Determining the Scope of Preservation of Evidence

The duty to preserve evidence requires the producing party to make a good faith effort to identify and manage relevant discoverable information.   Once the party recognizes when the duty to preserve attaches, the next step is to determine what potentially discoverable information must be preserved.  See,  Mosaid Techs. Inc. v. Samsung Elecs. Co., 348 F. Supp. 2d 332, 336 (D.N.J. 2004) (“…while a litigant is under no duty to keep or retain every document in its possession, even in advance of litigation, it is under a duty to preserve what it knows, or reasonably should know, will likely be requested in reasonably foreseeable litigation.”).  And because the vast majority of business information is now generated electronically without ever being printed to paper, the scope of preservation naturally includes electronically stored information (ESI).   Determining the scope of preservation of ESI presents a great challenge and must be balanced with a party’s right to continue to manage its electronic information and operate its business in a relatively normal fashion.

Preservation issues should be addressed at the outset of litigation, and both sides should be prepared to discuss the matter at the initial meet and confer sessions.  All parties are responsible for taking steps to preserve relevant evidence, and pursuant to Fed. R. Civ. P. 26(b)(2)(C) need to consider the cost, burden and necessity of preserving the information.  In Colorado state court, there is substantially less case law related to preservation, especially of ESI, but a good rule of thumb would be to ensure that one conforms to the requirements under the Federal Rules as well as any unique Colorado requirements.

Following are some suggestions to assist you in determining the scope of preservation:

• Consider the complexity of the case and seek cooperation, common ground, and fiscal reasonableness.
• What is the cost of production compared to the amount in controversy?
• What are the resources of each party?  What is the ability of each party to control costs, and what is its incentive to do so?
• What is the relevance of the evidence relative to the claims and defenses in the case?
• Consider the need to protect privileged, proprietary, or confidential information (including trade secrets).
• Know where a party’s electronic information may be found.
• Avoid unreasonable, overly broad, burdensome, or unnecessarily costly requests to produce ESI.  Consider collecting data from repositories used by key individuals rather than searching through an organization’s entire electronic storage systems.
• Apply reasonable selection criteria (search terms, date restrictions, folder designations, etc.).
• Determine the need for preservation and production of ESI that may not be apparent to ordinary employees or a party’s records custodians.
• What is the ease of accessing the information, and is it available from other sources?
• Is the ESI stored in such a way that it is unreasonably more costly or burdensome to access?  See, Zubulake v. UBS Warburg LLC, 217 F.R.D. 309, 324 (S.D.N.Y. 2003) ("...plaintiff entitled to all emails and electronic documents relevant to employment discrimination claim, including those only preserved on backup tapes; however, given burden and expense of restoring inaccessible backup tapes, a cost-shifting analysis is appropriate.”)
• Could a subset or representative sample of the requested ESI be provided to determine whether production of additional information is warranted?
• Identify potentially relevant materials that are most critical or most difficult to preserve/collect.
• Know document retention and destruction policies and practices--as soon as the duty to preserve has attached, immediately suspend any document destruction or data deletion policies until they can be reviewed to ensure compliance with preservation duties.
• Has a party deleted, discarded or erased any ESI after litigation was commenced, or after the party was aware that litigation was reasonably foreseeable? (Spoliation is defined as the destruction or failure to preserve resulting in the loss of evidence in pending or reasonably foreseeable litigation. Silvestri v. General Motors, 271 F.3d 583, 589 (4th Cir. 2001)).

It may be possible to reach a stipulation as to the extent of preservation required in a given case.  Where a stipulation is not reached, it is wise to advise the opposing party in writing as to the scope of preservation duties you believe they have.  See, e.g., Optowave Co. Ltd. v. Nitikin, 2006 U.S. Dist. LEXIS 81345 at *30 (M.D. Fla. Nov. 7, 2006) (finding that notice from opposing counsel about relevant categories of information put party on notice about scope of preservation duty).  Likewise, it is wise to err on the side of over-preservation of evidence of one's own data, especially where the potential damages or sanctions for failure to preserve are significant.

Jeff Vail is a business litigation attorney in Denver, Colorado.  Visit www.vail-law.com for more information.

