ARMA International has a free publication available for download from its website: Hot Topic, Gearing Up for E-Discovery, How to Meet the Challenges of the Post-Bailout World.
The publication contains tips on meeting the legal challenges facing organizations in the years ahead through refinement of records management programs. The article contains succinct advice on legal holds, preservation, collection and preparing for the meet and confer requirements of the Federal Rules of Civil Procedure and similar state requirements. The article also contains a coupon code for a 10% discount for the book Seven Steps for Developing and Implementing Legal Holds (ARMA 2009).
The free download is available here: http://tiny.cc/oX52D.
"The critical elements of a successful legal-hold strategy include broad-based management, transparent technological infrastructure and cross-departmental collaboration. Here are five steps to consider for organizations to improve their legal-hold process."
1. Coordinate collaboration at the highest level of the C-suite
2. Back-up and recover the required data
3. Issue an effective legal-hold notice
4. Collect the data
5. Manage and communicate to stay engaged
To download the entire article click here:
Litigation Hold Best Practices: How to Implement an Effective Workflow Process, is a very comprehensive 1.5 hour seminar originally provided as a CRM accredited course through ARMA International. The recorded seminar is available here: http://snipr.com/geaxk or click the image.
Forest Laboratories, Inc. v. Caraco Pharmaceutical Laboratories, Ltd. et al., 2009 WL 998402 (ED Mich. 4/14/09) (failure to preserve backup tapes post trigger event causes court to hold a hearing to determine if sanctions should be issued) (sanction decision reserved pending results of hearing.)
This is a patent infringement lawsuit. The parties are engaged in a small handful of patent lawsuits in various jurisdictions. This case relates to Caraco’s alleged infringement of a patent for escitalopram oxalate drug.
This is a must read decision. The court’s decision specifically analyzes the duty to preserve back up tapes, trigger events, the scope of the duty to preserve, accessible v. inaccessible data, whether “disaster recovery” back up tapes should be preserved, and circumstances requiring the preservation of disaster recovery back up tapes. Also of interest, testimony was submitted from defendants’ “spoliation expert.” Ultimately the court ruled that a hearing will be held to determine specifically whether: “(1) ‘the information contained on [the back up] tapes’ is ‘otherwise available,’ (2) the alleged spoliator can ‘identify where particular employee documents are stored on [the] backup tapes,’ and (3) the tapes ‘stor[e] the documents of ‘key players' to the ... litigation.’” If the moving party is able to establish these three elements, then the court will continue the hearing in a second phase to determine culpability and relevance.
The court first held that spoliation sanctions are appropriate if the moving party can establish 1) a duty to preserve evidence existed, 2) that records were destroyed with a “culpable state of mind” and 3) that the destroyed evidence was relevant. It is important to point out that the court held that the negligent destruction of evidence may provide the requisite culpable state of mind to permit spoliation sanctions.
Following the elements of spoliation the court first analyzed the duty to preserve. A party can not be sanctioned for spoliation if no duty to preserve exists at the time of destruction. The court held, therefore, that the “first step in the analysis is to determine the ‘trigger date’ or the ‘the date a party is put on notice that it has a duty to preserve evidence. Any destruction of potentially relevant evidence that occurs before the trigger date would be harmless, since the party was unaware of a need to safeguard evidence. The destruction of documents and evidence after the trigger date, however, is not allowed.” (Citations omitted).
Defendants argued that plaintiff in this case should have known that litigation was inevitable in the early 1990s. Defendants, however, failed to submit evidence showing that plaintiff knew or should have known that litigation was anticipated. Plaintiff acknowledged that the latest date triggering the duty to preserve was in September of 2003. Defendants also argued that the latest date triggering the duty to preserve was in September of 2003.
Despite this apparent agreement on the latest date of the trigger event, the court held that the duty to preserve evidence was triggered in August of 2003, when a competing patent application was filed. “It was at this time that plaintiffs had a duty to preserve all relevant evidence concerning the patent for use in imminent litigation with a competitor and in any ‘anticipated litigation’ such as the present patent infringement case. As a result, the court held that any pre-August of 2003 destruction of relevant evidence was harmless and not subject to sanctions. Post-August of 2003 destruction, however, is potentially sanctionable. In an important footnote (no. 2) the court said that a rule requiring large corporations to preserve evidence when litigation was merely possible would be crippling.
Plaintiffs admitted that they did not halt all recycling of back up tapes until May 2005 (nearly two years after the trigger event). Because of the failure to preserve back up tapes the court continued its analysis.
Without describing its reasoning the court held that potentially relevant evidence was destroyed. The court next relied on the now famous Zubulake v. UBS Warburg decision to analyze whether allegedly inaccessible back up tapes are of a class of evidence that must be preserved pursuant to a litigation hold. In Zubulake, the court held that “[a]s a general rule [a] litigation hold does not apply to inaccessible back up tapes (e.g., those typically maintained solely for the purpose of disaster recovery), which may continue to be recycled on the schedule set forth in the company’s policy. On the other hand, if back up tapes are accessible (i.e. actively used for information retrieval), then such tapes would likely be subject to a litigation hold.”
Plaintiff argued that the back up tapes were, in fact, used solely by the corporation for disaster recovery, citing to testimony from its vice president of information technology. Plaintiff’s also argued that defendants’ “spoliation expert” testified to a definition of disaster recovery back up tapes consistent with plaintiff’s definition. In response defendants failed to offer any evidence that plaintiff was accessing its back up tapes. As a result the court held that the back up tapes that were destroyed were inaccessible.
