Don't Wait Until It's Too Late: What You Need to Know Now About Preserving Electronic Evidence

June 5, 2008 — 1,102 views  

The Federal Rules of Civil Procedure have been revised to deal with electronic discovery issues, and the changes to the rules give us yet one more excuse to convey the message. Some very nasty verdicts have come from cases where one party failed to preserve or produce electronic evidence.

We hope that most of our readers are familiar with Zubulake, a decision from a federal court in New York, in which the employer’s failure to preserve electronic evidence in a discrimination case entitled the plaintiff to an “adverse inference” jury instruction – that is, the judge told the jury to infer that the missing documents were favorable to the plaintiff. The verdict was $29MM.

Last spring, in a fraud case, Morgan Stanley & Co. was hit with a verdict of $1.5 billion, in large part because of another “adverse inference” jury instruction given by the judge after the firm failed to comply with the court’s Orders regarding electronic discovery.

Don’t let this happen to you! While you still can, get familiar with the new rules, and have a plan in place.

Ninety-eight percent of information created today is digital and stored electronically. The displacement of tangible documents by electronic ones has caused a great deal of confusion in our legal system, specifically in the practice and procedure of litigation.

Here are the highlights of the new federal rules, which will take effect at the end of the year:

A “DOCUMENT” IS A DOCUMENT. For litigation purposes, electronic documents are no different from any other documents. They must be maintained and produced during discovery just like tangible, paper documents.

AVOID “SPOLIATION.” PRESERVE! The law imposes a duty to preserve information relating to a matter in litigation. The duty arises as soon as one knows, or reasonably should know, that a dispute will result in litigation. The duty to preserve is particularly important in the electronic environment where documents, e-mail correspondence and other electronic information is subject to being altered or routinely purged from the host computer system. It is imperative that businesses implement procedures for placing a “litigation hold” on all e-documents, e-mail correspondence and other electronic information relating to any matter that may result in litigation to preserve it and exempt it from being automatically altered or deleted from the computer system.
DON’T WAIT TO BE SUED. Don’t wait until you get a lawsuit to start preserving electronic evidence. When an employee threatens to sue, or files an administrative charge, that is the time to start preserving the evidence. Remember that the guideline is whenever the company knew or reasonably should have known that litigation would result.

“EVERYDAY FORMAT” IS OK. Unless otherwise requested or ordered by the court, electronic information may be produced in the form in which it is maintained in the ordinary course of business or in a form that is reasonably usable.

DON’T PROCRASTINATE. When litigation begins, the rules require the parties to discuss electronic discovery issues early in the discovery process and to address any issues involving the discovery of electronic information in a joint discovery plan. In light of this requirement, parties must consult with counsel at the earliest possible opportunity about the nature and scope of electronic discovery issues raised by the litigation.

DON’T FORGET IT. With all due respect to the legal profession, lawyers are not particularly well-equipped to know how to preserve and retrieve relevant electronic evidence. Therefore, any consultations about preserving electronic evidence should include the client’s IT specialists and, if necessary, outside IT consultants. IT specialists should be integrated into the litigation team to provide access to the party’s electronic data and technological support as appropriate during the course of the lawsuit.

A WORD ABOUT INSTANT MESSAGING. Employers should be aware that instant messages are discoverable, too. Many employees will load their “private” instant messaging programs onto their workplace computers, and send instant messages throughout the workday. Retrieval of instant messages through “private” programs may be difficult and expensive. Moreover, instant message communications tend to be even more casual and more potentially “inappropriate” than e-mail communications. Employers have two good options for dealing with instant messaging by employees: (1) ban it completely, and make sure the system blocks the operation of all such programs; (2) allow it, but make sure a system is in place to preserve all instant message communications and – most importantly – make sure all employees understand the risks involved in instant messaging – particularly about workplace topics.

DO ALL THESE THINGS, AND ENJOY SMOOTH SAILING INTO THE “SAFE HARBOR” The new rules have a “Safe Harbor” provision, which protects against sanctions where a party has lost, altered, or destroyed relevant electronic evidence “in good faith.” A court’s inquiry into a party’s good faith will focus on the party’s knowledge that the information was relevant to the matter in litigation, the party’s efforts to preserve the information, and whether the information was lost, altered or destroyed despite the party’s efforts to preserve it. Following all the other steps described in this Bulletin will make it much more likely that your company will sail into the Safe Harbor.

Constangy, Brooks, & Smith, LLC