duty to retain them. The court found that because the defendant had been unable to produce these documents, it had breached its duty to retain or preserve them. That court noted that the defendant did not have a comprehensive document retention policy in place during the litigation. Further, the defendant did not convey to its employees the necessity of preserving documents relating to the litigation and failed to take steps to ensure that employees read the electronic version of the policy and that they followed it. Accordingly, the court ordered that the defendant could not cross-examine the plain-tiff's financial expert, and the jury would be instructed of this limitation and the reason for its existence.
A call to action
What steps should an organization take now to minimize the risk of similar outcomes? It should develop an electronic document retention policy. Key elements should include:
- a clear written policy
- training of personnel to following the policy
- dissemination of the policy across the company
- periodic reminders, and
- a gatekeeper who can take steps to prevent the deleting or erasing of information in the event of a claim or lawsuit.
The courts have recognized a cause of action for interference with, or destruction of evidence, also known as spoliation of evidence. Such a claim typically arises where there is: pending or probable litigation involving the plaintiff; knowledge on the part of the defendant that litigation exists or is probable; willful destruction of evidence by a defendant to disrupt the plaintiff's case; disruption of plaintiff's case; and damages proximately caused by a defendant's acts.
Spoliation of evidence is quickly becoming one of the powerful tools used by trial attorneys in business and product liability cases. Even where the underlying case against a manufacturer or engineer is weak, the case will take on an entirely different flavor if spoliation of evidence can be shown.
Pete C. Elliott is vice-chairperson of the Trial Department at Benesch, Friedlander, Coplan & Aronoff LLP in Cleveland, and is the team leader of its Fluid Power Defense Group. Contact Elliott at [email protected]