The court’s finding that the back up tapes were inaccessible did not end its analysis. The court went on to describe the “Zubulake exception.” The court held that the Zubulake exception requires preservation of all back up tapes storing documents of “key players" to the litigation or anticipated litigation, if a company can identify where particular employee documents are stored on back up tapes and the information on the back up tapes is not otherwise available.
The court fashioned a three part test for the Zubulake exception: “First, the alleged spoliator must be able to ‘identify where particular employee documents are stored on [the] backup tapes.’ Second, the tapes must ‘stor[e] the documents of ‘key players' to the ... litigation.’ Third, ‘the information contained on [the] tapes’ must not be ‘otherwise available.’ The court concluded that this test was not sufficiently addressed by the parties and therefore ordered a hearing where both sides are to present evidence on the Zubulake exception.
Next the court tackled the second spoliation element: “culpable state of mind.” The court held that a spoliator can be sanctioned for merely failing to preserve evidence, because once the duty to preserve attaches any destruction of evidence is, at a minimum, negligence. Spoliation sanctions are appropriate for negligent destruction if the moving party can demonstrate that the evidence destroyed was relevant to the litigation. The court also held that the moving party need not prove relevance, if the destruction involved bad faith (i.e. intentional destruction) or gross negligence. The court held that it will hear evidence of culpable state of mind only if the three elements of the Zubulake exception are demonstrated at the hearing.
Rounding out its analysis, the court addressed relevance. The court held that “some evidence” of negligence must be introduced by defendants. Defendants must show that the evidence destroyed was of the type that would have naturally been introduced into evidence. The court noted that defendants should not be held to too strict a standard, “because doing so would subvert the... purposes of the adverse inference, and would allow parties who have... destroyed evidence to profit from that destruction.
We will keep an eye out for the results of the hearing. To download a copy of the decision click here: Download Forest Laboratories v. Caraco Pharmaceutical laboratories 4-14-09
The court in In re Intel Corp. Microprocessor Antitrust Litig., 2008 WL 2310288 (DDel 6/4/08) deemed defendant Intel waived privilege protection due primarily to defendant's willingness to make records related to custodian interviews avaialble to avoid worldwide depositions of custodians.
The Special Master ruled that Intel had waived work product protection, noting that Intel had agreed to produce, “detailed written description[s] of the preservation issues affecting [every] Intel Custodian, including the nature, scope and duration of any preservation issue(s).” The Special Master continued:
"Intel could have left AMD and the Class Plaintiffs to their own devices, forcing them down the path of protracted world-wide preservation depositions. It did not. Rather it trumpeted its willingness to have AMD, the Class Plaintiffs and the Court informed as to fact work-product gathered and provided “a detailed written description of the information provided by each custodian [to Weil] during the interviews."
Therefore, the Special Master concluded that Intel could not “mask” its agreed-to discovery of custodian information by asserting work product protection with respect to fact work product which, in the Special Master’s view, was at the heart of Intel’s position on its preservation issues.
For the case summary and a link to the decision see here: http://tiny.cc/LeMwF
We are working hard to be the most comprehensive resource for legal hold information on the web. As with any endeavor, there is always room for learning, creating and improving. If you care to share unreported cases, best practices, insights, questions, comments or constructive criticism, please feel free to send us an email.
Colleague and contributor to this site, John Isaza, Esq., is the author of two comprehensive research studies sponsored by The ARMA International Educational Foundation (www.armaedfoundation.org).
The studies examine case law in the United States where courts analyze just when the duty to preserve evidence is triggered in various factual scenarios. Links to the papers are below.
LEGAL HOLDS FOR "ANTICIPATED LITIGATION": New Case Developments to Determine Triggering Events & Scope of Production—A Study by John J. Isaza, Esq. Funded by contributions from the Los Angeles and Orange County Chapters of ARMA International to The ARMA International Educational Foundation. Click here to download:
Legal Holds & Spoliation: Identifying a Checklist of Considerations that Trigger the Duty to Preserve—A Study by John J. Isaza, Esq. Funded by The ARMA International Educational Foundation. Click here to download:
A survey of Global 1000 companies with revenue over $5 billion was conducted between October 2007 and March 2008. Benchmarking data was collected from corporations with revenue ranging from $5 billion to well over $150 billion in virtually all industry sectors, including: Biotechnology, Chemicals, Consumer Products, Energy, Financial Services, High Tech, Insurance, Manufacturing, Pharmaceutical and Transportation sectors, with Energy and Financial Services comprising 50% of the total. The findings of the survey are published in a report titled: "Benchmark Survey on Prevailing Practices for Legal Holds in Global 1000 Companies."
The GCOC website reports that the survey "will highlight the changes in processes and technology within [the surveyed] companies, the impact of those changes on reducing risk and cost, and the methodologies used to issue legal holds, manage preservation, and conduct e-discovery." The Survey was produced by CGOC (www.cgoc.com), a community of corporate practitioners in retention, preservation and privacy, Huron Consulting (www.huronconsultinggroup.com) and was sponsored by PSS Systems (www.pss-systems.com), a legal hold software company. You can download a copy of the Survey here: http://tiny.cc/cuAPK.
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