Legal Hold and Data Preservation Best Practices

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The basis for Legal Hold and Data Preservation Best Practices was the exceptional work by the group of presenters at the 2012 Conference on Preservation Excellence, held in Portland, Oregon in late September. The conference focused solely on the area of data preservation best practices. The presenters wanted to address a recurring issue heard at e-discovery events that found only limited attention being given to data preservation; often followed by a speaker blurting out “We could spend an entire day on preservation.” Well, we didn’t spend an entire day — we spent two.

The level of dialogue and depth of discussion on litigation holds and data preservation at the conference was unprecedented. Following the event, at which appeared many nationally recognized experts in electronic discovery and in-house practitioners from around the U.S., the consensus was that the event succeeded in demonstrating that preservation is a unique field of focus.

This Guide on “best practices” continues the goal of helping lead legal professionals on the path to excellence in legal holds and data preservation. Many organizations are working to instill sound data preservation processes and creating awareness internally among various groups of the importance of meeting the needs of the courts. However, few would rate themselves as achieving a level of excellence.

This Guide coalesces the discussions of some of the best minds in electronic discovery to discuss the Aristotelian Ideal of what litigation holds and data preservation can be, not necessarily what it is today. The real opportunity is to take the concepts and apply them in your workplace to achieve the following:

 Be better and more confident at what you do.
 Reduce your risk.
 Lower your costs.
 Strengthen your leverage when litigating.
 Make your time more productive.
 Make your co-workers’ time more productive.
 Annoy the courts less.

You are an integral part in advancing the practice of data preservation. The knowledge you gain by reading this Guide is a concrete step in advancing the level of expertise in our community. Together we can improve how organizations of all shapes, sizes and industries approach the task of responding to a preservation obligation while building a valuable knowledge base for all to do better.

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Legal Hold and Data Preservation Best Practices

  1. 1. DISCLAIMERThis Signature Paper is provided for general information and educational purposes only. The contents should notbe construed as legal advice or opinion. While every effort has been made to be accurate, the contents should notbe relied upon in any specific factual situation. This Signature Paper is not intended to provide legal advice or tocover all laws or regulations that may be applicable to a specific factual situation. If you have matters to beresolved or for which legal advice may be indicated, you are encouraged to contact a lawyer authorized to practicelaw in your jurisdiction.ABOUT ZAPPROVED INC.Zapproved is a Software-as-a-Service (SaaS) provider based in Portland, Ore., with a platform that addsaccountability to business communications. Zapproved’s first products focus on targeted compliance workflowsthat reduce liability risk in legal and regulatory compliance. The company is expanding its product line to create asuite of applications that address additional compliance issues and workplace collaboration.© 2012 by Zapproved Inc. All rights reserved.Zapproved Inc.19075 NW Tanasbourne, Suite 120, Hillsboro, OR 97124 USATel: (888) 376-0666 Email: info@legalholdpro.com Website: www.legalholdpro.com
  2. 2. Legal Hold and Data Preservation Best Practices |1© 2012 by Zapproved Inc. All rights reserved.Legal Hold and Data PreservationBest PracticesYour Guide for Navigating the Complexities ofPreservation in the Digital AgeTable of ContentsIntroduction: Preservation Emerges as a Unique Field of Legal Expertise ........................... 21. Research Studies Reveal the Current Challenges and Costs of Preservation .................. 32. Creating the Foundation for Preservation Involves Information Governance,Training and Corporate Culture....................................................................................... 63. Recognizing the Triggering Event...................................................................................... 94. Determining the Scope of Preservation.......................................................................... 125. Implementing and Managing the Legal Hold.................................................................. 146. Tactics to Reduce the Cost of Preservation .................................................................... 167. Mistakes Happen – What To Do When Preservation Problems Arise ............................ 188. Releasing the Legal Hold ................................................................................................. 219. Looking Ahead At the Impact of Evolving Technology and Potential Rules Changes..... 2310. A Judicial Perspective on Data Preservation Today....................................................... 25Contributors......................................................................................................................... 28Appendix A: Selected Cases Related to Data Preservation, Legal Holds and Spoliation..... 30Appendix B: Other Reference Materials.............................................................................. 35Appendix C: Reference Materials Related to Preservation and Proportionality................. 36
  3. 3. 2| Legal Hold and Data Preservation Best Practices© 2012 by Zapproved Inc. All rights reserved.IntroductionPreservation Emerges As Unique Field of Legal ExpertiseThe basis for Legal Hold and DataPreservation Best Practices was theexceptional work by the group ofpresenters at the 2012 Conference onPreservation Excellence, held inPortland, Oregon in late September. Theconference focused solely on the areaof data preservation best practices. Thepresenters wanted to address arecurring issue heard at e-discoveryevents that found only limited attentionbeing given to data preservation; oftenfollowed by a speaker blurting out “Wecould spend an entire day on preservation.” Well, we didn’t spend an entire day — we spent two.The level of dialogue and depth of discussion on litigation holds and data preservation at the conferencewas unprecedented. Following the event, at which appeared many nationally recognized experts inelectronic discovery and in-house practitioners from around the U.S., the consensus was that the eventsucceeded in demonstrating that preservation is a unique field of focus.This Guide on “best practices” continues the goal of helping lead legal professionals on the path toexcellence in legal holds and data preservation. Many organizations are working to instill sound datapreservation processes and creating awareness internally among various groups of the importance ofmeeting the needs of the courts. However, few would rate themselves as achieving a level of excellence.This Guide coalesces the discussions of some of the best minds in electronic discovery to discuss theAristotelian Ideal of what litigation holds and data preservation can be, not necessarily what it is today.The real opportunity is to take the concepts and apply them in your workplace to achieve the following: Be better and more confident at what you do. Reduce your risk. Lower your costs. Strengthen your leverage when litigating. Make your time more productive. Make your co-workers’ time more productive. Annoy the courts less.You are an integral part in advancing the practice of data preservation. The knowledge you gain byreading this Guide is a concrete step in advancing the level of expertise in our community. Together wecan improve how organizations of all shapes, sizes and industries approach the task of responding to apreservation obligation while building a valuable knowledge base for all to do better.A panel at the 2012 Conference on Preservation Excellence
  4. 4. Legal Hold and Data Preservation Best Practices |3© 2012 by Zapproved Inc. All rights reserved.1Research Studies Reveal the Current Challenges andCosts of PreservationContributed by Nicholas Pace and Mikki TomlinsonA reliable indicator that data preservationstandards are now starting to rise above thenoise is that quality research is being done onthe field. In 2012, two in-depth studies wereconducted which delved into the subject oforganizations’ attitudes and approaches to datapreservation.The first of these unique studies was the RANDCorporation’s Institute for Civil Justice’s Wherethe Money Goes: Understanding LitigationExpenditures for Electronic Discovery1publishedin April 2012. The 131-page report offersinsights into the costs of discovery, and perhapsmore importantly, the current challenges that acorporation faces aroundpreservation.RAND’s research team wasled by NicholasPace and Laura Zakaras usinga case-study method tosolicit in-depth insight fromeight “very large”corporations in regards tocosts across 57 e-discoveryproductions. The identities ofthe corporations have beenkept confidential.Originally, the preservation phase of electronicdiscovery wasn’t to be a focus of the study; butwhen the ICJ researchers spoke with in-housecounsel they found many expressing “more1Pace, Nicholas M. and Laura Zakaras, “Where theMoney Goes: Understanding Litigant Expendituresfor Producing Electronic Discovery,” April 11, 2012,Institute for Civil Justice, RAND Corporation.concern about the challenges and costs ofpreservation than about the costs of respondingto requests for production.” (p.85) With thatrealization, a new round of interviews wereadded to focus on preservation which tookplace from October 2010 to June 2011.One of the difficulties researchers found wasthe challenge to quantify expenses associatedwith preservation. Preservation costs are largelydriven by internal “soft” expenses in the form ofstaff time of the legal and IT staff as well as thedistributed effort of custodians. Such costs areinherently more difficult to track withoutconcerted effort.Furthermore, even directexpenses, such as investingin a legal hold managementsystem, are distributedacross all “present andfuture preservation needs”and may be “intertwinedwith other businesspurposes” such as recordsmanagement (p. 86).Further, “softer” costs suchas the opportunity cost oflost productivity andinefficiencies dueto not adopting improved preservationprocesses represent a significant obstacle tojustify expenditures using traditional return oninvestment (ROI) economics.In spite of the challenges associated withtracking preservation costs, all participants“reported that expenses associated withpreservation now constitute a significantportion of all of the company’s discovery-“Participants ‘reported thatexpenses associated withpreservation now constitute asignificant portion of all ofthe company’s discovery-related activities.’ Somebelieved strongly thatpreservation costs werepredominant.”
