Best Practices in Litigation Holds and Document Preservation. Presented by AABANY Litigation Committee

Transcription

1 Best Practices in Litigation Holds and Document Preservation Presented by AABANY Litigation Committee

2 Speakers Vince Chang Partner, Wollmuth Maher & Deutsch Connie Montoya Partner, Hinshaw & Culbertson Brian Song Partner, BakerHostetler Lisa Chan Associate, Ropes & Gray 2

3 Disclaimers Presentation does not constitute: Legal advice Solicitation of any attorney-client relationship Views expressed are solely those of the speakers, and do not necessarily represent the views of the speakers firms or their clients 3

4 WHY is document preservation important? A proper and defensible litigation hold and preservation plan is the most critical part of the discovery process Comprehensive preservation saves money Allows triage of discovery An ounce of prevention is worth a pound of cure Failure to properly preserve may distract from merits and risk a side show Costs of litigating preservation issues could force settlement No do-over in some cases 4

5 Overview, cont. Key Cases United States v. Volkswagen AG (No ) Zubulake v. UBS Warburg (S.D.N.Y. 2003) 5

6 WHAT WHAT is a litigation is a litigation hold? hold? Process of identifying, locating, and preserving potentially discoverable information Failure to properly preserve may lead to sanctions and distracts from the merits Confer with opposing counsel as soon as practicable 6

7 WHEN is the duty to preserve WHEN is the duty to preserve triggered? triggered? When litigation is reasonably anticipated, the company must suspend its routine document destruction policy and put in place a litigation hold The duty to preserve may be triggered BEFORE litigation commences 7

8 WHEN is the duty to preserve WHEN is the duty to preserve triggered? triggered? Credible threat: Reasonable anticipation of litigation arises when an organization is on notice of a credible threat that it will become involved in litigation or anticipates taking action to initiate litigation (Sedona Conference, 2007) Stedeford v. Wal-Mart, 2016 WL (D. Nev. June 24, 2016): Express demand likely to trigger duty, vs. vague statement insufficient to forecast litigation 8

9 WHEN is the duty to preserve WHEN is the duty to preserve triggered? triggered? Factors to consider whether litigation is reasonably anticipated Nature/specificity of the complaint/threat Who is making the claim Business relationship between accuser and accused Is the accuser litigious? Does the party who could assert the claim know she has a claim? Strength/scope/value of a potential claim Has company learned of similar claims? Experience in the industry Press/industry coverage of the issue 9

10 WHEN is the duty to preserve WHEN is the duty to preserve triggered? triggered? Some examples of possible trigger events Complaint filed/subpoena served/wells notice Pre-litigation demands, discussions, agreements Pre-litigation correspondence Creation of a list of potential opponents before filing a lawsuit Notice to an insurance carrier Claims filed with an administrative agency Substantive discussions about potential lawsuit Retention of counsel Action against others similarly situated 10

11 Counsel s Counsel s duties duties When a litigation hold is triggered, what are counsel s duties? Suspend routine document destruction policies and institute a litigation hold Become aware of client s current retention policy and information architecture Reasonably monitor compliance Retain and preserve, and ultimately produce some subset of preserved documents 11

12 Counsel s Counsel s duties duties: competence ABA Model Rule 1.1: A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation. Comment 8: To maintain the requisite knowledge and skill, a lawyer should keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology, engage in continuing study and education and comply with all continuing legal education requirements to which the lawyer is subject. 12

13 WHO is subject to the litigation hold? WHO should be involved? Work with in-house counsel to determine which employees are likely to have relevant information Don t forget third parties (vendors) and offsite storage (of hard copy documents and ESI) Some third parties have contractual obligations to preserve Third parties may have their own automatic destruction policies 13

14 WHAT Elements is a litigation of a litigation hold? hold A good litigation hold: Is in writing Is timely Describes the matter at issue in language that is readily understood by the custodians, who are likely not lawyers Provides specific examples of the types of information at issue Identifies potential sources of information and asks custodians to identify others who may hold relevant information Suspends routine destruction policies Informs recipients of the legal obligation to preserve information Informs of potential consequences to the custodian and organization for noncompliance Requires an affirmative response 14

15 WHAT should be preserved? WHAT should be preserved? WHERE should you look? Preservation is guided by reasonableness, so consider benefit v. burden Nature of issues, value of claim Accessibility of information Probative value of information Costs to preserve and store Reminder: Let preservation be over-inclusive Reminder: This is where it helps to have conferred with opposing counsel 15

16 WHAT should be preserved? WHERE should you look? WHERE should you look? Hard copy and ESI Removable media Files at home Mobile devices Cloud/network/shared drives Websites and social media Personal /social media accounts? 16

17 WHAT HOW is the should difference the documents and between information be prepared and stored? Preserving in place Sequestration Collection 17

