Diligent, organized recordkeeping is essential to the day-to-day operations of any successful business. It is also critical when your business faces litigation, whether the litigation is over a contract, employment matter, or any of the other potential legal disputes businesses face on a regular basis.
The duty to preserve states that, when a lawsuit is reasonably anticipated, there is a legal obligation on all possible parties to the case to preserve all potentially relevant information within their control, whether that information is in physical or digital format. There are several issues within that seemingly straightforward task that must be addressed.
First, when can a lawsuit be reasonably anticipated? That is a question that can only be answered on a case-by-case basis. If you are contacted by an attorney and notified of a possible lawsuit against you or your business, litigation can be reasonably anticipated. If you have an employee who is simply disgruntled or you have a minor dispute with a vendor that can be easily resolved, you may not have to reasonably anticipate litigation (that could change if the matter escalates). Each situation is unique, and a variety of factors must be considered in making the determination. However, if you have reliable knowledge that a lawsuit is forthcoming and you wait until the lawsuit has been filed or served to begin preservation efforts, you could face severe consequences in the form of sanctions by the Court if you have failed to preserve information that is relevant to the case. Sanctions could increase the costs of litigation or severely hurt your chances in succeeding at trial as the Court may allow the jury to infer that the information that you did not preserve would have been unfavorable to you.
Second, what information is potentially relevant? Once again, this must be determined on a case-by-case basis and is dependent on a variety of factors. In determining what is potentially relevant, it is best to take a broad approach, but to begin with the basics. For example, information relevant to a potential wrongful termination lawsuit brought by a former employee would include at least all files on the former employee (e.g. job description, application materials, interview notes, evaluations, pay/benefits, promotions, recognition, discipline, etc.), all internal communications pertaining to the former employee, and all company policies, regulations, rules, and guidelines that applied to that former employee at any time during his or her employment. There will likely be several additional categories of information that would need to be preserved depending on the precise nature of the potential lawsuit and the surrounding circumstances but starting with the basics allows you to efficiently identify those broader categories.
Third, what information is under your control? This is perhaps the most difficult question to answer because it is not necessary to have ownership or physical possession of information for it to be considered under your control. For example, information that is owned or possessed by another individual or entity that you have a right to request or access could still be considered under your control such that the duty to preserve would attach to it. It is best to take a broad approach and map out all potentially relevant information first before identifying what is under your control. Anything pertinent to your business that is under the control of your employee, agent, or representative is subject to the preservation requirement, which means the preservation measures must be applied company wide. It is, therefore, essential that all who have access to or the ability to destroy/alter information are aware of the preservation protocol.
To satisfy the duty to preserve, you must take all reasonable steps necessary to identify, locate, and maintain all information and documents, including e-mails and other electronically stored information, that could potentially be relevant to the lawsuit. This is often referred to as a litigation hold. At a minimum, a litigation hold should include the following:
1. Suspending deletion, overwriting, or any other destruction of electronic information relevant to the subject of the litigation that is under your control. This includes electronic information wherever it is stored, potentially including personal laptops or at home. It includes all forms of electronic communication, including e-mail, word documents, calendars, voice messages, videos, photographs, and information on your cell phone. This electronic information must be preserved so that it can be retrieved at a later date in its original electronic format.
2. Preserving any new electronic information that is generated after you have reason to anticipate a litigation which is or may be relevant to the litigation.
3. Preserving any hard copy document or object under your control which is or may be relevant to the litigation.
These three points are simply a basic overview of what measures must be taken to preserve information in anticipation of litigation. Within these points are numerous legal issues and questions to be answered. Three of those (1. When can litigation be reasonably anticipated? 2. What information is relevant? 3. What information is under your control?) are briefly addressed above, but there are several layers to these issues and many more to consider when implementing a thorough litigation hold plan.
The attorneys at Behr, McCarter & Potter, P.C. are experienced in representing businesses of all sizes in state and federal trial and appellate courts in Missouri and Illinois, in arbitration, and in successfully resolving disputes outside of the litigation process. If you have questions about litigation your business is facing, please do not hesitate to contact our office for assistance.
Author: Ryan Hyde