  5. 5. 4| Legal Hold and Data Preservation Best Practices© 2012 by Zapproved Inc. All rights reserved.related activities.” (p.89) Somefurther believed strongly thatpreservation costs were thepredominant portion of e-discovery expense (p.88).Reasons cited included theburden on staff of managinginformation under “hold” andthe costs of storing data for longperiods. The most telling are theburdens associated withimplementing and auditing legalholds. (p.88) In these largercorporations, some staff are“dedicated to little other thanmanaging preservation chores.” (p.88)Furthermore, one of the key drivers is a cleartendency to over-preserve in the face ofincreasing risk and uncertainty regarding whatconstitutes reasonable effort.It was clear from the study that more researchis needed to truly understand the total cost ofpreservation. With better understanding of thecosts, companies will find it easier and moreimperative to invest.The study explicitly addresses the benefits ofhaving an automated litigation holdmanagement system in place. (p. 92) Despitethe “potential for over-preservation” and the“awareness that compliance could never be fail-safe,” companies that had invested in anautomated legal-hold compliance system feltbetter off. As reported, “moving from an adhoc response for legal holds that depends onindividual attorneys to craft and manage bothnotice and compliance to a process that wasmore routinized and more consistentlydocumented and auditable was felt to removesome of the danger that the approach would bechallenged in the future.”As we’ve seen with recent case law, therecontinue to be conflicting opinions acrossjurisdictions regarding the scope and mechanicsof legal holds and preservation. As the reportnotes, “in the context ofpreservation, a world in which IT,corporate policies, and the lawall are rapidly evolving insometimes-different directions,such complaints may have moretraction than is usually the case.”(p.94) The participants worryabout where they sit on the“continuum between totalacceptability and serioussanctions.” (p.94) There is aunanimous and resoundingdesire for clear guidance on thescope and manner ofpreservation from the courts – which is one ofthe clear messages of this study topolicymakers.eDJ Group’s Mikki Tomlinson echoed the needfor more attention to data preservationpractices. She reported on a study her teamhad recently completed in 2012 regardingInformation Governance, which included aseries of questions about litigation holdprocesses. The survey results were compiledfrom 113 respondents.2Although the final report has yet to bepublished, the detailed survey shows that,according to Tomlinson, “it is clear that litigantsunderstand the importance of [legal holdmanagement]” yet approximately only twothirds have a documented legal hold process. Ofthe respondents that do document theirpreservation efforts, more than half either donot use a legal hold management system oraren’t sure if they do.When aggregated, eDJ’s research shows thefollowing (see chart): 55% don’t track holds or issue holds2http://ediscoveryjournal.com/2012/09/signs-of-information-governance-maturity/
  6. 6. Legal Hold and Data Preservation Best Practices |5© 2012 by Zapproved Inc. All rights reserved. 11% use spreadsheets to track 17% track with internal system 13% track with commercially availablesystemTwo-thirds of the survey respondents eitherdon’t issue holds, don’t track holds or use aspreadsheet to track holds. Given that theexpectation of a documented legal hold processhas been around for almost a decade, thispercentage of organizations taking a ratherhaphazard approach is a remarkably highnumber.The conclusions one can draw from the RANDCorporation and eDJ Group reports are thatwhile large corporations are concerned aboutholds and the costs incurred to overseepreservation, a majority of organizations arelikely not meeting the standard of care requiredby the federal courts.How Companies Manage Litgation HoldsSource: eDJ Group & ViaLumina Ltd. Information GovernanceSurvey, Sept. 2012, N = 113Dont track or issue holdsUse manual process, i.e.spreadsheetsTrack with internal systemUse commercial system
  7. 7. 6| Legal Hold and Data Preservation Best Practices© 2012 by Zapproved Inc. All rights reserved.2Creating the Foundation for Preservation InvolvesInformation Governance, Training and Corporate CulturePanel: Mikki Tomlinson, Elleanor Chin, David Cohen, Charlotte Riser Harris, and Mark TamburriThe best time to prepare for litigation holds and the preservation duty is when you are not inthe middle of a crisis. Setting a strong foundation in your organization is the key to avoidingtrouble in the future and lowering the overall burden and stress around data preservation. Bestpractices include proactively establishing information governance protocols, putting responseteams in place, documenting policies and training employees to build a culture of compliance. Establish an Information Governance ProtocolInformation Governance (IG) can be defined asa comprehensive program of controls,processes, and technologies designed to helporganizations maximize the value ofinformation assets while minimizing associatedrisks and costs. IG consists of a number ofcomponents including: Policy development Records management HR policies and procedures Security and risk management Legal holdMany organizations choose the “saveeverything” approach but this can growuntenable over time, despite the decrease instorage costs and improved search technology.Data continues to get harder to control with theemergence of ‘cloud computing’ and a varietyof new communication platforms, i.e. socialmedia, mobile.The typical focus in evaluating recordmanagement and preservation is on the storagecosts, meaning that by keeping more acompany has to buy more and more devices forstorage. There may be less focus on lostproductivity, which can be significant.Litigators know the real costs of trying to keepeverything include the following: The “smoking gun” problem – employeesletting down their guard in email, resultingin casual communications that can createan impression of culpability. The sheer cost of looking through vastquantities of data is tremendous.One effective approach to get managementbuy-in for moving forward with an InformationGovernance program can be to position IG as anasset management tool, rather than to focuspurely on the benefits of mitigating risk. Thevalue is in managing information and managingpeople while eliminating inefficiency.Finally, setting out to do an all-encompassing IGprogram is nothing if not daunting. Beopportunistic if you don’t have any formalprograms in place. Look for the opportunity forsmall wins in order to build credibility andmomentum behind the efforts and to showtheir return on investment (ROI).
  8. 8. Legal Hold and Data Preservation Best Practices |7© 2012 by Zapproved Inc. All rights reserved. Establish a Discovery Response TeamOrganizations should start by establishing aDiscovery Response Team. Such a team shouldconsist of key stakeholders from differentdisciplines including Legal, IT, HR, InformationSecurity, Records Management, or otherinternal teams that may regularly be calledupon to assist in the event of a potentiallawsuit. Outside counsel may also be a valuableparticipant to provide ongoing advice andguidance to the team.The primary goal of a discovery response teamshould be to establish lines of communicationcross-functionally so that various groups areready to go when called upon. Having a team inplace reduces organizational inefficiency thatcould result in potentially risky delays whenprompt action is required.The Discovery Response Team should haveprotocols in place to help scope legal holdnotifications, identify potentially responsivedata sources, ensure automatic deletionprotocols for e-mail and other enterpriserepositories are suspended as needed, help toassess risk of spoliation, etc.Another benefit of cross-functional responseteams is to engage employees througheducation, communications and setting ofexpectations. The team can also seek synergiesacross departments, such as leveraging thework of other security, records management,and related IT initiatives. Document Organization’s Records Retention PolicyAs a first step, data mapping (a.k.a. content or“source” mapping) can assist in understandingwhere data is retained by the organization, howthe data is being retained and/or replicated,and how such data is routinely being disposed.Learn by asking questions, either proactively orin response to a discovery obligation, andcapture the institutional knowledge for futurereference. Taking the opportunity to developeven a partial data map prior to any activelitigation is a valuable investment, and allowsfor the development of knowledge without thepressure of an active litigation schedule.Having a well-documented, reasonable andconsistently-applied records retention policycan support a safe harbor for destruction of ESIdue to routine operations of IT systems andprotocols. However, a party must also actaffirmatively to prevent such routinedestruction once a preservation obligation hasbeen triggered.A robust records retention policy enables alitigant to take advantage of FRCP Rule 37 whichprovides for a “safe harbor” when ESI is lost andunrecoverable “due to the routine operation ofan electronic information system.” It continues,“[a]bsent exceptional circumstances, a courtmay not impose sanctions under these rules ona party for failing to provide electronicallystored information lost as a result of theroutine, good-faith operation of an electronicinformation system.” F.R.C.P. 37(f)Affirmative action requires an understanding ofhow information is being retained and routinelydisposed of, whether through routineoperations of IT systems or through human-intervention. It also includes the ability toeffectively suspend such operations. Examplesabound in case law of organizations failing tosuspend automatic deletion of email and ESI.Consider the impact of evolving technologies aspart of your information governance programs
  9. 9. 8| Legal Hold and Data Preservation Best Practices© 2012 by Zapproved Inc. All rights reserved.– “bring your own devices” (BYOD), socialmedia, cloud computing, etc. BYOD is a newterm coined to describe when an employeeuses his/her own device for business purposes(i.e. an iPad, personal laptop or smart phone).Organizations are well-advised to consider whathappens when the information retained on suchdevices is subject to the organization’s duty topreserve.The final component of sound implementationof a records retention policy is to conductregular audits to ensure that the retentionschedules are being observed. If problems ariselater, having an audit trail showing that theinformation was properly managed – andregularly checked – can go a long way todemonstrating to a court or regulatory agencythat your organization operated in good faith. Train Employees about Preservation ResponsibilitiesEmployee education can be one of the mosteffective steps for assisting with preservationefforts. The two primary goals are to teachemployees about: Responsibilities as a custodian Identifying potential trigger events andalerting legal department when one arisesLook for opportunities to piggyback on ongoingtraining efforts such as annual ethics“refresher” courses or safety trainings. It is alsoadvisable to enlist Human Resources help byincluding materials in new employee training.One presenter described a successful effortinvolved designing a 15-minute training about“Being a Custodian.” She was very mindful tokeep it short and to the point. Then, in order toget adoption, she presented it as part of aregular weekly meeting among seniormanagers. By exposing the leadership team tomaterials, she was subsequently invited torepeat that exercise across the organization toraise awareness of this important responsibility. Build a Culture of ComplianceCorporate culture cannot be built quickly, buttake a long view and cultivate the value ofcompliance by reinforcing positive behaviors.Employees must internalize that preservation ispart of their role in protecting the company.Any spoliation will most likely undermine yourcase, not the opposition’s.In order to dissuade non-compliant or adversebehaviors, show that any intentional efforts todestroy information will likely fail due tomultiple copies of data in back-ups and otherlocations, and the fact that no data is ever trulydeleted with today’s powerful forensic tools.Have sanctions in place to punish employeesthat do not follow protocols, ranging fromletters of reprimand up to more seriousconsequences. Such actions will show otheremployees and the courts that the organizationtakes compliance seriously.Anecdotally, it is common practice foremployees to circumvent automatic deletion ofemails and other ESI. Teach employees that thisis not encouraged and show ways to properlymanage documents, helping them differentiatewhat they truly need versus what they can dowithout. At the same time, consider means toconfigure IT systems that discourage saving inunauthorized or non-standard locations whilechanneling saving to centrally managed orstandardized locations.