When Does The Duty To Preserve Evidence Arise?

When does the duty to preserve relevant material arise?  Generally, it arises when litigation or an
investigation is “reasonably anticipated.”  Without question, the duty to preserve begins when a
Summons and Complaint is received.  However, there may be times when a pre-litigation dispute
is reasonably anticipated to lead to litigation, in which case a litigation hold notice should be
issued.   In Asher Assocs., LLC v. Baker Hughes Oilfield Operations, Inc., 2009 U.S. Dist.
LEXIS 40136 at *23 (D. Colo. May 12, 2009) the court found that the obligation to preserve
evidence may arise even earlier than the actual filing of a lawsuit if a party has notice that future
litigation is likely.  Of course, for the plaintiff, the duty to preserve evidence normally arises well
before the filing of the lawsuit.  While there is no bright line regarding how early a plaintiff’s
duty to preserve arises in the process of contemplating and preparing to bring a lawsuit,
plaintiffs’ counsel should err on the side of caution and advise a client that there is a duty to
preserve as soon as the engagement begins to evaluate potential claims.

Consider the following questions to determine if the duty to preserve has been triggered.

• Do the known facts suggest that litigation is likely?  Answering this question can be tricky, and requires a thorough examination of all known facts.
• Has a consumer or customer complaint been received that clearly and credibly threatens suit?  A letter from a customer requesting a refund or suggesting that they will sue without describing the alleged wrongdoing, injury, or damages, probably does not warrant a hold.  If the letter is from the customer’s attorney, making a credible demand and threatening suit, then the duty to preserve is triggered.  In Asher,  plaintiff’s counsel sent two separate letters to defendant. The first letter expressed plaintiff’s desire to settle a warranty claim and did not threaten litigation.  The subsequent letter sent by plaintiff’s counsel made a claim for damages and set a 5-day deadline for payment.  The court found that the duty to preserve was triggered upon receipt of the second letter.
• Have there been repeated, specific complaints about a particular issue? In Computer Assoc. Int’l v. American Fundware, Inc., 133 F.R.D. 166, 168-69 (D. Colo. 1990), the court found that during pre-litigation meetings, one software company was explicit in its communication to the other software company that it believed the other company was copying its source code, thereby triggering the duty to preserve evidence related to the source code.
• Does legal counsel anticipate a lawsuit or investigation? There are times when counsel becomes aware, either through the media, employees, or other sources, that litigation or an investigation is possible.
• Do company representatives know of the possibility of a lawsuit?
• Has Plaintiff decided to file suit?
• Has a Summons and Complaint been received?  This is one of the few bright line points where a duty to preserve always exists no later than the receipt of a Summons and Complaint.

All of these factors should be considered when evaluating when the duty to preserve arises.  Once it has been established that preservation of relevant evidence is required, the next step in the process is to determine the scope of preservation. This topic is a hot potato, and one that directly impacts the cost of litigation and the risk of future discovery sanctions for failure to preserve. I’ll address this issue in future posts, focusing on electronically stored information, as well as discovery of social media.

Jeff Vail is a business litigation attorney in Denver, Colorado.  Visit www.vail-law.com for more information.

Rule 26(f) Conference Checklist

F.R.C.P. 26(f) requires that all parties confer “as soon as practicable—and in any event at least 21 days before a scheduling conference is set” to discuss “the nature and basis of their claims and defenses,” “the possibilities for promptly settling or resolving the case,” “arrange for the disclosures required by Rule 26(a)(1),” “discuss any issues about preserving discoverable information,” and “develop a proposed discovery plan.”  The discovery plan prepared by the parties should address “changes . . . in the timing, form, or requirements for disclosures under Rule 26(a),” “the subjects on which discovery may be needed, when discovery should be completed, and whether discovery should be conducted in phases or be limited to or focused on particular issues,” “any issues about disclosure or discovery of electronically stored information, including the form or forms in which it should be produced,” “any issues about claims of privilege or of protection [of] trial-preparation materials,” and “what changes should be made in the limitations on discovery imposed under these rules . . . .”

