Litigation Hold Triggers and the Duty to Preserve Evidence

For a party to meet its obligation to produce relevant evidence during the discovery phase of litigation, they must first meet their obligation to preserve evidence. Often, one of the first steps an in-house lawyer takes to preserve evidence is to send a litigation hold letter (or “legal hold”) to employees that worked on the project or transaction subject to dispute.

Litigation hold letters are issued in anticipation of litigation instructing recipients to preserve relevant documents and other information. The duty to preserve relevant information is triggered when litigation is “reasonably anticipated.” Rimkus Consulting Group, Inc. v. Cammarata, 688 F. Supp. 2d 598, 612-613 n. 7 (S.D. Tex. 2010). The test for “reasonable anticipation of litigation” varies by jurisdiction, but, in general, reasonable anticipation of litigation arises when a party knows there is a credible threat that it will become involved in litigation. Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 217 (S.D.N.Y. 2003).

What is a “Credible Threat of Litigation?”

Events rising to the level of a credible threat of litigation take many forms and may occur several years before actual litigation commences. Situations triggering an obligation to preserve evidence include receipt of a demand letter, formal complaint, records subpoena, or the occurrence of an event that typically results in litigation. Additionally, a reputable media report suggesting an impending government investigation (and possible litigation) may also trigger litigation hold obligations.

Case Law Examples of Litigation Hold Triggers

The following cases illustrate various situations triggering preservation obligations:

• Bagley v. Yale University, Civ. No. 3:13-CV-1890 (D. Conn. Dec. 22, 2016) (Duty arose before filing of suit and arguably when university staff exchanged emails noting plaintiff’s threat of legal action).
• Rimkus Consulting Group, Inc. v. Cammarata, 688 F. Supp. 2d 598, 612-613 n. 7 (S.D. Tex. 2010) (Duty arose for defendants when they were planning to institute a related legal action).
• Jones v. Bremen High Sch. Dist. 228, No. 08-CV-3548 (N.D. Ill. May 25, 2010) (Duty to preserve documents arose when party received EEOC charges).
• D’Onofrio v. SFZ Sports Group, Inc., No. 06-687 (D.D.C. Aug. 24, 2010) (duty to preserve evidence triggered on receipt of letter stating that sender intended to initiate litigation and requesting preservation of electronic documents).
• Cache La Poudre Feeds, LLC v. Land O’Lakes, Inc., 244 FRD 614 (D. Colo. 2007) (No duty to preserve evidence based on “equivocal letters” about a dispute).
• Mosaid Tech. Inc. v. Samsung Electronics Co., 348 F. Supp. 2d 332, 336 (D.N.J. 2004) (Duty arose when complaint served).

Regardless of Triggering Event, Preservation Efforts Must be Reasonable

The Sedona Conference’s “Commentary on Legal Holds” explains that whether a reasonable anticipation of litigation exists and whether a party must preserve documents should be determined on a case-by-case basis based on facts known to the potential litigant. Along those lines, judicial evaluation of a party’s preservation and legal hold efforts is a factual inquiry and generally based on the good faith and reasonableness of the decision (including whether a legal hold is necessary and how the legal hold should be executed).

In Bagley v. Yale, the court offered several factors a court might consider to determine if legal hold efforts were reasonable:

1. When did a party’s duty to preserve evidence arise?

2. Did the party issue a litigation hold notice in order to preserve evidence?

3. When did the party issue a litigation hold notice, in relation to the date its duty to preserve the evidence arose?

4. What did the litigation hold notice say?

5. What did recipients of the litigation hold notice do or say, in response to or as result of, the notice?

6. After receiving recipients’ responses to the litigation hold notice, what further action, if any, did the party giving the notice take to preserve the evidence?

Adoption and compliance with an information governance policy may help demonstrate reasonableness and good faith in meeting preservation obligations as will adoption of an effective and defensible legal hold process. Implementation of these processes will minimize the risk of document spoliation (loss or destruction), sanctions, and even damage to reputation.

To meet preservation obligations, suspension of document retention and deletion protocols may be necessary. But, as the court noted in Zubulake, to comply with legal hold obligations a party is not required to preserve “every shred of paper, every e-mail or electronic document, and every backup tape.” As the Fourth Circuit Court of Appeal recently observed, “a party is not required to preserve all its documents but rather only documents that the party knew or should have known were, or could be, relevant to the parties’ dispute.”

To document preservation efforts and to fully understand the extent and nature of information to preserve, use of ESI (electronically stored information) questionnaires and custodian interviews are often advisable.

If there is even a remote chance of litigation, it is best to err on the side of caution and preserve information relevant to the dispute or run the risk of penalties, evidentiary sanctions, adverse rulings or fines. Silvestri v. General Motors Corp., 271 F.3d 583 (4th Cir. 2001). For additional information about legal holds and ESI preservation, additional articles may be found here.