  10. 10. Legal Hold and Data Preservation Best Practices |9© 2012 by Zapproved Inc. All rights reserved.3Recognizing the Triggering EventPanel: Craig Ball, Dawn Radcliffe, Mollie Nichols, Dave Walton, and Paul WeinerThe so-called “trigger event” is a misnomer. It is often not a single event, but a series of signalsbased upon which a legal team must choose to initiate preservation efforts or not. Once thechoice has been made to proceed with saving information in anticipation of potential litigationor regulatory investigation, the process again may be piecemeal. Ensure a sound understandingof what a trigger means, how trigger events are identified and promptly acted upon. Understand the Legal Definition of ‘Trigger’A party is obligated to preserve evidence whenit has “notice that the evidence is relevant tolitigation or when a party should have knownthat the evidence may be relevant to futurelitigation.”3Having a defined process is criticalwhen identifying and determining whether atrigger event has occurred, including whatconstitutes a triggering event, criterion forevaluating a trigger, and methodologies toensure awareness of possible triggering events(reporting, education, ownership of theprocess). As Craig Ball characterizes it, suchevents are less a trigger than a valve.The events or actions that constitute a triggerare too numerous to list, but The SedonaConference® has defined some factors whichare listed in the sidebar.Trigger events can be tricky to identify – thereare no bright lines in this area. While in mostcases it may be clear (e.g., a patient death orfiling of a formal employment discrimination3Eckhardt v. Bank of America, N.A., 2008 U.S. Dist. LEXIS36951, 2008 WL 1995310, at *5 (W.D.N.C. May 6, 2008)claim), more often than not there are occasionswhen a few facts emerge and it is unclear whatwill happen eventually. Engage legal counseland let the “lawyering” begin – analyzing theinformation at hand, looking for opportunitiesto get more data to corroborate, analyzing therisks and then provide an opinion. Once adecision is made, act and stand by it. Be awareof the intersection between the assertion ofwork product privilege and the triggering of alegal hold.
  11. 11. 10| Legal Hold and Data Preservation Best Practices© 2012 by Zapproved Inc. All rights reserved. Establish a Process for Investigating Potential CasesSome important considerations whendeveloping a process for recognizing a triggerare clearly establishing who owns the process,educating internal parties and defining theirreporting responsibilities. While legal personnelare aware of these events, pay extra attentionto communicating the importance to managersacross the organization so that they areroutinely reminded of their critical role and theconsequences if they “sit” on key information.Work with your business unit managers toeducate and help them keep this obligation topof mind. One head of litigation support reviewspast cases to understand litigation patterns.Once a complete picture has been developed,the manager publishes to the company in plainEnglish the types of issues for which a quick callor e-mail to the Legal Department is required.When those are received, the legal departmentimmediately follows up to assess the facts inthe case. Generally people want to do the rightthing, so give employees the tools and trainingto do so.Occasionally opinions differ betweenstakeholders such as line of business managers,legal, and outside counsel. Priorities andperceived risks may vary – such as outsidecounsel’s desire to take affirmative action in aparticular case, while inside counsel may bemore cautious due to the larger ramificationsfor the organization of responding to apreservation duty. Try to focus on the legalissues at hand and the importance of takingaffirmative action in response to the triggeringevent.As with all phases of responding to discovery,an auditable record is critical, should youractions be called into question by an opposingcounsel or court. Document your decisions andfactors considered when deciding whether ornot a trigger has occurred. Follow a regularprocess — ad hoc decisions with unpredictableoutcomes make demonstrating to the courtthat you have a defensible good faith process inplace far more difficult. Don’t Hesitate to Issue a Legal HoldAs a rule of thumb, if two people are in a roomtalking for more than 30 minutes as to whetheror not there has been a trigger, it’s time to issuea legal hold. Too often legal practitionersequate a hold with an entire string of events –broad data collection or an inevitable legalaction. Such a perception can be paralyzingbecause it creates barriers to action.A legal hold need not be an onerous task. It maystart with just a communication to key peopleto hold onto certain files and data in place untilit is determined if further action is required.Don’t wait and over-analyze for too long. At aminimum, take steps to secure any ephemeraldata that could be needed at later time. Be onthe lookout for records that might be subject toautomatic deletion or ESI that would beirretrievably lost or altered.The court will be looking back on your decisionsin two or three years’ time with the benefit of20/20 hindsight. Imagine you are testifying incourt about your actions and make sure thatyou will have good answers should thateventuality occur.
  12. 12. Legal Hold and Data Preservation Best Practices |11© 2012 by Zapproved Inc. All rights reserved.THE SEDONA CONFERENCE® COMMENTARY ON LEGAL HOLDS:THE TRIGGER & THE PROCESS, 2010 (Excerpts)Guideline 1: A reasonable anticipation of litigation arises when an organization is on notice of acredible probability that it will become involved in litigation, seriously contemplates initiatinglitigation, or when it takes specific actions to commence litigation.”Guideline 2: Adopting and consistently following a policy or practice governing an organization’spreservation obligations is one factor that may demonstrate reasonableness and good faith.Guideline 3: Adopting a process for reporting information relating to a probable threat of litigationto a responsible decision maker may assist in demonstrating reasonableness and good faith.Guideline 4: Determining whether litigation is or should be reasonably anticipated should be basedon a good faith and reasonable evaluation of relevant facts and circumstances. Sedona identifies aseries of factors pertinent to the issue of whether litigation should be reasonably anticipated. Theyinclude: The nature and specificity of the complaint or threat; The party making the claim; The position of the party making the claim; The business relationship between the accused and the accusing party; Whether the threat is direct, implied or inferred; Whether the party making the claim is known to be aggressive or litigious; Whether a party who could assert a claim is aware of the claim; The strength, scope and value of a potential claim; The likelihood that data relating to a claim will be lost or destroyed; The significance of the data to the known or reasonably anticipated issues; Whether the company has learned of similar claims; The experience of the industry; Whether the relevant records are being retained for some other reason; and Press and/or industry coverage of the issue directly pertaining to the client, or ofcomplaints brought against someone similarly situated in the industry.Copyright © 2010, The Sedona Conference®. Reprinted courtesy of The Sedona Conference®. The full text of thisCommentary is available www.thesedonaconference.org. Recognize the Trigger as a PlaintiffThe duty to preserve is shared equally by bothplaintiff and defendant, a fact that is oftenoverlooked. Some of the most notable opinionsregarding preservation have involved the failureof plaintiffs to preserve and document theirefforts. Oftentimes, the duty to preserve arisesmuch earlier for the plaintiff, based on whenthey reasonably anticipated that they may seekrelief in court. And pay attention to claimingwork product on a matter – a sure sign thatlitigation was likely being anticipated.
  13. 13. 12| Legal Hold and Data Preservation Best Practices© 2012 by Zapproved Inc. All rights reserved.4Determining the Scope of PreservationPanel: Michael Arkfeld, Maura Grossman, Denise Talbert, and Mark TamburriAfter discussing “when” to preserve, this section turns to the “what,” “where” and “howmuch.” At the center of any preservation duty are the key players, or those individuals with themost direct knowledge and information regarding the matter at hand, and the data sourceswhich may have recorded those processes and timelines. Simple in theory, yet complex inpractice. Identify Key Players and Data Sources At the OutsetStart with the facts of the case such as theknown or anticipated causes of action. Whatrecords will support these claims or defenses?Who are the key players, and where do theyretain potentially relevant information? Whereelse may data be retained that is within the“possession, custody and control” of theorganization (including agents or third-parties)?A party has a duty to preserve all relevantdocuments—but not multiple identical copies—in existence at the time the duty to preserveattaches and any relevant documents createdthereafter. A party must preserve “what itknows, or reasonably should know, is relevantto the action, is reasonably calculated to lead tothe discovery of admissible evidence, isreasonably likely to be requested duringdiscovery and/or is the subject of a pendingdiscovery request.” [Zubulake]The standard for preservation is “reasonableand good faith” – consider how cooperationand proportionality can be applied to limit thescope of preservation. Also, be prepared toexpand or reduce the scope as the case evolves– and be certain to document the decision-making process in case you are called to defendyour actions.Having a Discovery Response Team in placecomprised of representatives from various keyfunctions in the organization can aid ininvestigating scope. Tools like data or contentmaps, and record-keeping of decisions madepreviously, can make the process far moreefficient (rather than “recreating the wheel”every time).Querying key players from the outset forpotential sources will assist in getting the mostaccurate picture of what is relevant. Be sure totap into this important source of knowledgeand adjust the scope accordingly. Usecustodian interviews to solicit input from thoseinvolved. Consider “early case assessment”tools to review key documents or emails fromkey players to refine topics and participants.Some ways to limit scope, especially in the pre-litigation phase, include: Applying tiers of relevancy and adjustingpreservation actions accordingly (e.g.,emails versus text messages) Analyzing threats (e.g., one disgruntledemployee versus pattern of abuse) Exploring if the court can offer relief(although courts generally lack incentive tolimit preservation early)
  14. 14. Legal Hold and Data Preservation Best Practices |13© 2012 by Zapproved Inc. All rights reserved. Pay Attention to Danger Areas, i.e. Bad Actors, Ephemeral Data, Etc.At the outset, identify areas of greatest risk ofspoliation which might include bad actors,automatic-delete functions, ephemeral data,employment changes, computer upgrades, andthe like. Act quickly to take control of such datasources to avoid losing the “safe harbor” fromspoliation caused by the routine operation of ITand information management systems.If there is a chance of a “custodian-as-culprit”situation, such as in a criminal matter orregulatory investigation, then coordinate withIT and secure their personal data repositories.Actions such as imaging hard drives orquarantining devices are likely not necessary forall custodians, only those which may have anincentive to destroy data in order to protecttheir personal interests. Avoid the Pitfalls (and Real Costs) of Over-PreservationAt the outset, conduct a risk analysis andunderstand the value of the case. Be aware ofthe potential implications for an overly-broad oroverly-inclusive scope: Business interruption caused by respondingto and complying with hold instructions Added storage expense (particularlyinvolving backup tapes, or rescindingretention policies for database and archiveapplications that routinely purge aged orobsolete data) IT infrastructure and operational impacts(e.g., responsiveness of search queriesacross bloated data sets, or the timerequired to perform a routine backup fordisaster recovery) Subsequent discovery cost and riskassociated with retaining informationbeyond its otherwise useful life and thatwould otherwise not have been availablefor future discovery You Don’t Have to Be Perfect Out of the GateBe pragmatic about preservation. If a case isfrom 2008, don’t look for text messages fromlast week. Lawyers are trained to make riskassessments and decisions on these subjects.Look at the facts of the case and put somethingreasonable and good faith in place – and beprepared to clearly explain what you did andwhy you did it.Your initial preservation steps may not beperfect, and the scope of preservation mayneed to expand later. Sanctions are less likelywhen timely actions are taken that can bedeemed reasonable. A case management orderor some other remedy may be in order to limitrisk of hindsight.In cases where there is some uncertainty at theoutset, consider “taking out an insurancepolicy” by duplicating or preserving a back-upmedium that corresponds with a time frame orcustodians applicable to the case. At least thatway you have something to fall back on. It isn’tnecessary to run out and save every GPS or SMSunless you have some reason to believe there issomething relevant there.