C.R.C.P. 16(b)(3) provides a similar requirement under Colorado law, requiring the parties to “no later than 15 days after the case is at issue . . . confer with each other about the nature and basis of the claims and defenses; the matters to be disclosed pursuant to C.R.C.P. 26(a)(1); and whether a Modified Case Management Order is necessary.”  While the specific requirements of C.R.C.P. 16(b)(3) are less detailed than F.R.C.P. 26(f), it is a best practice to follow the federal guidelines in state court conferences.

This initial conference is also an excellent opportunity to outline additional time and cost-saving measures.  One best practice is to provide to opposing counsel via letter a proposal for the following items.  This serves both to streamline and guide the 26(f) conference and to create a record of the proposals and good faith efforts made to streamline discovery.

Consider discussing some or all of the following at a Rule 26(f) conference:

Nature and Basis of Claims and Defenses:

- Plaintiff should inquire into anticipated defenses if Answer not yet filed, or for explanation of affirmative defenses where presented

- Defendant should inquire into factual basis for claims where not specifically articulated in Complaint

Settlement:

- Make initial/follow-on settlement offers if appropriate

- Discuss timing of future settlement efforts and mediation in light of discovery schedule

Initial Disclosures, ESI, Preservation of Information, Production Format:

- Discuss scope of appropriate initial disclosures where appropriate
- Discuss types of ESI that may be relevant, including local storage, networked storage, individual employee computers, smart phones (repositories of text messages and photos), corporate blogs and wikis, individual and corporate social media information on Facebook, blogs, Twitter, corporate voicemail, personal and corporate instant messaging, calendaring systems

- Where Electronically Stored Information exists (nearly every case), discuss the extent and structure of each parties ESI and consider agreeing that the parties will produce an outline of their ESI storage and structure to streamline requests and production.  Overview of ESI systems should include discussion of:
- Date ranges for review

- Name and role of ESI custodians

- ESI system types and structure (including individual workstations, shared drives, etc.

- File types that will be searched

- Search terms that will be used

- Counsel should familiarize themselves with their own client’s ESI structure and information before the Rule 26(f) conference

- Consider agreeing that, following receipt of outline of ESI custodians and structure, each party may nominate 5 ESI custodians in opposing party for preservation and review

- Discuss format for production of documents (e.g. PDF files with OCR layer provided by email to opposing counsel where size permits, otherwise by US Mail or courier)

- Discuss importance that documents be produced in the order in which they are kept in the ordinary course of business

- Discuss necessity and form of protective order for confidential documents

- Agree that, where native format of ESI differs from production format, parties will additionally produce document in native-format where specifically requested (i.e. Excel spreadsheets (.xls), QuickBooks files (.qbb), etc.)

- Address scope of potentially relevant information including ESI, and appropriate preservation measures

- Discuss rolling production time-frames in light of discovery schedule

Privilege Issues:

- Address any case-specific privilege issues

- Agree on timing of disclosure of privilege log and format for log
- Agree that documents created after a certain date (often case filing date) need not be included on privilege log

- Agree to claw-back provision that inadvertent production will not waive privilege

- Consider agreeing that each side may designate up to 20 documents from privilege log for in-camera inspection

Proposed Discovery Plan (for inclusion in proposed scheduling order):

- Discuss potential for informal discovery

- Number and names of deponents and time limitations, location

- Number of written discovery requests

- Discuss number and deadline for disclosure of expert witness reports

- Discuss whether limitation/elimination of expert depositions is appropriate

Additional Cost/Time-Saving Measures

- Agree that all discovery disputes will be discussed by phone call between counsel, not via letter

- Agree that all depositions will be scheduled by agreement (no unilateral notices)

- Agree that all deposition exhibits will be numbered sequentially

- Agree that, if FRCP don’t apply, neither side will be entitled to communications with experts not discoverable under FRCP 26(a)(2)

The agreements reached during the Rule 26(f) conference, as well as the competing views of the parties where no agreement was reached, should be documented in a joint report to the Court that must be filed within 14 days after the conference.

Jeff Vail is a business litigation attorney in Denver, Colorado.  Visit www.vail-law.com for more information.