* Session 803* PENALTY: HOLDING ON THE OFFENSE! EVERYTHING YOU NEED TO KNOW ABOUT LEGAL HOLDS

Transcription

1 * Session 803* PENALTY: HOLDING ON THE OFFENSE! EVERYTHING YOU NEED TO KNOW ABOUT LEGAL HOLDS

2 Presented by: Karin S. Hansen Moderator PeopleConnect, Inc. Seattle, Washington Michael A. Griffin Jackson Lewis P.C. Seattle, Washington Ronald L. Hicks, Jr. - Meritas Meyer, Unkovic & Scott LLP Pittsburgh, Pennsylvania Jeffrey W. Jacobs Document Technologies, LLC (DTI) Richmond, Virginia Kristin Bell Stella The Gymboree Corporation San Francisco, California

3 DISCLAIMER This presentation is for educational purposes only and should not replace independent professional judgment or be construed as legal advice. Statements of facts and opinions expressed are those of the participants individually, and not the participants employers.

4 Legal Holds - Agenda The Sedona Conference Guidelines Zubulake, Recent Case Law Updates & Penalties Hypothetical #1 Taj University Hypothetical #2 TechToys Mock Deposition Legal Holds Top 10 Practice Tips Questions

5 The Sedona Conference Guidelines

6 The Sedona Conference Commentary on Legal Holds: The Trigger & The Process Issued in Fall 2010 Cited in numerous federal and state court discovery opinions

7 The Sedona Conference Guideline 1 A reasonable anticipation of litigation arises when an organization is on notice of a credible probability that it will become involved in litigation, seriously contemplates initiating litigation, or when it takes specific actions to commence litigation.

8 The Sedona Conference Guideline 2 Adopting and consistently following a policy or practice governing an organization s preservation obligations are factors that may demonstrate reasonableness and good faith.

9 The Sedona Conference Guideline 3 Adopting a process for reporting information relating to a probable threat of litigation to a responsible decision maker may assist in demonstrating reasonableness and good faith.

10 The Sedona Conference Guideline 4 Determining whether litigation is or should be reasonably anticipated should be based on a good faith and reasonable evaluation of relevant facts and circumstances.

11 The Sedona Conference Guideline 5 Evaluating an organization s preservation decisions should be based on the good faith and reasonableness of the decisions undertaken (including whether a legal hold is necessary and how it should be executed) at the time they are made.

12 The Sedona Conference Guideline 6 The duty to preserve involves reasonable and good faith efforts, taken as soon as is practicable and applied proportionately, to identify and, as necessary, notify persons likely to have relevant information to preserve the data.

13 The Sedona Conference Guideline 7 Factors that may be considered in determining the scope of information that should be preserved include the nature of the issues raised in the matter, the accessibility of the information, the probative value of the information, and the relative burdens and costs of the preservation effort.

14 The Sedona Conference Guideline 8 In circumstances where issuing a legal hold notice is appropriate, such a notice is most effective when the organization identifies the custodians and data stewards most likely to have relevant information, and when the notice: (a) Communicates in a manner that assists persons in taking actions that are, in good faith, intended to be effective; (continued on next slide)

15 The Sedona Conference Guideline 8 (cont d) (b) Is in an appropriate form, which may be written; (c) Provides information on how preservation is to be undertaken; (d) Is periodically reviewed and, when necessary, reissued in either its original or an amended form; (continued on next slide)

16 The Sedona Conference Guideline 8 (cont d) and (e) Addresses features of relevant information systems that may prevent retention of potentially discoverable information.

17 The Sedona Conference Guideline 9 An organization should consider documenting the legal hold policy, and, when appropriate, the process of implementing the hold in a specific case, considering that both the policy and the process may be subject to scrutiny by opposing parties and review by the court.

18 The Sedona Conference Guideline 10 Compliance with a legal hold should be regularly monitored.

19 The Sedona Conference Guideline 11 Any legal hold policy, procedure, or practice should include provisions for releasing the hold upon the termination of the matter at issue so that the organization can adhere to policies for managing information through its useful lifecycle in the absence of a legal hold.

20 ESI Spoliation 2016 Ronald L. Hicks, Jr. and Meyer, Unkovic & Scott LLP. All rights reserved Ronald L. Hicks, Jr. and Meyer, Unkovic & Scott LLP. All rights reserved.

21 Defensible Legal Holds Portrait of Laura Zubulake by Anita Kunz Photo of Shira Scheindlin by Arnold Adler 2016 Ronald L. Hicks, Jr. and Meyer, Unkovic & Scott LLP. All rights reserved.