  15. 15. 14| Legal Hold and Data Preservation Best Practices© 2012 by Zapproved Inc. All rights reserved.5Implementing and Managing the Legal HoldPanel: Craig Ball, Elleanor Chin, Robert Owen, Dawn Radcliffe, and Susan SmallTime to roll up your sleeves and make sure your organization is fulfilling its duty to preserve.This phase is dictated by proper, consistent execution. Notifying custodians, suspending auto-deletion routines, tracking acknowledgments and being able to demonstrate your good faithefforts through a detailed audit trail are all critical to success. Effective Legal Holds Communicate While Audit Trail Provides DefensibilityAt the core of the litigation hold process is thenotice which must be delivered to custodians ina timely manner. Following is a checklist thatencompasses the contemporary standard for alegal hold as adapted from Pension Committee: Issue hold notification in a written form Issue the hold in a timely manner Identify and focus on key players Obtain affirmative custodial responsesand continue to monitor compliance Include clear, direct instructions forcompliance to custodians Periodically re-issue holds so that theobligation is fresh in employees’ minds Counsel must supervise employees’preservation efforts and compliance Suspending automatic deletion andpreserving backup media should beundertaken when warranted as part ofthe overall mix of preservation steps.Custodian interviews after the holdnotification has been issued can ensureongoing compliance and provide moreclarity about the nature, quantity andlocation of potentially relevantinformation. When possible, utilizetechnology to automate the litigation holdto maintain a consistent process andefficiently create a detailed and completeaudit trail.It is critical to fully document the processboth for continuity and to demonstrateand defend the organization’s efforts.Following the process consistently is alsomuch easier to defend than the actions ofan ad hoc approach. Notification Letter Must Be Comprehensible and DefensibleA preservation notice must meet the followingtwo objectives:1. Clarity – the goal is comprehension on thepart of the audience as to desired actions.2. Defensibility - The content will aid inpersuading a judge after the fact that thehold was both reasonable and acted upon.In short, you have to instruct custodians to notonly save potentially relevant data, but how toidentify and save it. Another element is that itshould also state the consequences if theinstructions are not followed.For a core group of key custodians, considerfollow-up communication that is personalrather than merely a standardized notice. For
  16. 16. Legal Hold and Data Preservation Best Practices |15© 2012 by Zapproved Inc. All rights reserved.example, start with, “Mary, you are thecontroller of this company so you will havespreadsheets and financial analysis pertinent tothis matter….” This instantly communicates tothe recipient that it is their responsibility to act.The sender should be a person that commandsthe attention of the recipients, as per therelevant case law. For example, a notice sent bya paralegal may not have as much impact onthe CFO as a notice sent from the generalcounsel or COO.Finally, the legal hold process must have amechanism that provides for affirmativeacknowledgment on the part of those expectedto take action – i.e., has the notice beenreceived, understood and agreed to becomplied with. Focus on Data Repositories, Not Just Individual CustodiansIn today’s communications infrastructure, datais often at risk of destruction through normal IToperations (e.g., actions that routinelyoverwrite data) or the nature of the technologyitself. Protect data that is potentially at risk bycommunicating the need to put the datarepository on hold. Pay particular attention toautomatic email deletion or other processesthat systematically manage retention anddisposition. Watch for unique data sources thatmay be relevant – such as mobile phonelocation data or video surveillance recordings,and plan for how you can preserve in advance.Establish a process that considers preservationobligations when data is at risk – an employeeleaving the company or changing jobs, an ITinitiative to upgrade software or replace aginghardware, or a records management initiativeto get data retention into compliance (e.g.“shred days”).Mitigating such risks begins with establishingclear lines of communication between legal andother corporate functions such as IT, RecordsManagement, HR and information security. Counsel Must Understand Their Supervisory RoleIn-house and outside counsels have anobligation to supervise preservation andcollection efforts. Lawyers must monitor activityand provide an audit function for theorganization’s process. A failure to engage inthe preservation process – such as in the case ofa ‘fire-and-forget’ memo issued from outsidecounsel – will not be tolerated by the courts. Trust, But VerifyIn many cases, the effort to collect data is notimmediately necessary, in particular for pre-litigation holds when it is not clear if productionwill ever be required. In appropriatecircumstances, custodians may be relied uponto make good decisions and preserve-in-place,as long as the urgency and clear expectationshave been communicated and understood.However, it is wise to conduct regular audits ofyour preserve-in-place strategy to validate thatdata will be available when and if it is needed.
  17. 17. 16| Legal Hold and Data Preservation Best Practices© 2012 by Zapproved Inc. All rights reserved.6Tactics to Reduce the Cost of PreservationPanel: Michael Arkfeld, Charlotte Riser Harris, Susan Small and Dave WaltonPreservation can get expensive quickly, especially if the case involves a significant number ofcustodians. Yet the desire to minimize ongoing expenses cannot justify spoliation.Limiting costs, or at least making them align with the issue under consideration, is one of theprimary factors that drive continuing discussions around proportionality. The SedonaConference’s first Principle of Proportionality states: “The burdens and costs of preservation ofpotentially relevant information should be weighed against the potential value and uniquenessof the information when determining the appropriate scope of preservation.”Different approaches can help alleviate, or at least postpone, the more expensive stages ofcollecting, processing and reviewing ESI as long as a sound litigation hold process is in place. Leverage Technology to Your AdvantageMany new technology offerings help ease theburden of preservation by automatingprocesses including automated legal hold tools,early case assessment (ECA), and sampling. Newsoftware tools can demonstrate due diligence,engage custodians, and solicit feedback whichcan accelerate the process with less effort.Tools to automate the legal hold notificationand compliance process are valuable. Whileusing a spreadsheet to track a hold is betterthan nothing, a manual approach consumesmuch more time on the part of the legal staffand is inherently error-prone.Understanding your data infrastructure can alsohelp – are there redundant data sources thatcan be ignored as duplicative when determiningthe scope of a hold? Communicate Early and Often with Outside CounselCommunication is absolutely critical for costreduction in preservation. With regard toworking with outside counsel, the client andcounsel often have an incompleteunderstanding of each other’s worlds andpriorities. Communication can help clarifyexpectations on both sides.Outside counsel can and should be clear abouttheir objectives and priorities in thepreservation process, as it relates to the totallitigation objective and risk. Inside counsel andmanagers can reassure and educate outsidecounsel so there is comfort with internalprocesses. Preservation should be a joint effortrather than something completely controlled byoutside counsel or the client.
  18. 18. Legal Hold and Data Preservation Best Practices |17© 2012 by Zapproved Inc. All rights reserved. Look to the Court for AssistanceThe Rule 26(f) or pre-trial ‘meet and confer’ canaddress any issue the parties choose and can bethe single most important factor to reducecosts.It is not always necessary to addresspreservation in the initial conferral and oftenpreservation will be substantially underway bythe time of a Rule 26(f) conference. But bydemonstrating that a reasonable and good faitheffort has been made to preserve data, partiescan focus on negotiating a fair and reasonablescope of discovery. For example, a litigant couldoffer to produce ESI for a limited number ofcustodians initially, while ensuring data from abroader set of custodians is being preservedshould additional discovery be warranted.The courts can also help in some situations,such as when facing asymmetrical discovery.The ‘meet and confer’ endeavors to ensurelitigants discuss preservation at the initialconference. It directs parties to present anydisputes about preservation to the court assoon as possible, so that the judge can issueappropriate orders regarding what should orshould not be preserved in the earliest stage oflitigation.One organization noted that they havesuccessfully used a burden analysis at the “meetand confer.” In a class action suit, the other siderequested individual screen shots for everymember of a 500,000-person class. A projectmanager went step-by-step to see how long asingle collection would take for a single person.In the end, the production for one person was30 pages long — the entire process would take8 months at a cost of $12 million. The data-driven analysis provided leverage to negotiateto keep costs down through sampling.“One organization noted that theyhave successfully used a burdenanalysis at the ‘meet and confer’….The data-driven analysis providedleverage to negotiate to keep costsdown through sampling.”