18 HOW should the documents and information be prepared and stored? HOW should the documents and information be prepared and stored? DON T just print copies of ESI DO work with IT department Consider imaging rather than copying Metadata concerns DO keep documents in native format with metadata DO be aware of employees leaving and joining the company 18

19 HOW should the documents and information Lifting be prepared a litigation and stored? hold Lift a hold when: Relevant statute of limitations expires Settlement and payment Judgment and no appeal within time for appeal Document lifting the hold: Agreement with adversary Direction from court Internal notes re: reasons for lifting 19

20 HOW to ensure Spoliation compliance? FRCP 37(e): If electronically stored information that should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery, the court: 1. upon finding prejudice to another party from loss of the information, may order measures no greater than necessary to cure the prejudice; or 2. only upon finding that the party acted with the intent to deprive another party of the information s use in the litigation may: A. presume that the lost information was unfavorable to the party; B. instruct the jury that it may or must presume the information was unfavorable to the party; or C. dismiss the action or enter a default judgment. 20

21 HOW Spoliation: to ensure motivation compliance? for change Old Rule 37(e): Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system. Problems (per Advisory Committee Notes 2015): Different standards for sanctions and curative measures being applied in different federal circuits Extreme sanctions based on finding of negligence alone Excessive effort and money spent on preservation 21

22 HOW Spoliation to ensure analysis: compliance? step 1 Loss of information: 1. ESI should have been preserved in the anticipation or conduct of litigation Keim v. ADF Midatlantic, LLC, 2016 WL (S.D. Fla. Dec. 5, 2016) 2. ESI is lost CAT3, LLC v. Black Lineage, Inc., 164 F. Supp.3d 488 (S.D.N.Y. 2016) 3. Loss was due to a party s failure to take reasonable steps to preserve Best Payphones, Inc. v. City of New York, 2016 WL (E.D.N.Y. Feb. 26, 2016) Feist v. Paxfire, Inc., 2016 WL (S.D.N.Y. Aug. 29, 2016) 4. ESI cannot be restored or replaced through additional discovery 22

23 HOW Spoliation to ensure analysis: compliance? step 2 A finding of prejudice Eshelman v. Puma Biotech., Inc., 2017 WL (E.D.N.C. June 7, 2017) lost Court may order measures no greater than necessary to cure the prejudice 23

24 HOW Spoliation to ensure analysis: compliance? step 3 [I]ntent to deprive Living Color Enter., Inc. v. New Era Aquaculture, Ltd., 2016 WL (S.D. Fla. Mar. 22, 2016) Upon finding of intent, court may order sanctions 24

25 HOW to Spoliation: ensure compliance? sanctions Evidence preclusion CAT3, LLC v. Black Lineage, Inc., 164 F. Supp.3d 488 (S.D.N.Y. 2016) Adverse inference Permissive vs. mandatory Monetary fine GN Netcome, Inc. v. Plantronics, Inc., 2016 WL (D. Del. July 12, 2016) Default judgment Omnigen Research v. Yongqiang Wang, 2017 WL (D. Or. May 23, 2017) 25

26 HOW HOW to ensure to ensure compliance? Work with IT and HR Document the process Expect that documentation may be produced or used to prepare a 30(b)(6) witness Documentation should include: How search was conducted Which files were searched Who was asked to search What custodians were told Extent of supervision 26

27 WHO should ensure WHO should ensure compliance? compliance? Either in-house counsel or outside counsel, or someone at their direction Depends on nature and complexity of case Written record of compliance, follow up, questions and responses Periodic certifications Audit and sampling ability Notification alone, with no follow up, is NOT sufficient! 27

28 Counsel s Counsel s duties ethical obligations Model Rule 3.4(a): A lawyer shall not unlawfully obstruct another s access to evidence or unlawfully alter, destroy or conceal a document or other material having potential evidentiary value. A lawyer shall not counsel or assist another person to do such an act. E.C of N.Y. Lawyer s Code: Because it interferes with the proper administration of justice, a lawyer should not suppress evidence that the lawyer or the client has a legal obligation to reveal or produce. 28

29 HOW to Issues ensure with compliance? How do you deal with a client who intentionally violates the litigation hold and deletes his s? What if the client was only negligent? If the client has deleted his s, is there still a way to get those s back? What do you do if the destroyed documents were likely attorney-client privileged or attorney work product? 29

30 HOW to Issues ensure with compliance? Do you have a duty to disclose your client s spoliation to the court or opposing counsel? What are the potential consequences to the client of spoliation? What are the potential consequences to you if your client engages in spoliation? 30

31 Best practices Best practices Litigation hold should be in writing Identify custodians and data managers most likely to have relevant information Provide guidance on how to preserve Review periodically and update as new information comes to light Addresses features of relevant information systems that may prevent retention

32 Best practices, Best cont. practices Document the process, not just the policy Monitor regularly and require affirmative responses Provide for releasing or terminating the hold when the matter is resolved Address departing employees and new hires Discuss with opposing counsel and get agreement, if possible

33 Best practices, Conclusion cont. Questions?