22 Defensible Legal Holds Zubulake has not been adopted in every jurisdiction. A party's preservation obligation is tied to when the party "reasonably anticipates litigation." To avoid sanctions, Zubulake requires counsel to: Advise his or her client about its preservation duty; Become fully familiar with the client's data/document retention policies and practices; Talk with "Key Players" in the litigation; Oversee and monitor compliance with the litigation hold; Send periodic reminders to "Key Players;" and Ensure ESI is safely stored and segregated Ronald L. Hicks, Jr. and Meyer, Unkovic & Scott LLP. All rights reserved.

23 ESI Spoliation: Sanctions Under federal law, bad faith is necessary to impose sanctions for spoliation; negligence is insufficient. Sanctions can include: Cost-shifting Monetary penalties Adverse inference instructions Evidence preclusion Default judgment Ronald L. Hicks, Jr. and Meyer, Unkovic & Scott LLP. All rights reserved.

24 Case Samples: Bad Faith Req. Martin v. Stoops Buick, Inc., 2016 U.S. Dist. LEXIS (S.D. Ind., Apr. 25, 2016) Best Payphones, Inc. v. City of N.Y., 2016 U.S. Dist. LEXIS (E.D. N.Y., Feb. 26, 2016) Ralser v. Winn Dixie Stores, Inc., 309 F.R.D. 391 (E.D. La., Aug. 21, 2015) In all three cases, spoliation sanctions were denied because no evidence of bad faith or gross negligence Ronald L. Hicks, Jr. and Meyer, Unkovic & Scott LLP. All rights reserved.

25 Case Samples: Cost-Shifting Cheng v. Lakeforest Assocs., LLC, 2014 U.S. Dist. LEXIS (D. Md., Jun. 30, 2014) Thermotek v. Orthoflex, Inc., 2015 U.S. Dist. LEXIS (N.D. Tex., Jul. 7, 2015) In both cases, the sanctioned party was ordered to pay the attorneys' fees and costs incurred to bring the motion or locate the evidence through other witnesses Ronald L. Hicks, Jr. and Meyer, Unkovic & Scott LLP. All rights reserved.

26 Case Samples: Fines In re Boehringer Ingelheim Pharm., Inc., 745 F.3d 216 (7 th Cir. 2014) $1 million sanction GN Netcom, Inc. v. Plantronics, Inc., 2016 U.S. Dist. LEXIS (D. Del., Jul. 12, 2016) $3 million sanction, plus cost-shifting, adverse inference and other possible evidentiary sanctions 2016 Ronald L. Hicks, Jr. and Meyer, Unkovic & Scott LLP. All rights reserved.

27 Case Samples: Adv. Inference Fid. Nat. Title Ins. Co. v. Captiva Lake Invest., LLC, 2015 U.S. Dist. LEXIS 1350 (E.D. Mo., Jan. 7, 2015) Stinson v. City of NY, 2016 U.S. Dist. LEXIS 868 (S.D. N.Y., Jan. 5, 2016) Cognate Bioservs., Inc. v. Smith, 2015 U.S. Dist. LEXIS (D. Md., Aug. 31, 2015) In these cases, a permissive adverse inference was ordered. The sanctioned party was permitted to explain its spoliation Ronald L. Hicks, Jr. and Meyer, Unkovic & Scott LLP. All rights reserved.

28 Case Samples: Adv. Inference Crown Battery Manu. Co. v. Club Car, Inc., 2016 U.S. Dist. LEXIS (N.D. Oh., May 9, 2016) Design Basics, LLC v. Marhofer, 2015 U.S. Dist. LEXIS (E.D. Mi., Jun. 15, 2015) In these cases, a non-rebuttable adverse inference was ordered. Imposed because of spoliation was knowingly done for multiple years. Inference allowed an element or defense to be proven w/o further evidence Ronald L. Hicks, Jr. and Meyer, Unkovic & Scott LLP. All rights reserved.

29 Case Samples: Burden Shifting Day v. Celadon Trucking Servs., Inc., 827 F.3d 817 (8 th Cir. 2016) Affirmed a court's use of burden shifting with respect to class certification. Required employer to prove who should not be in class given employer's failure to prevent loss of its personnel/payroll records and other ESI Ronald L. Hicks, Jr. and Meyer, Unkovic & Scott LLP. All rights reserved.