  19. 19. 18| Legal Hold and Data Preservation Best Practices© 2012 by Zapproved Inc. All rights reserved.7Mistakes Happen – What To Do When PreservationProblems ArisePanel: Ron Hedges, Mollie Nichols, Denise Talbert and Paul WeinerNot everything can go according to plan, and that is true with preservation too. Despite yourbest efforts, data can get lost or destroyed inadvertently, or worse, intentionally destroyed by abad actor trying to cover their tracks.Whatever the cause of data loss, it is critical to act quickly and if necessary notify the court andopposing counsel in order to explore options to remedy the situation. Counter Any Spoliation with Prompt Attention and TransparencyOnce you uncover a preservation failure, it iswise to notify the court and opposing party assoon as practical. The best way to avoid harshsanctions is to operate in good faith andtransparently.Remember, perfection is not the standard, sodon’t overreact. Upon learning of spoliation, askyourself the following questions: Is the lost data relevant and is its loss likelyto have any impact on the requestingparty’s ability to litigate? Is the data replicated elsewhere?If you believe the ESI is not relevant,demonstrate that it is not by corroborating withsamples from other sources or offering upaffidavits and relevant witnesses fordepositions. Look for alternative sources for thedata that was allegedly destroyed, whetherfrom a forensic image of a computer, going toback-up tapes or locating others in theorganization with the same information.Once information is gathered and a remedialplan has been developed, then talk to the otherside. Explain what happened, identify what mayhave been lost and explore options to remedyany potential impact of the lost information.Also show that your preservation efforts to datehave been well executed and sound so that youcan show that this situation was an anomaly.Demonstrate that the organization took actionsto educate and/or reprimand the employee atfault in order to reinforce a culture ofcompliance. Plan for ‘Points of Failure’ in Data Preservation – Bad Actors, PersonnelChanges, Hardware or Software UpgradesIf there is the possibility of bad actors involved,it is important to anticipate potentialdestruction and lock-down relevant data andrepositories prior to notification. Look forindividuals that could be harmed by theinformation in their possession.Occasionally individuals may be concealinginformation in their possession not directly
  20. 20. Legal Hold and Data Preservation Best Practices |19© 2012 by Zapproved Inc. All rights reserved.related to the matter at hand, but which isotherwise compromising (e.g. pornography,personal communications, or materials relatedto a job search).Be in tune with potential trouble spots whendata is in jeopardy and individuals involved maybe working to solve an immediate problem thatcould result in inadvertent spoliation. Anexample would be a faulty laptop which isinhibiting a person from being productive butwhich may also contain responsive data.Regular reminders of legal hold obligations willhelp mitigate such risks, while also workingclosely with HR and IT in order to avoid issuessuch as someone walking out the door beforetheir information can be secured properly. If the Other Side Is At Fault, Exercise Patience Before Approaching the CourtBe sure to not overplay your hand if you learnabout spoliation by the opposition. The firstreaction of many attorneys is to say, “Let’s gofile a spoliation motion.” Before running to thejudge, send the other side a letter to lay out theissue and ask them to explain it.Oftentimes the situation may not appear as direonce more facts have been discovered. It onlyweakens your credibility by making you lookreactionary and uncooperative in front of thejudge if the spoliation ends up being a non-issue.If you write letter requesting an explanationand you don’t get a satisfactory response back,then you can go to the court. Explain that youdon’t want to be here, that you tried to remedythe situation and that you are there becauseyou now need the help of the court.True Life Tales of SpoliationDuring the 2012 Conference on Preservation Excellence, several attorneysshared some of their experiences with spoliation and the actions they took toremediate it. Following are their three stories which are being presentedwithout attribution.Situation 1 – Key Custodian Ignores Hold and Deletes EmailAnywayThe General Counsel of a large corporation sent out legal hold notices toexecutives and other key custodians pertaining to a significant commercialdispute. During follow-up interviews with executives, it was determined that akey custodian had failed to adhere to the litigation hold instruction, even after acknowledging itaffirmatively. This person had deleted a large amount of email in complete disregard to the hold.One of the dynamics in this case was that opposing counsel was very focused on electronic discovery, soit was clear this would be an issue that would be under particular scrutiny. Since the spoliation wasfound through the interviews, it was privileged information.
  21. 21. 20| Legal Hold and Data Preservation Best Practices© 2012 by Zapproved Inc. All rights reserved.To remedy the situation, the legal team had back-up tapes pulled and restored in order to recover andanalyze the deleted emails. The spoliation was disclosed to opposing counsel and the legal team offeredthe executive up for deposition. The deposition took place and the witness was prepped well and clearlyanswered about the motivation behind what had occurred. In addition, all of the recovered emails weresupplied to the opposing counsel. Finally, the executive who deleted the email received a letter ofreprimand and had to take training about the company’s obligation to preserve evidence.In the end, the spoliation became a non-event and there were no motions for sanctions.Situation 2 – Preserved Laptops Are Mistakenly Wiped by ITIt was a large wage and hour class action case and the defendant issued and tracked legal holds to keycustodians, as well as field employees and even several putative class members. As part of the process, asystem was put in place to collect the laptops of any custodians who were leaving the company.Despite many protections in place, an IT staffer who was not involved in the case decided one day toopen the locker and wipe the 15 computers that had been set aside from departing employees.The legal team came clean to the other side immediately. Through multiple “meet and confers” theywere informed of the systems and controls that were in place. An affidavit was provided from theemployee who had wiped the computers explaining in detail what had happened and why it was amistake.At this point, opposing counsel overplayed its hand and went directly to the judge looking for sanctions.In front of the judge, the defense team showed all of the parts of the preservation process that hadgone right in order to show that this was an aberration. By going to other sources and back-up tapes toshow that all of the information that was lost was available elsewhere – and that it was irrelevant to thecase – the team was able to show to the court that there was no prejudice. The judge appreciated theefforts and the case proceeded without any further action required.Situation 3 – The Dreaded Phrase: “We Cleaned Things Up”The case involved a key custodian who had hoarded tons of data, including having hard drives tuckedaway in his desk drawers. During preparation for the case, he was talking about how client records werehandled and he revealed that even though they hadn’t archived information for two years – he haddone so just 10 days prior because he thought it’d be a good time to “clean things up.”The good news is that the data had not been destroyed; rather, it had just been sent away. He alsoshowed that that he had kept a log of everything that was archived.The legal team disclosed everything to the opposing counsel immediately. The defense showed howmuch data it had collected from this person – including how many similar items from other custodians.The other side was given the index that showed that everything was still available upon request. Itended up being a non-event despite the poor timing.
  22. 22. Legal Hold and Data Preservation Best Practices |21© 2012 by Zapproved Inc. All rights reserved.8Releasing the Litigation HoldPanel: Mikki Tomlinson, David Cohen, Charlotte Riser Harris and Mark TamburriOftentimes, releasing a hold and returning to normal retention and disposition practicesrepresents a significant challenge. Many organizations maintain legal holds ad infinitum, eitherout of fear or simply failing to make a decision otherwise. However, it’s important to releaseholds in order to both demonstrate active monitoring of preservation efforts and avoid costlyover-preservation. What factors determine when a hold can be released and what does arelease process entail? Notify Custodians In Writing When Resuming Normal Retention SchedulesWhen releasing a hold, send a releasenotification to affected custodians so they canreturn to normal document retention anddisposition practices. As with the initial legalhold notification, send the release notificationin writing as well so that there is an audit trail.When releasing a hold, check to see if thecustodian is being asked to preserve data forother cases. If so, remind them of their otherobligations and help determine what data istruly no longer needed. And remember torelease data that was specifically collected,stored and/or disseminated for a particularcase, including that being held by third-partyservice providers.It is also important to consider the implicationsof returning to normal retention anddestruction practices. For example, a mailboxmay be placed on hold by suspending routinedestruction based on age. The custodian thencomes to rely on email being there when he orshe wants it. The hold is subsequently released,say after three years, and when returning to a90-day retention schedule suddenly months oryears of emails become subject to auto-deletion. It can come as an unpleasant surprise,and thus it is helpful to fully inform thecustodian of the implications of returning to“normal” retention practices.Other special considerations that may comeinto play include when data is being preservedunbeknownst to an employee due to aconfidential matter, or data is being preservedwithout recalling the specifics for doing so. Determine Who Has the Authority to Release Legal HoldsIdentify the individuals within your organizationwho can determine when a duty to preserve nolonger applies. The circumstances could bestraightforward, such as when a pending matterconcludes, but they can also be subtle.Empower a person who can make the call andrecord that decision so it can be shown to havebeen made in good faith.The situation is further complicated when thehold was triggered by an event that neverproceeded to litigation. Do you retain theinformation until the statute of limitation endsor is there another parameter to consider?Do you have a routine process to trigger ananalysis of holds that may no longer berequired?
  23. 23. 22| Legal Hold and Data Preservation Best Practices© 2012 by Zapproved Inc. All rights reserved. Retrieve Data from Third Parties Such as Law Firms and VendorsData pertinent to a particular case may resideoutside of the organization, such as with a lawfirm or electronic discovery vendor. Contact allthird-parties and have the data destroyed orreturned to the organization in accordance withthe company’s records management policies.Similarly, once the case is concluded considerthe disposition of documents produced to theother side. You may have a case managementorder in place from the beginning that says thereceiving party will destroy all the documentsthat were produced to them. The end of thecase is the time to remind the opposing party ofthat obligation.
  24. 24. Legal Hold and Data Preservation Best Practices |23© 2012 by Zapproved Inc. All rights reserved.9Looking Ahead At the Impact of Evolving Technology andPotential Rules ChangesPanel: Michael Arkfeld, Maura Grossman, Ron Hedges and Paul WeinerTechnology continues to move at a dizzying pace, creating both opportunities and challengesfor the legal team. On a positive side, advances in search and retrieval technologies can makefinding potentially relevant information easier. Yet advances in technology are also changingthe ways we create, store and access information as well.In response, the law must also adapt to the new realities placed upon litigants by technology.Changes to the Rules in the United States move slowly – very much by design. We findourselves in a gray area where the burdens placed on organizations due to new data sourcesand quantities that were unimaginable even a decade ago are not yet contemplated by theFederal Rules of Civil Procedure. Are the common law principles on which our legal system isbased up to the task? Be Agile in Adapting Preservation Policies for New TechnologyNew devices are showing up in the corporateenvironment – smart phones, tablets and othermobile computing devices – which impact thescope and magnitude of litigation holds. Newmodes of communication are being used by ouremployees for business – instant messaging,internet email and social media like LinkedInand Facebook – which legal teams must takeinto consideration when planning forpreservation.Additionally, new storage mediums areproliferating – especially with “cloudcomputing” and the internet – which must beconsidered when developing a sound datapreservation process.Preservation efforts must adapt to addressthese evolving technologies. It is key tounderstand how they are being utilized in theline of business and also how and where thedata is kept – and, even more critically, for howlong.The duty to preserve evidence requires theproducing party to make a good faith effort toidentify and manage relevant discoverableinformation – whether it is paper, email, socialmedia or another unforeseen technology. Applyyour best judgment, and act in good faith, andbe cooperative. Doing so will help courts andlitigants navigate through times of rapidchange. Rule Makers Continue Deliberations on Potential ChangesThere are a number of efforts underway toaddress how preservation and production ofdata can be managed, particularly in complexlitigation where there is asymmetry between
  25. 25. 24| Legal Hold and Data Preservation Best Practices© 2012 by Zapproved Inc. All rights reserved.parties. The process to consider changes in theFederal Rules formally kicked off at the AdvisoryCommittee on Civil Rules’ 2010 Conference onCivil Litigation at Duke Law School and hasproceeded through multiple gatherings, withthe Judicial Conference Subcommittee onDiscovery Mini-Conference on Preservation andSanctions in 2011 being a key milestone.While these processes continue, it is notpossible to predict what form changes wouldtake, if any. Under consideration is a change toRule 26 that would establish national federalcivil practice framework addressing scope,triggering events, sources and types ofinformation, and timeframes. Another potentialarea is to amend Rule 37 so that remedies andsanctions are standardized nationally so at leastthere is predictability across all federaljurisdictions about what would happen shouldspoliation occur.Regardless of the ongoing discussions, it isimportant to remember that Rules of CivilProcedure, both at the Federal and State level,often take years to catch up with the realities oftechnological change. Using ‘Technology Assistance’ in Early Case Assessment May EventuallyMove to PreservationHow will technologies like “technology-assistedreview” factor into standards for informationgovernance, data disposition and preservation?The concept of Technology Assisted Review(TAR), also commonly referred to as “predictivecoding,” is becoming more openly discussed inthe electronic discovery community. Advancesin computer-assisted search and retrieval canreduce costs and improve the quality ofinformation – both are positive advancementsfor our legal system.The concept of “technology assistedpreservation” has been discussed but thetechnology is still years away from fruition. Intheory, the legal team could implement a legalhold throughout an entire corporate networkfor potentially responsive information followinga trigger event. However, that would assist ateam but it is unlikely that it would supplant theneed for a written notification to custodianssince the “preservation tool” would never havecomprehensive access to all forms ofcommunication and information.
  26. 26. Legal Hold and Data Preservation Best Practices |25© 2012 by Zapproved Inc. All rights reserved.10A Judicial Perspective on Data Preservation TodayOn the afternoon of September 28, 2012, former U.S. Magistrate Ronald J. Hedges (D.N.J.)interviewed U.S. Magistrate Judge Paul S. Grewal (N.D.Cal.) about the current state of datapreservation in the Federal courts. These two jurists had both ruled on spoliation sanctions innoteworthy commercial litigations. The following are excerpts from their talk which have beenedited for clarity and brevity.Challenges for Litigants Regarding Legal HoldsJudge Grewal: On litigation holds and how theRules might provide a solution here, andwhether parties should face different standardsin different jurisdictions. The answer to thelatter question is “no.” We should not besubjecting parties on either side to theuncertainty of their obligations and having thatuncertainty depend in large part if notexclusively on whether they get sued on oneside of the river or the other.I think that is unworkable. This uncertainty isnot only unworkable from the parties’perspective; it’s also frankly unworkable for thecourt.The reality is that we’re struggling with theseissues and are looking to our colleagues forguidance. This is why I spend as much timeeducating myself about what other courtselsewhere in the country are wrestling with.The problem is that the Rules Enabling Act doesimpose certain limits on what issues can beaddressed byeitheramendmentsto the FederalRules or evenby local rules.Even if you canclear thathurdle interms of whatthe rules mightprovide. Theinterests at thetrial court level in promulgating standards isgoing to be somewhat mixed.Expectations for “Meet and Confer”Judge Grewal: One of the things I require forparties that appear before me at the CaseManagement Conference is a joint statementconfirming all the different issues they’ve metand conferred on in the 26(f) and under ourlocal rules. I have to tell you more often thannot, when it comes to preservation of ESI thereport I get is that “the parties have agreed topreserve data.” I’m thrilled — because if theycan’t agree on that then we’ve got real issuescoming down the road.I do have expectations that regardless of yourpast experience with ESI, you need to beinformed. The excuse to be ignorant on theseissues – if it ever carried any water – has longsince fallen by the wayside. Folks have alludedto the fact that you can go to the SedonaConference site and in about 20 minutes youcan get educated on at least what you shouldbe talkingabout. It’s fairto say I’m lesstolerant ofthat ignorancethan othersmay have hadjust a fewyears ago. Ithink for goodreason.Hon. Ronald Hedges and Hon. Paul Grewal
  27. 27. 26| Legal Hold and Data Preservation Best Practices© 2012 by Zapproved Inc. All rights reserved.Judge Rader’s Model Order for E-Discovery inPatent CasesJudge Grewal: A model e-discovery order byChief Judge Rader offers guidelines for thenumber of custodians, production to be made,number of search terms, etc. I’ve implementedit and usually the fight is about custodialproduction and in what order. I’ve also issuedan order that those principles are equallyapplicable when working with third parties ondiscovery.I think the major benefit of that model order forpatent cases is that the model order has causedfurther dialog in the courts about what areappropriate limits. It has provided a specificframework for proportionality and other ideasthat we’ve wrestled with. I think that’s the waythe order has proven most useful.What I keep trying to impart on parties is thatultimately the point is there needs to be someex ante discussion on what limits apply. I don’tcare what those limits are, but forcing thatdialog and discussion earlier in the disputebenefits everyone.A Successful “Meet and Confer”Judge Grewal: I have seen meet and confer withvery mixed results. Let me offer some thoughtsabout what I’d like to see to answer yourquestion coming out of a 26(f) process.The easiest thing for the court to assess to see ifpeople are meeting in good faith is to look atthe objective evidence. Who was there? Whendid you meet? How long did you meet? Whatwas the agenda? Those basic questions in 75percent of the cases get at who was really theproblem. That’s a key issue.The main thing I want to see out of meet andconfer is that there was give and take. I canhear about compromise in teleconferences. Thelawyering art – far too few understand that it isan art, give-and-take. That’s what the judgewants to see.Non-Attorneys at “Meet and Confer”Judge Grewal: The trend is to have the “topguy” or “top woman” in the case. I’m muchmore interested in having someone there whoknows what they’re talking about. Let’s behonest, the first chair trial lawyer may have theknowledge and competence, but most of thetime that’s not true. It doesn’t impress me ifyou brought senior talent to the “meet andconfer” if you didn’t also have the person therewho knows what is going on. The expert doesn’thave to be a lawyer. In many cases, it shouldn’tbe a lawyer.Do You Use Social Media?Judge Grewal: I do. I have a Facebook account. Iuse Twitter. I’ve played around on moreobscure offerings. There are many reasons I doit. One of them is I used social media before Iwas a judge and it seemed to be reasonable todo it after I was on the bench, of course in adifferent capacity.The main reason is that social media is critical tounderstand how these tools work becausethey’re going to come up in cases. The analogyI draw is what if I was a judge in traffic courtand I never learned how to drive? The realreason is I want to stay up-to-date to see howreal people use this stuff in real life. Where Ihappen to sit I am responsible for all civildiscovery in my cases. As a U.S. Magistrate, oneof my most important roles is serving as a checkon the executive branch when serving searchwarrants. When the FBI, IRS or anybody elsewant to see what’s on your Facebook or Gmailaccount, they come to my district and come tome with an application for a search warrant. IfI’m not familiar with those subjects, I’m notdoing my job.
  28. 28. Legal Hold and Data Preservation Best Practices |27© 2012 by Zapproved Inc. All rights reserved.The final point is that under our various mutualtreaties, it’s not just our government withinterest in this data but over a hundredcountries around the world who by treaty havethe right to ask DOJ to seek that information ontheir behalf.Critical Role of Non-Attorneys in CourtJudge Grewal: I think in general one thing I findencouraging about this conference is the rigidlines between legal, HR, compliance, etc. areblurring. Fluency in the language of yourcolleagues is critical. Early conversations aboutthese issues are critical, and ahead of a massivedispute in Federal court. Policies andprocedures direct such discussions. In aparticular case it’s important for variousstakeholders to get together and understandhow these obligations are going to be met.I welcome the participation of non-lawyers whohave expertise into court. I understand thedynamics of control, but if your legal partner isunwilling or uninterested in having a non-lawyer present to engage with a judge on acertain issue at least that person needs to bebrought into the conversation ahead of thehearing so the person knows what he or she istalking about.It’s important for the non-lawyers in the roomto understand that very few judges I knowwould look askance at having a directconversation at the hearing. In fact, many of uspresume the lawyers are less sophisticated onthe issues so they have a presumption againstthem when they walk into court.Importance of Records ManagementJudge Hedges: One thing is it’s great to haverecords policy, but if the policy is notimplemented, it’s useless. Have the policy -- anda process so people know about the guidelinesand follow them.Legal Holds and DefensibilityJudge Grewal: Whatever the hold strategy, Iwant to know that what you are teaching yourpeople was actually practiced. That goes a longway towards avoiding any claims of bad faith.So audit, audit, audit.The second thing I want to drill on is the notionof consequence. In so many disputes I wrestlewith whether the individual was a rogueemployee or not. It goes a long way if weunderstand where someone went off the gridthat there was some consequence. If I am beingtold of all of these reasons why this happenedand I find there was no consequence, then Ihave to consider how seriously of an argumentthat the error was a one-off occurrence.Two Ideas to Take HomeJudge Hedges: One, whatever you do,document it. Keep a record of what you do andwhy. Two, Audit. Whatever you’re doing youhave to show that the instructions were beingfollowed.Judge Grewal: Transparency. Remember thelesson of Watergate. It wasn’t the break-in, itwas the cover-up. In so many of these instancesthe cover-up is what the judge can feel. Discloseearly, disclose often. Think about education.Goes back to what you’re teaching youremployees and your clients, and how youdocument the directives so they understand.For this to work, to rise above the mediocrity, Ithink it’s critical that the silos be broken downbetween these different functions. I can’tunderscore enough in many ways I don’t see“preservation excellence” as a legal function atall. Legal has a lot to say about datapreservation and is accountable for it, but thenotion that this is something that legal ownsexclusively is outdated. Organizations andgroups must reflect that reality. That’s whatcourts expect to see.
