Litigation Holds & Electronically Stored Information

What You Don’t Do May Tank Your Defense

By Hayden Bashinski and Patrick Schach

An easy way to get in trouble in a lawsuit—even if an employer has not done anything wrong on the merits—is to fail to institute a proper litigation hold for electronically stored information (“ESI”). ESI litigation holds have become a hot topic in recent years. Failure to institute them and ensure they are being followed can and has led to court orders:  (1) forcing employers to pay for additional discovery, (2) permitting a jury to infer that lost ESI must have been harmful to the employer’s case (a spoliation instructions sanction), (3) and/or some combination of the two. Courts across the nation are becoming less forgiving of employers that neglect to initiate appropriate litigation holds, regardless of their sophistication or size.  This article outlines the basics of litigation holds, particularly as they apply to ESI, as well as some of the finer details recommended to help keep you out of litigation hold trouble.  

What is a litigation hold?

A litigation hold is the process that ensures a party on notice of likely litigation preserves documents, data, items, or anything else that might be implicated by the allegations of the lawsuit or expected lawsuit. The “anything else” includes e-mails, text messages, and any other ESI and documents that may be discoverable by the other party during the litigation process.  For most, the process of initiating a litigation hold seems and is straightforward.  However, there are many traps even for the most wary human resources professionals. 

In-house counsel and human resource officers are frequently tasked with gathering ESI and tangible documents for litigation. Most are heavily trained on the company’s legal obligations. These are not the only players on the team, however. Companies routinely employ lower-level supervisors with decision-making authority, witnesses who may be named in a lawsuit’s allegations, or other employees who may have important information to the lawsuit based on the particulars of the suit in question.  These same employees often receive company cell phones, laptops, and e-mail addresses.  

The employer’s duty to preserve ESI extends to these other employees. Do they understand that text messages, word documents, and e-mails must be preserved? Do they know what “metadata” is or why it, too, must be preserved? Do they understand that the data and metadata on those devices must be preserved, oftentimes in native format, to further the company’s hold obligations?  It is the employer’s responsibility to inform these employees of these obligations and to ensure their compliance. 

Going one step further – does your company’s IT department routinely clear data, or use a software that does so, in order to maintain efficient data storage costs? If so, and if an effective litigation hold process is not in place, then you may find yourself behind the legal eight ball.

When do your litigation hold obligations arise?

An employer’s litigation hold obligations arise when it reasonably anticipates litigation. Obviously, receipt of a summons and complaint triggers the obligation. If you or your client receive a demand letter, you can reasonably anticipate litigation and the obligation likely is triggered. In like manner, when an employee files an EEOC charge, employers are on-notice of potential litigation.  Whether a company “reasonably anticipates litigation” is determined on a case-by-case basis, which underscores the importance of maintaining effective litigation hold procedures. 

What documents and information need to be preserved?

There is no finite list of documents and information that must be preserved.  Broadly stated, though, the obligation applies to just about anything that might have anything to do with the allegations or defenses. Just because ESI may not be admissible at trial, an employer is still required to preserve it once the obligation arises. Given the expansive scope of discoverable information, initiating an effective litigation hold for ESI can be burdensome.  However, if you are able to determine the storage media, custodians, and substantive and temporal scope of the hold – then you can determine what documents and information must be preserved. These are the key inquiries, and whoever is tasked with implementing a litigation hold should ask these questions about ESI, based on the specific facts at issue, each time the hold obligation arises.

i. Common Media for Electronically Stored Information

There is a plethora of different media on which ESI can be stored. A few common examples include: video and audio recordings, e-mails, text messages, instant messages, photographs, and electronic personnel records. By timely initiating a litigation hold, and informing the appropriate custodians to preserve and segregate ESI from the relevant storage media, you can effectively avoid the erasure arguments that inundate motions for spoliation and sanctions. 

ii. Who are the appropriate custodians?

A custodian is any employee who may possess discoverable information. For the sake of example, and using a typical employment discrimination case, determining the appropriate custodians is usually straightforward. Decision makers. Alleged bad actors. Supervisors. The plaintiff. Maybe witnesses. This determination may not be easy. Imagine a hostile work environment/termination case with five decision makers at varying levels of management, one “bad actor” supervisor, and a few gossiping coworkers – that’s a lot of people to keep up with. Gathering, preserving, and segregating the information and documents from these custodians can be particularly burdensome if your company provides employees with cell phones and e-mail accounts.  Clearly, determining the appropriate custodians at the outset of the company’s hold obligations will keep you on the right side of your duty, and avoid the punitive measures implicated by failing to fulfill your obligations.  

iii. What is the appropriate substantive scope of the hold?

For employers, this is the time where partnering with outside counsel is crucial. The appropriate substantive scope is determined by the plaintiff’s allegations – since the information and documents to be preserved are those that may be discoverable under the legal standard of the jurisdiction where the suit is pending. This determination is made on a case-by-case basis, but typically includes e-mails and text messages to or from decision makers regarding the plaintiff. Even though many of these communications will not be relevant (e.g., e-mails to all employees about the schedule), preserving these documents is important given the scope of discoverable information. 

iv. What is the applicable temporal scope?

Again, depending on the facts involved, the temporal scope varies. Sometimes, the temporal scope encompasses the date of the employee’s application until present. In others, the temporal scope can be limited by the applicable statute of limitations or to a shorter period implicated by the specific allegations.  As before, outside counsel can serve as effective advisors in determining the temporal scope of the documents and information to be preserved.

What is in-house counsel’s and/or human resources’ role in initiating an effective litigation hold of ESI, and what are the basic steps for initiating a hold?

Depending on the size and structure of the employer, the duties of in-house counsel and human resources vary. For some employers, it is up to in-house counsel to determine when to implement the litigation hold and to determine the appropriate custodians, media, and the appropriate substantive and temporal scope of the hold.  For employers without in-house counsel, these duties typically fall on human resources.  Regardless, someone has to do it. And someone has to do it well starting at the time when the obligation first arises.

For practical purposes, once a company is aware its litigation hold obligations have been triggered, it is prudent for in-house counsel and/or human resources to determine the relevant custodians, media, and substantive and temporal scope. Once in-house counsel or human resources has done so, they can generally follow the below steps to initiate a litigation hold of ESI: 

1. Contact the relevant custodians and IT by e-mail to inform them of the anticipated litigation (Employee X has made claims against the Company alleging Y); 

2. Describe the types of ESI to be preserved (e.g., e-mails, text messages, word documents, pdfs, and video recordings); 

3. Explain that ESI must be preserved, in native format if possible; 

4. Describe the substantive topics of the ESI to be preserved (e.g., electronic personnel records, e-mails mentioning Employee X, etc.); 

5. Provide the temporal scope of the information to be preserved; and 

6. Request that the ESI be segregated and provided to in-house counsel or human resources for preservation. 

The importance of incorporating your IT department in this process from the outset cannot be overstated. IT professionals typically will know how and where to go to preserve ESI before it is terminated in the normal course of business. It is imperative to partner with IT so they can push the right buttons or pull the right levers to effectuate this.

Finally, litigation holds of ESI should be reasonably supplemented at varying stages of litigation given that a plaintiff’s claims often morph over the course of pleadings and discovery.

By quickly and efficiently invoking a litigation hold of ESI, you or your client can help avoid costly penalties, and more importantly – ensure you preserve information necessary for your defense.