30 HYPOTHETICALS

31 Hypothetical #1 Taj University You are CEO of Taj University (get rich quick real estate seminars) marketing materials give impression of a notfor profit, accredited university Fraud complaint letter by participant, alleges false advertising, Mahal University copied 1 week later, letter from Mahal CEO regarding investigation to Sales VP to cease use of and destroy marketing brochures Verbal conversation with IT to pull web ads All hard and electronic copies of brochures and web ads destroyed Formal demand and preservation letter from Mahal s attorneys

32 Hypothetical #2 - TechToys IT Manager, Donald, history of bi-polar disorder and Tourette syndrome (has been granted various workplace accommodations) Donald has violent outburst in front of customer, fired on the spot EEOC lawsuit coming your way! Donald apologizes, intends to live off the grid this is the last you ll ever hear from me HR investigation, failed attempts to reach Ronald deleted, laptop wipe and re-issued within 90 days, consistent with TechToys normal policies 2 years, 364 days later, state court suit alleging disability discrimination

33 Mock Deposition Empire Threads teen clothing retailer, 800 stores in 40 states Plaintiff, Gwen Stacy, a former sales associate in S.F. (does not have company ) Store Manager - Joanna Jamison (has company ) District Manager Mary Jane Watson (has company ) Plaintiff on medical disability (mental health issues), not first time Plaintiff fired upon return from most recent leave for falsified time cards (Empire discovered while on leave) Plaintiff sues for disability discrimination and retaliation Mike Empire HRBP supports SF stores

34 LEGAL HOLDS - TOP TEN PRACTICE TIPS

35 1 - Understand the Preservation Obligation Duty to preserve is required when there is reasonable anticipation of litigation Being served with a lawsuit or notice of government obligation is certainly a triggering event, but not the only one Courts have not established a standard for interpreting reasonable anticipation; instead each case is evaluated on its facts and circumstances and may be unique to your business/industry

36 2 Create a Legal Hold Plan A legal hold process should contain specific, detailed criteria for what events trigger a legal hold in your business and industry Err on the side of caution and prudence, balancing business risk, burden and cost Be consistent in determining triggers and executing holds in your company

37 3 Identify & Interview Custodians Quickly identify custodians of relevant data Interview custodians to ensure the proposed scope of the legal hold is accurate Find out what relevant documents they may have, and where it is located Whatever process you follow, document it so that if it s challenged, you can defend it

38 4 Issue the Legal Hold (Part I) Hold notifications should be comprehensive and provide all the essential information that custodians need to properly perform their role in the legal hold Issue the hold in a timely manner Preservation steps must be reasonable, and performed in good faith Acknowledgement that the custodian has received, understands and agrees to comply with the preservation notice

39 5 Issue the Legal Hold (Part II) Zubulake taught us that issuing the hold is not enough, counsel must take affirmative steps to search for and identify relevant data Consider advanced technology to enhance defensibility Don t overlook ESI in the cloud, on social media sites and in rich media Don t forget about the passive destruction of documents suspend automatic purges and deletions, even if contrary to the current document retention and disposition policy

40 6 Utilize Templates Developing legal hold templates can ensure that all necessary information and instructions are included, and that notifications can be issued in a timely manner

41 7 Communicate Regularly with Custodians Establish open channels of communication that make it easy for custodians to ask questions If a hold is in place for an extended amount of time, re-issue the preservation notice and require custodians to re-acknowledge their receipt and intent to comply Evaluate whether the legal hold needs to be narrowed/expanded to address new information in discovery, or if new custodians are identified (especially after meet and confer)

42 8 Don t Forget to Release the Hold Legal holds associated with litigation must remain in place for the life of the litigation (including appeal) Limit the release to a specific legal hold, not a release of ALL legal holds Unless required for other pending or related matters, custodian data should be deleted in accordance with normal retention and disposition policies, but documentation of hold notifications and responses (or non-responses) needs to be retained and preserved

43 9 Document, Document, Document Assume you will be required to provide documentation of each and every step of the legal hold to demonstrate that proper procedure was carried out in a timely manner Be prepared to show proof that a good faith effort was undertaken to preserve documents Track key events for each custodian (preservation notice, acknowledgement/response, reminders, re-issues and legal hold release) Manual documentation and tracking may be burdensome (and error-prone), consider automated solutions not only to simplify the process but reduce the risk of human error

44 10 Preparation is Key

45 QUESTIONS??? Michael A. Griffin Karin S. Hansen Ronald L. Hicks, Jr. Jeffrey W. Jacobs Kristin Bell Stella