  29. 29. 28| Legal Hold and Data Preservation Best Practices© 2012 by Zapproved Inc. All rights reserved.Contributors(in alphabetical order)Michael Arkfeld — Principal of Arkfeld and Associates, and Director of the Arkfeld eDiscovery and DigitalEvidence Program (AEDEP) at the Center for Law, Science & Innovation, Sandra Day OConnor College ofLaw, Arizona State University. Arkfeld has extensive experience in e-discovery, having literally writtenthe book (Arkfeld on Electronic Discovery and Evidence).Craig Ball — Board Certified trial lawyer, certified computer forensic examiner, electronic evidenceexpert, and award-winning columnist. Ball routinely serves as a court-appointed special master andconsultant in computer forensics and electronic discovery and has served as the Special Master ortestifying expert in computer forensics and electronic discovery in some of the most challenging andcelebrated cases in the U.S.Elleanor Chin — Partner, Davis Wright Tremaine LLP. Chin concentrates on litigation and alternativedispute resolution with a particular emphasis on electronic discovery. She has over 12 years of litigationexperience, and represents clients in matters ranging from software contract disputes to prosecution ofnoncompetition agreements.David Cohen — Partner and Practice Group Leader for Global Records & E-Discovery Practice Group,Reed Smith LLP. Cohen has more than 25 years of commercial litigation experience, has served asspecial e-discovery counsel in many cases, represents companies in complex litigation matters, and alsocounsels clients on records management and litigation readiness issues.Hon. Paul Grewal — U.S. Magistrate Judge, United States District for the Northern District of Californiawho recently wrote Apple, Inc. v. Samsung Elecs. Co. Ltd., No. C 11-1846 LHK (PSG) (N.D. Cal. July 25,2012) that addressed spoliation issues.Maura Grossman — Counsel at Wachtell, Lipton, Rosen & Katz. Grossman has represented Fortune 100companies and major financial services institutions in corporate and securities litigation, including civilactions and white-collar criminal and regulatory investigations. Her practice presently focuses onadvising lawyers and clients on legal, technical, and strategic issues involving electronic discovery andinformation management, both domestically and abroad, as well as on matters of legal ethics.Hon. Ronald Hedges — Principal in Ronald J. Hedges, LLC and former United States Magistrate Judge inthe United States District Court for the District of New Jersey. Hedges has extensive experience in e-discovery and in management of complex civil litigation matters. He serves as a special master,arbitrator, and mediator specializing in e-discovery and privilege issues.Mollie Nichols — Partner, Redgrave LLP. Nichols brings more than twenty-five years of experience as alitigator, law professor and legal consultant on issues involving electronic discovery and evidence in bothcivil and criminal litigation. Prior to joining Redgrave LLP, Mollie was the Director of eDiscovery andLitigation Services for an Am Law 50 firm. In this role, Mollie was responsible for overseeing the firm’seDiscovery, litigation technology, cases on-line and court procedures groups.Robert Owen — Partner, Sutherland Asbill & Brennan LLP. Owen has more than 35 years of experiencein New York commercial litigation and is a nationally recognized adviser to financial services, energy andtechnology companies. He has handled hundreds of cases before federal and state courts andarbitration panels throughout the United States. Prior to joining Sutherland’s Litigation Practice Group,Bob led the commercial litigation boutique firm of Owen & Davis PC, which he co-founded.
  30. 30. Legal Hold and Data Preservation Best Practices |29© 2012 by Zapproved Inc. All rights reserved.Nicholas Pace — Social Scientist, The RAND Corporation Institute for Civil Justice. Pace has contributedhis expertise in civil justice–related research methodology to many projects for the RAND Institute,including a recent study he led that explored issues associated with class actions against insurers. Otherrecent projects include researching the legal and implications of electronic discovery.Dawn Radcliffe — Discovery Manager, TransCanada Pipelines. Radcliffe is responsible for managing theelectronic discovery efforts and services for the organization, and has extensive experience in e-discovery, litigation support and hold order management. Radcliffe has also served as eDiscoveryProject Manager for Vinson & Elkins among numerous other IT and practice support roles.Charlotte Riser Harris — Manager, Practice Support, Hess Corporation. Harris has twenty-five plus yearsin the legal industry including paralegal, team leader, project management, litigation support, anddepartment supervision and management. She has proven expertise in the restructuring of a litigationsupport department around the demands of electronic discovery.Susan Small — Litigation Administrator, Assurant. Small has twenty-plus years of experience in the legalindustry, including serving as litigation administrator where she oversees among other tasks thelitigation hold process for Assurant. She has also served as a senior litigation paralegal at a law firm.Denise Talbert — Partner and Chair of eDiscovery, Data and Document Management Practice (eD3),Shook Hardy & Bacon LLP. Talbert is a partner in the Global Product Liability Group and BusinessRecords Management & Consultation Practice. She has over 16 years of experience in cost-effectivediscovery management in complex litigation, including the preservation, collection, organization, review,and production of documents.Mark Tamburri — Senior Associate Counsel and Vice President of Litigation, University of PittsburghMedical Center. Prior to joining UPMC, Tamburri was a partner at Reed Smith where he was in charge ofassociate development for the firm’s Commercial Litigation Group. His extensive experience includescommercial litigation matters, prosecuting and defending claims against corporate fiduciaries, defendingmedia companies in libel cases and helping the public to access government records.Mikki Tomlinson — Director, Strategic Consulting Division, eDJ Group Inc. (parent company of theeDiscovery Journal). Tomlinson has over 20 years of executive, management and litigation supportexperience in the legal and e-discovery industries. Her diverse experience ranges from creating asuccessful legal consulting and training company to developing and managing the litigation supportdepartment of a Fortune 250 corporation. Prior to the eDJ Group, Mikki served as E-Discovery Advisorfor Chesapeake Energy Corporation.David Walton — Member and Co-Chair of E-Discovery Task Force, Cozen OConnor. Walton is a memberin the firm’s Labor & Employment Group and co-chair of the firms E-Discovery Task Force. Heconcentrates his practice on all aspects of employment litigation. He has extensive experience inlitigating matters involving restrictive covenants, trade secrets, fiduciary duties, and defendingemployers targeted by discrimination lawsuits.Paul Weiner — Shareholder, National e-Discovery Counsel, Littler Mendelson, P.C. In his current role,Weiner provides focused guidance and expertise on electronic discovery matters to Littlers lawyers andtheir clients, ranging from case and client-specific advice about meeting preservation obligations,addressing initial "meet and confer" obligations, handling court appearances that address eDiscoverymatters, developing strategies for efficient and effective data harvesting, review and production, toimplementing cost-shifting/reduction strategies.
  31. 31. 30| Legal Hold and Data Preservation Best Practices© 2012 by Zapproved Inc. All rights reserved.Appendix A – Selected Cases Related to DataPreservation, Legal Holds and SpoliationCase Reference DescriptionScentsy Inc. v. B.R. Chase LLC, No. 1:11-cv-00249-BLW, 2012 WL 4523112 (D. IdahoOct. 2, 2012)Copyright infringement case where defendant filed a motion to compelforensic examination. Court concluded plaintiffs litigation hold and documentretention policies were "clearly unacceptable" (lack of written legal hold;timing of verbal hold coinciding with filing complaint; routine email dispositionafter 6 months). Court ordered additional depositions (along with potential foradditional sanctions if spoliation found to have occurred).Hynix Semiconductor, Inc. v Rambus, Inc.No. C-00-20905 RMW (N.D. Cal. Sept. 21,2012)Upon appeal, two federal court cases (Hynix v Rambus and Micron Tech vRambus) were remanded after finding differing conclusions regardingspoliation claims with nearly identical underlying facts. Originally, in Hynix, thecourt determined that Rambus did not spoliate documents. The Federal Circuitcourt concluded that the court had "applied too narrow a standard offoreseeability." Following reconsideration, the court concluded the earliertrigger date and that Rambus had therefore committed spoliation.Apple v. Samsung Elecs. C. Ltd. No. C 11-1846 LHK (PSG) (N.D. Cal. July 25, 2012)In this patent infringement case, court agreed with Apple in seeking an adverseinference for data spoliation due to failure to suspend automated deletion ofemail (and lack of email being produced from 14 key fact witnesses for relevanttime period)Chin v. Port Authority of New York NewJersey Nos. 10-1904-cv(L), 10-2031-cv(XAP),2d Cir., July 10, 2012In this Second Circuit Court of Appeals employment discrimination opinion,Chin sought a spoliation sanction for Port Authoritys purported grossnegligence for failure to issue a written legal hold; court rejected SDNY "per se"gross negligence argument, finding that in this case there was no prejudicesuffered due to ample evidence being produced by the Port.Omogbehin v. Cino 2012 U.S. App. LEXIS12545, (3d Cir. N.J. June 20, 2012)Employment discrimination suit where plaintiff filed a motion allegingspoliation; court concluded that plaintiff had failed to prove that supposedemails had in fact existed (an no allegation of faulty legal hold processes)In re: Oil Spill by the Oil Rig “DeepwaterHorizon” in the Gulf of Mexico on April 20,2010 E.D.La., MDL No. 2179Former BP drilling engineer indicted on April 24, 2012 on that charges hedeleted text messages relevant to the ongoing lawsuit (obstruction of justice)GenOn Mid-Atlantic LLC v. Stone &Webster Inc., No. 11 Civ. 1299(HB)(FM)(S.D.N.Y. Apr. 20, 2012)In this contract dispute, defendant alleged spoliation by data held by a third-party; court found that the duty to preserve did extend to data under "practicalcontrol" of the party, but denied sanctions due to lack of prejudice shown.
