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.