Hold Everything:
Requirements and Tips About Document Retention
John A. Stone, Esq.
The law governing document protection in the
context of litigation and the consequences
of failing to do so.
While various state and federal statutory and
regulatory regimes may impose rules about
how and how long certain documents and
information must be maintained (and kept
confidential), litigation – including merely
anticipated or reasonably likely litigation –
imposes additional distinct and separate
requirements.
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All parties to this case have a legal duty to preserve
evidence.
While a litigant is under no duty 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.
The duty to preserve material evidence arises not only
during litigation but also extends to that period before the
litigation when a party reasonably should know that the
evidence may be relevant to anticipated litigation.
Disability Rights New Jersey, Inc. v. Velez, 2011 WL 2937355, n.3 (D.N.J. 2011) [emphasis added, citations
omitted]
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The duty to preserve evidence arises when a party reasonably believes
that litigation is foreseeable and, as such, may arise “many years before
litigation commences[.]”
Mediva Pharma Suisse AG v. Roxane Laboratories, Inc. , 2010 WL 310697, *13 (D.N.J. 2010) [emphasis added, citation
omitted].
Spoliation is “ ‘the destruction or significant alteration
of evidence, or the failure to preserve property for
another’s use as evidence in pending or reasonably
foreseeable litigation.’
“The Third Circuit has adopted a four-factor test for
evaluating spoliation claims, finding that spoliation
occurs where: “(1) the evidence was in the party's
control; (2) the evidence is relevant to the claims or
defenses in the case; (3) there has been actual
suppression or withholding of evidence; and (4) the
duty to preserve the evidence was reasonably
foreseeable to the party.” “The party who seeks a
spoliation sanction bears the burden of proving these
factors.”
McCann v. Kennedy University Hosp., Inc., 2014 WL 282693, *5 (D.N.J. 2014)
The Third Circuit held … that “a finding of bad faith is pivotal
to a spoliation determination.” The Court's ruling made it
clear that “actual suppression requires more than ordinary
negligence.” … [In] order to make a showing that evidence
was withheld in bad faith, the party who seeks a spoliation
sanction bears the burden of proving intent.
McCann v. Kennedy University Hosp., Inc., 2014 WL 282693, *7 (D.N.J. 2014) [citations omitted]
In New Jersey’s state courts, a party “has a duty to preserve evidence when
(1) litigation is pending or likely, (2) the alleged spoliator has knowledge of
such litigation, (3) the evidence is relevant, and (4) the non-spoliating party
is prejudiced by the concealment or destruction of the evidence.
That the spoliation is negligent is not dispositive, although it is “ ‘a factor
to be considered when determining the appropriate remedy for the
spoliation.’ With respect to the scope of the duty to preserve evidence,
however, “a potential spoliator need do only what is reasonable under the
circumstances.”
When spoliation is found to have occurred, the judge may fashion a civil
remedy to serve the purposes of making the non-spoliating party whole,
punishing the wrongdoer, and deterring others from engaging in such
activity. … “[T]he time when an act of spoliation is discovered will indeed
strongly suggest the appropriate course of action in that case....”).
Chapin v Samaras, 2014 WL 1125016, *3 (App. Div. 2014) [citations omitted, emphasis added]
BAD FAITH COULD BE INFERRED FROM FAILURE TO IMPLEMENT A
LITIGATION HOLD AFTER YOU KNEW OR SHOULD HAVE KNOWN
ABOUT ACTUAL OR EVEN POSSIBLE LITIGATION
If a party fails to produce documents after a litigation hold
should be in place that party may be subject to sanctions due to
a failure to preserve.
Since a spoliation inference is a possible sanction for failure to
implement a litigation hold, it follows that a litigation hold only
applies to documents within a party's possession, custody, or
control. … [T]his includes documents that are not necessarily in
the party's physical possession. Therefore, a litigation hold may
extend to third parties, and courts have issued orders to this
effect. [T]he duty to preserve “extends to documents ... in the
possession, custody and control of the parties to this action, and
any employees, agents ... or other non-parties who possess
materials reasonably anticipated to be subject to discovery.”
Haskins v. First American Title Ins. Co., 2012 WL 5183908, *4 (D.N.J. 2012) [citations omitted, emphasis added]
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Evidence of spoliation may give rise to
sanctions, which include: dismissal of a claim
or granting judgment in favor of a prejudiced
party; suppression of evidence; an adverse
inference; fines; and attorney's fees
Mediva Pharma Suisse AG v. Roxane Laboratories, Inc. , 2010 WL 310697, *14 (D.N.J. 2010) [citation omitted].
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Sanctions are warranted “when there is evidence that
a party's spoliation of evidence threatens the integrity
of th[e] Court.”