  32. 32. Legal Hold and Data Preservation Best Practices |31© 2012 by Zapproved Inc. All rights reserved.BYU v. Pfizer Inc. (D. Utah, April 16, 2012) BYU alleged that 1) Pfizer’s initial inquiry for legal advice following itswithdrawal from the research arrangement was a preservation “triggering”event and 2) that Pfizer’s 1994 litigation “sensitized” it to the possibility thatadditional interested parties might come forward. Court denied that the dutyto preserve had attached 12 years prior to filing complaint.Danny Lynn Electrical v. Veolia ES SolidWaste No. 2:09CV 192-MHT, 2012 U.S. Dist.LEXIS 31685, (M.D. Ala. March 9, 2012)In denying a motion for sanctions late in the case, the court concluded that thedefendant had not acted in bad faith, that an effective litigation hold processwas in place, and the degree of prejudice suffered was minimal.Tracy v. NVR Inc., 04-cv-6541L (W.D.N.Y.,March 26, 2012)In this FLSA class-action lawsuit, plaintiffs moved to compel production oflitigation hold notices and list of recipients, based on preliminary showing ofspoliation of potentially similarly-situated opt-in plaintiffs (despite ordinaryprotection that hold notices are protected by privilege). The motion wasdenied on the grounds that the plaintiffs failed to demonstrate that the duty topreserve extended to potential opt-in plaintiffs, nor that spoliation hadoccurred. In contrast, the court did grant NVRs motion for spoliation againstone of the opt-in plaintiffs.State National Insurance Co. v. County ofCamden 08-cv-5128 (D.N.J. March 21,2012)Finding the Countys efforts severely lacking ("including a failure to institute alegal hold after the trigger event, suspend auto-deletion of email, or retaincopies of any back-up tapes"), the Court ordered monetary sanctions despitefinding no actual spoliationPouncil v. Branch Law Firm Case No. 10-1314-JTM-DJW (D. Kan. Mar. 7, 2012)In this malpractice product liability case, motion to compel defendant forfailing to take proper steps to preserve ESI (including court-ordered litigationhold, additional discovery and monetary sanctions for costs)915 Broadway Associates, LLC, v. Paul,Hastings, Janofsky & Walker, LLP 2012 NYSlip. Op. 50285U (N.Y. Sup. February 16,2012)In this malpractice real estate transaction case, the court agreed with motionfor spoliation sanctions and dismissal of the claim with prejudice due to afailure to take adequate steps to preserve potentially relevant evidence(including failure to implement an effective litigation hold process, suspendautomated destruction of email, decommission and discarding of an integralemail server)Pippins v. KPMG LLP 279 F.R.D. 245(February 3, 2012)During the stay of discovery in this FLSA class-action lawsuit, KPMG sought aprotective order limiting the scope of preservation efforts due to the burdenimposed by preserving hard drives for thousands of former employees thatmight fall within a potential FLSA collective. After failing to resolve the dispute,the court concluded that it would be premature to limit scope of preservation.Voom HD Holdings LLC v. EchoStar SatelliteLLC 2012 NY Slip Op 00658 (January 31,2012)Contract dispute, confirming lower court sanctions due to EchoStar failed toissue a legal hold once litigation could be “reasonably anticipated” and failed tosuspend automatic email deletion until four months after the suit was filedresulting in a loss of relevant emails.Perez v. Vezer Industrial Professionals, Inc.2011 WL 5975854 (E.D. Cal. Nov. 29 2011)Personal injury case where no litigation hold was implemented and "minimal, ifany, efforts were made to preserve relevant documents and ESI"; smallmonetary sanction awarded to plaintiff (due to lack of gross negligence andminimal prejudice suffered)
  33. 33. 32| Legal Hold and Data Preservation Best Practices© 2012 by Zapproved Inc. All rights reserved.NACCO Materials Handling Group, Inc. v.Lilly Co. (No. 11-2415 AV, 2011 WL5986649, W.D. Tenn. Nov. 16, 2011)In this case involving improper access to secure dealer website, Lilly failed totake reasonable steps to preserve (e.g., failure to issue company-wide litigationhold due to scope of allegations, to suspend auto-delete and routineoverwriting features, or to collect ESI), resulting in court-imposed preservationactions and monetary sanctions.N.V.E., Inc. v. Jesus J. Palmeroni, et al. CivilAction No. 06-5455 (ES), 2011 U.S. Dist.LEXIS 107600 (D.N.J., September 21, 2011)Wrongful termination case where defendant admits to not issuing a legal holdand found to be "was grossly negligent in failing to preserve" records (e.g.,destroying ESI from a computer system that was subsequently upgraded)E.I. Du Pont De Nemours & Co. v. KolonIndus., Inc. No. 3:09cv58, 2011 WL 2966862(E.D. Va. July 21, 2011)In this countersuit, Kolon was found to have failed to implement an effectivelegal hold process and key players indicating intentional destruction of relevantdocuments; adverse inference in lieu of default judgment (citing efforts inissuing litigation holds and subsequent efforts to preserve files)Haraburda v. Arcelor Mittal USA, Inc. No.2:11 cv 93, 2011 WL 2600756 (N.D. Ind.June 28, 2011)Employment discrimination case where defendant chose to defer issuing alitigation hold or implement a process to preserve evidence until after the Rule26(f) conference; court agreed with motion to compel and ordered placing anappropriate legal holdGaalla v. Citizens Medical Ctr. 2011 WL2115670 (S.D. Tex. May 27, 2011)Plaintiffs sought sanctions in response to the defendant’s failure to preservedisaster recovery backup tapes. The court ruled against sanctions, findingpreservation efforts that were undertaken were reasonable, including issuing atimely litigation hold, making timely snapshots of relevant email accounts andinstituting journaling.Surowiec v. Capital Title Agency, Inc. 2011WL 1671925 (D. Ariz. May 4, 2011)Finding gross negligence for inadequate preservation efforts and discoverymisconduct, including failing to issue a timely litigation hold and suspendroutine document destruction when the defendant should have reasonablyanticipated litigation, the court imposed monetary sanctions and an adverseinference instruction.E.I. du Pont de Nemours and Co. v. KolonIndus., Inc. 2011 WL 1597528 (E.D. Va. Apr.27, 2011)Despite a claim by the plaintiff that critical information was lost, the courtdenied sanctions for willful spoliation, citing that a defendant’s duty topreserve is not absolute, but must only be reasonable and proportional to thecircumstances.Steuben Foods, Inc. v. Country GourmetFoods LLC WL 1549450,WDNY April 21,2011Breach of contract case where defendant asserted plaintiffs reliance on averbal legal litigation hold and failure to produce at least three emailswarranted spoliation sanctions; court found no evidence of spoliation orresulting prejudiceStar Direct Telecom, Inc. v. Global CrossingBandwidth, Inc. 2011 WL 1125493(W.D.N.Y. Mar. 21, 2011)Among numerous discovery disputes, plaintiff sought spoliation sanctions fordestruction of emails; court concluded that duty to preserve arose whencomplaint was filed (not earlier as contended by Star Direct); however, failingto issue a litigation hold nor take adequate steps to preserve amounted togross negligence and imposition monetary sanctionsGreen v. Blitz U.S.A., Inc. 2011 U.S. Dist.LEXIS 20353 (E.D. Tex. Mar. 1, 2011)Product liability case where court found defendant failed to preserve ESI (andeven encouraging deletion in line with records policies); monetary sanction andorder to provide Memorandum to opposing counsel in every lawsuit forforthcoming five years
  34. 34. Legal Hold and Data Preservation Best Practices |33© 2012 by Zapproved Inc. All rights reserved.Philips Electronics North America Corp., etal. v. BC Technical No. 2:08-CV-639-CW-SA,2011 WL 677462 (D. Utah Feb. 16, 2011)Copyright infringement and misappropriation of trade secrets; failure to issuetimely litigation hold while key players "wantonly destroyed incriminatingevidence", resulting in sanctions and summary judgment for plaintiffUnited States v. Halliburton Co. 2011 WL208301 (D.D.C. Jan. 24, 2011)Plaintiff requested additional production of emails from an expanded list ofcustodians, despite significant production that had already been completed.The court determined that the plaintiff had failed to demonstrate that missingemails were crucial, and that additional discovery was not warranted.Orbit One Communications, Inc. v.Numerex Corp. 2010 WL 4615547 (S.D.N.Y.,Oct. 26, 2010)Despite the failure to "engage in model preservation," the court denied amotion for spoliation due to insufficient evidence that any lost ESI was relevantto the case (rejecting notion that failing to issue a written legal hold is "per se"gross negligence).Victor Stanley, Inc. v. Creative Pipe, Inc., etal. (D.MD, Sept. 9, 2010)Copyright and patent infringement, unfair competition involving purposefuldestruction and overwriting of files in order to obfuscate incriminatingevidence, resulting in sizable monetary sanctions and default judgment oncopyright infringementMedcorp, Inc. v. Pinpoint Tech., Inc. 2010WL 2500301 (D. Colo. June 15, 2010)Case involving intentional destruction of 43 hard drives containing relevantinformation; finding negligence, court issued monetary sanctions and adverseinference instruction against MedcorpJones v. Bremen High School Dist. 2282010 WL 2106640 (N.D. Ill. May 25, 2010)Wrongful termination where defendant failed to issue a litigation hold untilwell after trigger event, lack of meaningful guidance to key players, andcontinued automatic destruction of ESI (including backup tapes for email);finding gross negligence, sanctions included cost shifting and additionaldepositionsPasslogix, Inc.v.2FA Technology LLC, et al.2010 WL 1702216 (SDNY Apr. 27, 2010)Breach of contract case involving 2FAs failure to issue a legal hold (despitebeing a small company) and intentional bad-faith spoliation resulting inprejudice; monetary sanction designed to punish bad actors directlyMerck Eprova AG v. Gnosis S.p.A. et al. 07Civ. 5898 (SDNY Apr. 20, 2010)Mislabeling of a nutritional agreement involving inadequate preservationefforts (lack of litigation hold, failure to suspend automatic email deletion andinadequate supervision of custodian search; finding of gross negligence andmonetary sanctions and additional depositionCrown Castle USA, Inc. v. Fred A. NuddCorp. 2010 U.S. Dist. LEXIS 32982, (WDNYMar. 31, 2010)Product liability case involving gross negligence due to a failure to monitor theapproach used to determine where and what to look for in terms of responsivedocuments; failure to suspend auto-delete of emails; and failure to issue legalhold (rejecting adverse inference due to lack of bad faith and prejudice)Rimkus Consulting Group Inc. v. Nickie G.Cammarata, et al., 07-cv-00405 (SDTX Feb.19, 2010)Non-compete and misappropriation of secrets; lack of written hold and willfuldestruction of evidence by the defendants after the duty to preserve hadattached, resulting in monetary sanctions and adverse inference instructionPension Comm. v. Banc of America Sec.,LLC 685 F. Supp. 2d 456 (S.D.N.Y. January15, 2010)Complex litigation case where several plaintiffs were found to have failed toimplement reasonable preservation efforts, including failure to issue writtenlegal holds and other shortcomings resulting in finding of gross negligence

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