DOCUMENT RETENTION ISSUES FOR IN- HOUSE COUNSEL

Transcription

1 DOCUMENT RETENTION ISSUES FOR IN- HOUSE COUNSEL Rebecca A. Brommel BrownWinick 666 Grand Avenue, Suite 2000 Des Moines, IA Telephone: Facsimile:

2 Document Retention - Generally Purpose: Set forth how your company will preserve and destroy information Purpose: Ultimately save time in searching for up to date and necessary information Purpose: Helps business deal with documents when and if litigation or investigations occur

3 In-House Counsel Responsibilities Development of the Policy Oversee records inventory and appraisal Help identify legally required retention periods Update policy as law or technologies change Enforcement of the Policy Training of employees Review/audit procedures regularly

4 In-House Counsel Responsibilities (con t) The Litigation Hold Clear procedures set forth in policy Be in charge (or determine who is in charge) of determining when the hold is in effect Communication to employees Determination of scope of hold Determine when hold expires

5 Litigation Holds Generally May apply even if you are not a party to the litigation, but are simply a holder of documents/information Reasonably foreseeable litigation Service of petition/complaint Demand letter Subpoena or informal request for records Legitimate verbal threat of litigation Notice of investigation by law enforcement or government agency Formal employee complaints to management Incident involving personal/property injury

6 Duty to Preserve The litigation hold relates to company s duty (and your duty as attorney) to preserve evidence Minimum duty develop and oversee and preservation process, even if you do not yet have a formal document retention policy Also duty to alert others with relevant documents through issuance of hold letters

7 What do you do? Assess scope of necessary hold Discuss with others internally who hold those documents Determine whether there are those outside who also hold relevant documents Discuss and determine the costs of review, retrieval, costs and strategy of the hold and any necessary response

8 Duty to Preserve Test for Sanctions 1. Is the document retention policy reasonable considering the facts and circumstances surrounding the records at issue? 2. Have lawsuits or complaints been filed concerning the types of records at issue? If so, what is the frequency and magnitude of those lawsuits or complaints? 3. Was the document retention policy instituted in bad faith?

9 Duty to Preserve Test for Sanctions (con t) Standards may be different pre v. post litigation commencement Typically requires: Evidence of intent to destroy Intent to destroy is for purposes of obstruction or suppressing the truth Evidence of bad faith/mal-intent Opposing party is prejudiced by the destruction

10 Duty to Preserve - Sanctions Payment of reasonable expenses, including attorney fees Adverse Jury Instruction Orders from Court: Establishing certain facts Refusing to allow your company to support or oppose certain claims/ defenses Refusing to allow your company to introduce certain evidence Striking parts of pleadings/defenses Stay of proceedings until documents provided Dismissal of action (if plaintiff) Judgment by default (if defendant) Contempt of court

11 Case Law Examples Nacco Materials Handling Group, Inc. v. The Lilly Co., 2011 WL (W.D. Tenn. Nov. 16, 2011) Lawsuit arose from Lilly s alleged unauthorized use of Nacco s secure dealer website Lawsuit served 2/25/2011 Lilly s attorney sent litigation hold letter to Lilly s President 3/09/2011 providing specific instructions as to issuance of a litigation hold and the wide sweep of the hold Lilly s President only sent letter onto 7 others in company 5/2011 Lilly searched electronic servers for term Yale (Nacco s d/b/a)

12 Case Law Examples (con t) Nacco Materials Handling Group, Inc. v. The Lilly Co. (con t) Lilly failed to: Issue company-wide litigation hold (only sent to 7 of 160 employees, not even all the key players ) Provide additional instruction to employees re: the hold Take steps to prevent s from being deleted, to prevent data from being overwritten or to identify and preserve backup tapes Take steps to collect evidence from key players or search key players computers to determine if information existed Oversee or supervise the collection process (left it up to employees) Did not follow up with employees to determine what efforts had been made Document their search and collection efforts Identify a person in charge of the preservation, search and collection To retain a technical expert (because they were not equipped to handle the computer searches)

13 Case Law Examples (con t) Nacco Materials Handling Group, Inc. v. The Lilly Co. (con t) Court first determined degree of culpability was the conduct negligent, grossly negligent, or willful, wanton and reckless Exhibits the continuum of fault that many courts are now using to determine sanctions in failure to preserve cases Court found that Lilly was, at a minimum, negligent Sanctions: Reimbursement of costs to Nacco for its forensic examination of Lilly s computers and forensic examination of hard drives Payment for mirror imaging of computers of persons in Lilly s parts department Lilly also required to file an affidavit detailing each step it took to preserve, search for and collect potentially relevant information from date of service of complaint to present, detailing the date and person taking such steps Also awarded Nacco its reasonable costs, including attorney fees, associated with bringing the Motion

14 Case Law Examples (con t) Innis Arden Golf Club v. Pitney Bowes, Inc., 257 F.R.D. 334 (D. Conn. 2009) Innis Arden sued Pitney Bowes and other potentially responsible parties (PRPs) under CERCLA and state law to recover costs incurred in removing PCB from its property Innis Arden failed to preserve soil samples Court held that duty to preserve began when Innis Arden s counsel was actively involved in investigation and analysis of samples in preparation for legal action against the PRPs and when they hired the company to do the sampling Even though Court did not find purposeful destruction, the loss was significant and could not be adequately remedied by an adverse jury instruction Sanction imposed: preclude Innis Arden from introducing any evidence based upon the soil samples it took and then subsequently destroyed (note impact on expert witness testimony) Lessons: (1) Plaintiffs have equal duty to preserve; (2) even if not purposeful destruction, importance of evidence can impact sanctions

15 Lessons Learned Have a good written document retention plan Be diligent upon receipt of anything that triggers a litigation hold Control and oversee the hold process Document the who, what, when and where of the hold process Regularly review and audit procedures and employee compliance

16 Website: Toll Free Phone Number: OFFICE LOCATIONS: 666 Grand Avenue, Suite 2000 Des Moines, Iowa Telephone: (515) Facsimile: (515) Franklin Place Pella, Iowa Telephone: (641) Facsimile: (641) DISCLAIMER: No oral or written statement made by BrownWinick attorneys should be interpreted by the recipient as suggesting a need to obtain legal counsel from BrownWinick or any other firm, nor as suggesting a need to take legal action. Do not attempt to solve individual problems upon the basis of general information provided by any BrownWinick attorney, as slight changes in fact situations may cause a material change in legal result.