Litigation Holds Are Mandatory Not Optional

I’ve had several new engagements in the past 6 weeks and in each case I’ve been surprised to learn that the new client does not have a mandatory litigation hold policy. Rather, they assess each case as it comes in and decide whether or not to issue a litigation hold.  This rather casual attitude towards litigation holds strikes me as an echo of the words of Judge Shira Scheindlin in Pension Committee of the Univ. of Montreal Pension Plan, et al., v. Banc of America Securities, LLC, et al.  (“Pension Committee”), when she said that litigants are still conducting electronic discovery in an “ignorant and indifferent fashion.”

So let’s take a look at the requirements for a litigation hold and where they came from. First, let’s keep in mind that the obligation to preserve evidence began well before the ED rule changes in 2006. First, as Judge Scheindlin points out in Pension Committee,  “The common law duty to preserve evidence relevant to litigation is well recognized.”  And Judge Scheindlin herself set the modern standard for litigation holds two years before the rule changes. In Zubulake V, issued in 2004, she specifically held that counsel MUST issue a litigation hold when litigation either commences or is reasonably anticipated and further that the hold must be communicated clearly to key players who have relevant information under their control and that those players should be periodically reminded of the preservation duty.

Although the 2006 rule amendments did not codify this position, it was endorsed in a 2007 Sedona Conference commentary, has been cited in numerous court decisions, both state and federal (cf, Synventure v Husky, 2009 U.S. District Lexis 105306 (D. Vt. Mar. 13, 2009)) and is being incorporated by the most recent state rule changes, notably the California Electronic Discovery Act of 2009.   And now Judge Scheindlin has returned to the issue with her ruling in Pension Committee.

And she makes it quite clear. The duty to preserve is a duty, not a choice.  The failure to adequately preserve documents will cause spoliation and that equals gross negligence. The failure to issue a written litigation hold equals gross negligence.  The failure to suspend routine document retention and/or destruction policies as part of a litigation hold will equal gross negligence.

You MUST do the following according to Judge Scheindlin:

      1. Identify all key players

      2. Issue them a written litigation hold

      3. Ensure that no records are destroyed

      4. Cease deletion of any and all relevant email

      5. Preserve the records of any former employees which may be relevant

      6. Preserve backup tapes if they are the only source of any relevant information

      7. Reissue the litigation hold on a regular basis to ensure compliance

Failure to take these steps may result in sanctions including the allowing of further discovery, cost shifting, fines, special jury instructions, preclusion of evidence and default judgement or dismissal.

I strongly urge all attorneys and their corporate clients to read the Pension Committee decision and familiarize yourself with it’s findings.  They are not just suggestions, they are requirements.


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