The Pension Committee Revisited One Year Later

Transcription

1 The Pension Committee Revisited One Year Later Welcome and Introductions Brad Harris Vice President of Legal Products, Zapproved Numerous white papers, articles and presentations on legal hold best practices Co-authored with Jablonski Grasping Legal Holds article, Information Management, Sept-Oct 2010 Micah Kasdan Vice President - ESI Business Development, TERIS Corporate and Legal ESI workflow consulting and ESI Meet & Confer Advisor MCLE speaking engagements and articles for local and national organizations 2

2 Agenda Trends in Case Law 2010 The Pension Committee through Orbit One Why Legal Holds (and why now) Legal Hold Process Checklist Steps to Better Preservation 3 What is a Legal Hold? Also known as a litigation hold or record hold Whenever litigation is reasonably anticipated, threatened, or pending against an organization, that organization has a duty to undertake reasonable and good faith actions to preserve relevant and discoverable information A legal hold is a specific directive to take appropriate actions to preserve information Failing to take reasonable steps can lead to destruction of evidence related to legal or regulatory proceedings 4

3 Trends in Case Law 2010 The Pension Committee v Banc of America Securities Rimkus Consulting Group Inc. v. Nickie G. Cammarata Crown Castle v. Nudd Corp. Merck Eprova v. Gnosis Jones v. Bremen High School Victor Stanley v. Creative Pipe Courts and regulatory agencies do expect organizations to take reasonable and good faith steps to prevent spoliation. 5 Changing Expectations

4 Pension Committee v. Banc of America Hedge fund litigation filed in Feb 2004 (transferred to Southern District of NY in October 2005) "The failure to issue a written litigation hold constitutes gross negligence because that failure is likely to result in the destruction of relevant information. Monetary sanctions and adverse inference The Pension Comm. Of the Univ. of Montreal Pension Plan v. Banc of America Securities, No. Civ (SDNY Jan. 11, 2010) 7 Finding of Gross Negligence Six plaintiffs found grossly negligent: Failure to issue a written litigation hold prior to 2007; Deleting ESI after the trigger event; Failing to request documents from key players; Delegating search efforts without any supervision from management; Destroying backup tapes relating to key players where other ESI was not readily available; and/or Submitting misleading or inaccurate declarations. Seven plaintiffs found negligent: The failure to institute a written litigation hold was not yet generally required in early 2004 in Federal Court in Florida. 8

5 Rimkus v. Cammarata Intellectual property case seeking release from a noncompete agreement Reinforcing the considerations from The Pension Committee opinion Consideration of the spoliating party s culpability and level of prejudice Permissive adverse inference sanction that instructed the jury to decide if the defendants intentionally deleted s and whether the lost information would have been unfavorable to the defendants. 9 Rimkus Consulting Group, Inc. v. Cammarata, 2010 U.S. Dist. No. 07-cv (SDTX Feb. 19, 2010) Crown Castle v. Nudd Corp. Case involving an alleged product defect of a cell transmission tower Plaintiff failed to send written legal holds, failed to suspend routine deletion of s, failed to monitor the approach used by custodians to determine where and what to look for in terms of responsive documents Plaintiff found to be have been grossly negligent and sanctioned for costs (but avoided harsher penalties due to absence of bad faith) Crown Castle USA, Inc. v. Fred A. Nudd Corp., 2010 U.S. Dist. LEXIS 32982, (W.D.N.Y. Mar. 31, 2010) 10

6 Merck Eprova v. Gnosis Case involving mislabeling of a nutritional ingredient Plaintiff requested sanctions for failing to take adequate measures to preserve ESI, failing to diligently search for responsive documents, and misrepresentations concerning productions Court found no doubt that Defendants failed to issue a legal hold and deemed this failure a clear case of gross negligence. Cost shifting, $25,000 fine and additional deposition; plus potential for future adverse inference Merck Eprova v. Gnosis, 2010 U.S. Dist. No. 07-Civ (SDNY April 20, 2010) 11 Jones v. Bremen High School EEOC complaint (wrongful termination) filed in October 2007 Defendant s initial response was to instruct three administrators to search through their own electronic mail (no effort made to suspend auto-destruction of ESI until spring of 2009) Court determined defendant s attempts to preserve evidence were reckless and grossly negligent. Sanctions included cost shifting and additional depositions (but no adverse inference) Jones v. Bremen High School Dist. 228, 2010 WL (N.D. Ill. May 25, 2010) 12

7 Victor Stanley v. Creative Pipe Copyright and patent infringement, unfair competition and Lanham Act violations Purposeful spoliation in order to obfuscate incriminating evidence ( Collectively, they constitute the single most egregious example of spoliation that I have encountered ) Determination of appropriate sanctions in light of bad faith efforts that ultimately failed to prejudice the case Victor Stanley, Inc. v. Creative Pipe, Inc., et al. (D.MD, Sept. 9, 2010) 13 Determining Sanctions Demonstrating spoliation: 1) control of the evidence and a duty to preserve it; 2) a "culpable state of mind" when the evidence was lost or destroyed; and 3) that the lost or destroyed evidence was "relevant" Factors in determining the appropriate sanction include: 1) the degree of fault; 2) the degree of prejudice suffered; 3) Avoid substantial unfairness and serve as a deterrent to others 14

8 Why Legal Holds (and Why Now)? Rising expectations of what constitutes reasonable and good faith effort Your opposition is becoming far more e- discovery savvy The courts are becoming far less tolerant The risks and consequences for not acting appropriately are increasing 15 The bottom line is: organizations that fail to grasp their legal hold obligations do so at their own peril. Legal Hold Process Checklist Identify the trigger event Analyze the duty to preserve Define the scope of the legal hold Implement the legal hold Enforce and examine the effectiveness of the legal hold Manage the legal hold over time Release the legal hold 16

9 1. Identify the Trigger Event A duty to preserve arises when an organization reasonably anticipates litigation or regulatory action Analyze the Duty to Preserve Determine what steps need to be taken in response to a trigger event, including whether a legal hold notice is necessary By now, it should be abundantly clear that the duty to preserve means what it says and that a failure to preserve records paper or electronic and to search in the right places for those records, will inevitably result in the spoliation of evidence. 18

10 3. Define the Scope of the Legal Hold Implement the Legal Hold 20

11 5. Enforce and Examine Effectiveness Taking steps to ensure the legal hold process is effective, including confirming receipt, understanding and acceptance of legal hold Manage the Legal Hold Over Time Responding to changes over time (required revisions and updates) Sending routine reminders to custodians 22

12 7. Release the Legal Hold Removing the hold once the duty to preserve no longer exists 23 Managing the Legal Hold Process 1. Creating the written hold instructions 2. Specifying and sending to recipients (and other cc s) 3. Tracking custodian compliance 4. Periodic updates & reminders 5. Documenting your efforts 6. Releasing the hold 24

13 Managing the Legal Hold Process 25 Managing the Legal Hold Process 26

14 Five Steps to Better Preservation 1. Establish a process 2. Send timely, written legal holds 3. Take steps to ensure understanding and compliance 4. Create a fact record 5. Collaborate Process Defensibility 27 Thank You! Brad Harris, Vice President of Legal Products brad@zapproved.com Phone: Micah Kasdan, VP ESI Business Development mkasdan@teris.com Phone: