Legal Holds and Trigger Events

Exhaustion of Administrative Procedures Did Not End Legal Hold Obligations

To see the original blog post from E-Discovery Bytes click here.

"In a recent Louisiana case, Pipes v. UPS (W.D. La. 7/22/09), UPS was hit with a motion for sanctions due to alleged spoliation of evidence.  One of its drivers was involved in an accident.  After the accident, UPS fired the driver and he filed a grievance protesting his termination.  He argued that the accident was not his fault, but rather was caused by a faulty tire on his delivery van.  His grievance was denied at all stages, and his firing was upheld.  Following the end of the grievance process, van maintenance records were destroyed, and the allegedly faulty tire was released to a vendor."

"However, the fired driver then sued both UPS (for firing him) and his union (for inadequate representation) in federal court.  When he discovered that the maintenance records and tire were gone, he brought a motion for sanctions.  UPS's managers testified that they thought they could put the matter behind them when the grievance was decided, and so had gotten rid of the evidence.  The court ultimately declined to sanction UPS because the driver's claim lacked merit, and the tire and maintenance records were ultimately only slightly relevant to his claims."

Suspicious Lack of Data on Blackberries Leads to Adverse Inference Sanction

When employees defect from one company to another and litigation is initiated, nothing good ever comes of it.  The case of Southeastern Mechanical Services, Inc. v. Brody, 2009 WL 2883057 (M.D. Fla. Aug. 31, 2009) is just such a case.  The short answer here is that a group of employees left the plaintiff''s company, Southeastern Mechanical Services ("SMS") to join Thermal Engineering Construction Services, Inc. (“TEI”).   When some of the employees turned in their SMS laptops upon their departure, they were wiped (meaning a software program was used to erase data from the hard drives of the laptops.)  This raised suspicion and SMS initiated a lawsuit alleging theft of trade secrets and confidential information.  

During a preliminary injunction hearing, the court did not believe the explanation that some of the individual defendants wiped their laptops to protect personal information.  As a result the court issued a temporary restraining order ("TRO") preventing the group of employees from deleting their TEI issued blackberries and laptops.  The blackberries were turned in for forensic examination by plaintiff and defendants and found to have a suspicious absence of data.  The blackberries contained no phone, e-mail or text messages, even though individual defendants (former SMS employees) testified that they used their TEI issued blackberries (and a personal blackberry of one former employee) every day for e-mail, phone and texting since starting with TEI.

Legal Holds Continue to Present a Technology Hurdle for Half of the Organizations Surveyed

Results recently released by a combined Forrester/ARMA survey demonstrate that "increasing regulatory requirements and onerous eDiscovery burdens are forcing enterprises to design strategies to mitigate legal risk. Effective records and retention management programs play a big role in these strategies."  Records Management: User Expectations, Market Trends, And Obstacles (Forrester/ARMA 2009) ("Survey").  The Survey reports on the increasing role of records managment to help mitigate legal risks associated with the continued explosion of the volume and types of electroncially stored information created and stored by organizations each day.  The Survey is 11 pages and worth a view to check in on the current state of records management.  ARMA members can download a copy of the report here.

Because we focus on legal holds, the Survey reported that legal holds continue to present a technology hurdle for over half of the organizations surveyed:

• Limited support for integrated legal hold capability poses significant legal risk. Integrating legal hold capabilities with records management plays an important role in mitigating legal risk. Nearly 48% of records management stakeholders report that their records management solution supports legal hold natively or via a packaged third-party integration. The counterpoint to this figure represents significant potential legal exposure. More than half of records management decision-makers report that their application doesn’t support legal hold, that they don’t know if it does, or that it does but that these capabilities aren’t currently being used.

Survey, p. 6.  Forrester conducted the survey online with responses from 434 technology and strategy decision-makers with responsibility for records management during June and July 2009. Approximately 95% of respondents were located in North America. Approximately 32% of the survey participants were employed by enterprises with more than 5,000 employees.

To read more about the Survey, see the press release here.