Minimize your risk with document preservation

 Scott Randolph, The Daily Record Newswire

Businesses that have been sued or anticipate being sued face many challenges. One is the preservation of all relevant documents. Idaho courts can impose monetary sanctions, throw out defenses and even rule against a party on its entire case when that party fails to take appropriate measures to preserve necessary electronic and written communications and documents. Knowing what steps to take to ensure appropriate document preservation will go a long way in minimizing the risk of sanctions and adverse rulings in court.

Preserve all potentially relevant documents

In the event a dispute exists where litigation may be on the horizon, companies have an obligation to preserve all potentially relevant documents, regardless of the form in which they are kept or any document retention policy that otherwise might apply. The meaning of “document” in this context is very broad and includes electronic information that may reside in the cloud, in remote server farms, on mobile devices, and on the equipment of employees who work outside the office.

The duty to preserve relevant documents is triggered when a company or individual “reasonably anticipates litigation.” The party must immediately suspend its routine document retention/destruction policy and put in place a ‘litigation hold’ to ensure that managers, employees and others preserve all relevant documents. Routine document destruction must stop and back up tapes, surveillance videos, server logs, e-mail archives, and all other potential sources of relevant data must be retained.

Sanctions for “spoliation”

The failure to properly preserve data is known as “spoliation.” According to the Idaho Supreme Court, when the destruction of data is intentional, courts may infer that the destroyed evidence was unfavorable to that party. Even when the destruction of documents is not intentional, courts may impose spoliation sanctions including ordering the offending party to pay the other party’s attorneys’ fees and costs. An Idaho federal court recently dismissed a party’s entire case because that party had not identified and produced relevant information during the lawsuit.

In another recent case, a federal court within the Ninth Circuit imposed sanctions on a party where it failed to produce email messages after a certain date and failed to produce any Gmail messages despite the fact that the use of a Gmail account by the defendant executive was undisputed. Even though there was no showing of bad faith or intent by the non-producing party, the court still awarded sanctions based upon a finding that the defendant failed to preserve and produce the documents.

Steps for proper document preservation

Preserving data can be difficult and expensive, but it is worth every headache and penny. Companies that reasonably anticipate litigation should consider taking the following steps to institute a proper “litigation hold”:

• Identify all employees, agents, consultants and other persons who may have relevant data and inform them of their obligation to preserve both hard copy and electronic information, including information on mobile devices and home computers.

• Instruct stakeholders and identified employees not to modify or forward information to others as that may change the data or result in inadvertent destruction.

• Inform internal IT personnel to stop normal document destruction procedures and to retain all relevant data, including back up tapes, e-mail archives, etc.

• Notify third parties that maintain your data, such as cloud service providers, of your preservation obligation.

• Consider hiring a third-party vendor to assist with document preservation.

• Keep your preservation policy in place for the duration of the litigation, including any appeal.

By implementing an appropriate document preservation policy and ensuring compliance with it, parties who are facing or contemplating litigation will limit their exposure to sanctions and adverse court rulings due to intentional or inadvertent document destruction. After all phases of the litigation are over, parties may safely resume their normal retention and destruction policies.

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Scott Randolph is a litigation partner at Holland & Hart with experience in e-discovery, complex case management, and business dispute resolution. He can be reached at 208-383-3988 or serandolph@hollandhart.com.

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