A multi-part series on achieving effective legal holds, including relevant case law, content to include, processes to employ, best practices to follow, available tools to leverage, and more
In the first Part of this series, we reviewed an assortment of recent cases illustrating the potential dangers associated with ineffective or nonexistent legal holds. In this Part, we review the duty of preservation and the triggers to that duty and hold issuance.
Additional discussion of the common law history of spoliation and preservation concepts is available in The Sedona Conference Commentary on Legal Holds.
Although this common law duty of preservation is not directly codified in the Federal Rules of Civil Procedure, it is dictated by implication in Rule 26, Rule 34, and Rule 45. Together, these three rules define the potential scope of discovery for litigants and third parties, and anything the rules may require you to produce is, inherently, something you need to preserve.
So, what is the scope defined by those rules?
The scope of potential discovery – and, therefore, of the duty to preserve – is deliberately broad, which is consistent with our court system’s emphasis on truth-seeking over gamesmanship. As stated in one recent court decision involving discovery sanctions:
Litigation is not a game. It is the time-honored method of seeking the truth, finding the truth, and doing justice. When a corporation and its counsel refuse to produce directly relevant information an opposing party is entitled to receive, they have abandoned these basic principles in favor of their own interests.
In its simplest form, the scope of discovery and preservation for electronically-stored information (ESI) has four elements:
The definition of “documents” provided by the Federal Rules of Civil Procedure is expansive enough to encompass almost any sort of material in any format. Rule 34(a)(1)(A) states that it covers “documents and electronically stored information – including”:
. . . writings, drawings, graphs, charts, photographs, sound recordings, images, and other data or data compilations — stored in any medium from which information can be obtained either directly or, if necessary, after translation by the responding party into a reasonably usable form . . .
The Committee Notes on the rule emphasize the broadness again:
The rule covers – either as documents or as electronically stored information – information “stored in any medium,” to encompass future developments in computer technology. Rule 34(a)(1) is intended to be broad enough to cover all current types of computer-based information, and flexible enough to encompass future changes and developments.
References elsewhere in the rules to “electronically stored information” should be understood to invoke this expansive approach.
Thus, nothing can be overlooked based purely on its format or source type; everything is potentially subject to the duty.
Possession, Custody, or Control
In addition to defining the broad scope of “documents,” Rule 34(a)(1) also specifies that the scope of discovery and preservation extends to those documents within “the responding party’s possession, custody, or control.” This phrase means that you are responsible, not just for the materials you physically or electronically possess, but for any that you legally control. Thus, materials maintained by third parties on your behalf are treated the same way as the records you actually possess yourself. If you have the right (or, in some cases, the ability) to obtain it, you are responsible for preserving and producing it.
Unfortunately for parties, there is some variation from jurisdiction to jurisdiction in exactly how far “possession, custody, or control” is deemed to extend. The three common standards – “Legal Right,” “Legal Right Plus Notification,” and “Practical Ability” – and their areas of applicability are broken down in detail in The Sedona Conference Commentary on Rule 34 and Rule 45 “Possession, Custody, Or Control.”
Among the “documents” that are in your “possession, custody, or control,” the ones that may be discovered and must be preserved are those that are relevant. Rule 26(b)(1) defines “the scope of discovery” broadly. It extends to “any nonprivileged matter that is relevant to any party’s claim or defense.”
Relevance itself is also defined broadly, by Federal Rule of Evidence 401. That rule dictates that evidence is relevant if “it has any tendency to make a fact more or less probable than it would be without the evidence” and “the fact is of consequence in determining the action.” The Committee Notes to the rule state explicitly that this is an intentionally low bar because “[a]ny more stringent requirement is unworkable and unrealistic.”
Thus, any documents in your possession, custody, or control that have any tendency to make any fact of consequence more or less likely are relevant, potentially discoverable, and required to be preserved.
Finally, the scope of potential discovery and required preservation is limited to materials meeting the above criteria that are also unique. As specified by Rule 26(b)(2)(C), discovery is not meant to be “unreasonably cumulative or duplicative.” For ESI in particular, this is important, as it is in the nature of electronic systems to create numerous identical copies of materials, both for operation and for backup. Generally, there will be no additional evidentiary value to preserving numerous identical copies of the same materials.
Beyond those four elements, there are two additional potential limitations on the scope of discovery that are less relevant to the question of preservation scope:
Preservation can always be stopped if it’s later determined to be unnecessary, but lost data can never recovered if it’s later determined to have been necessary after all.
The duty to preserve documents often arises before a case is actually filed or commenced, because the duty arises not when there is litigation but when there is reasonable anticipation of litigation (or agency action, etc.). As explained in “Guideline 1” of The Sedona Conference Commentary on Legal Holds:
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.
Examples of triggering events include: discovery of a legal or regulatory violation by an employee; receipt of a legal hold notice from a regulatory agency; hearing a terminated employee threaten suit; receipt of an actual complaint or subpoena; and, many more.
Upcoming in this Series
In the next Part of this series, What Should Be in the Hold?, we will review the standard elements of an effective legal hold.