Spoliation sanctions serve the following three
functions: remedial, punitive and deterrent. They
level the playing field so that the prejudiced party is
restored to the position it would have been in absent
the spoliation. They punish the spoliator for its
misconduct and they warn other potential litigants
that spoliation of evidence will not be tolerated and
will be dealt with by the Court if necessary.
Mediva Pharma Suisse AG v. Roxane Laboratories, Inc. , 2010 WL 310697, *14 (D.N.J. 2010) [citation omitted].
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An adverse inference that permits a jury to infer that
‘destroyed evidence might or would have been
unfavorable to the position of the offending party.’
Mediva Pharma Suisse AG v. Roxane Laboratories, Inc. , 2010 WL 310697, *14-15 (D.N.J. 2010) [citations omitted].
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An adverse “inference is predicated upon the
common sense observation that when a party
destroys evidence that is relevant to a claim or
defense in a case, the party did so out of the wellfounded fear that the contents would harm him.”
Cappagross v. State Farm Insurance Co., 2010 WL 3404974, *10 (D.N.J. 2010) [citation omitted]
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In order for the spoliation inference to apply, the
party seeking the adverse inference must establish
that the following four factors have been satisfied:
“First, it is essential that the evidence in question be
within the party's control.”
“Second, it must appear that there has been actual
suppression or withholding of the evidence.”
Third, the evidence destroyed or withheld was
relevant to claims or defenses.”
“And fourth, it was reasonably foreseeable that the
evidence would later be discoverable.”
Mediva Pharma Suisse AG v. Roxane Laboratories, Inc. , 2010 WL 310697, *14-15 (D.N.J. 2010) [emphasis added,
citations omitted].
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“If a party has notice that evidence is relevant
to an action, and either proceeds to destroy
that evidence or allows it to be destroyed by
failing to take reasonable precautions,
common sense dictates that the party is more
likely to have been threatened by the
evidence” and, regardless of the “offending
party's culpability[,] ... it cannot be denied
that the opposing party has been prejudiced”
Mediva Pharma Suisse AG v. Roxane Laboratories, Inc. , 2010 WL 310697, *14-15 (D.N.J. 2010) [italics in
original, other emphasis added, citations omitted].
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In addition, with respect to the third factor, that the destroyed or
withheld evidence is “relevant,” … typically, where the culpability
of the offending party is negligence, gross negligence or even
recklessness (as opposed to willful or knowing) the party seeking
the spoliation inference must establish not only that the
destroyed or withheld evidence is probative …, but also “must
adduce sufficient evidence from which a reasonable trier of fact
could infer that the destroyed or unavailable evidence would
have been of the nature alleged by the party affected by its
destruction.” In other words, the party seeking the spoliation
inference must make a sufficient showing from which a fact
finder could reasonably determine that the destroyed or withheld
evidence would have been favorable to the movant.
Mediva Pharma Suisse AG v. Roxane Laboratories, Inc. , 2010 WL 310697, *14-15 (D.N.J. 2010) [citations omitted].
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A duty to preserve is an “affirmative obligation,” which
arises “when the party in possession of the evidence
knows that litigation by the party seeking the evidence is
pending or probable and the party in possession of the
evidence can foresee the harm or prejudice that would be
caused to the party seeking the evidence if the evidence
were to be discarded.”
NVE, Inc. v. Palmeroni, 2011 WL 4407428, *5 (D.N.J. 2011) [emphasis added]
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Once a party reasonably anticipates litigation, it must
suspend its routine document retention/destruction policy
and put in place a litigation hold to ensure the
preservation of relevant documents [and things].”
Robinson v. Winslow Township, 2010 WL 3326678, *5 (D.N.J. 2010) [emphasis added]
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Additionally, there has been a growing trend among
courts to find the attorney-client privilege is lost
when spoliation has occurred.
Although, in general, litigation hold letters are
privileged, courts have adopted the view that when
spoliation occurs those letters become discoverable.
These cases, although specific to whether litigation
hold letters are discoverable, recognize a growing
trend of waiver of privilege to require production of
documents where spoliation has occurred.
Magnetar Technologies Corp. v. Six Flags Theme Park, Inc. 886 F.Supp.2d. 466, 482 and n. 114, 116 and 117(D.Del. 2012)
A party who destroyed documents may be
deposed about the procedures it used to
preserve documents after finding defendants
expunged hard drives of employees after
litigation had begun.
Cache La Proudre Feeds, LLC v Land O’Lakes, Inc. 244 F.R.D. 614, 634 (D.Colo. 2007)
Failure to properly protect your documents
could impair your ability to take advantage of
an opponent’s failure to protect their
documents
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The term “document” has the broadest meaning possible
For example, and without limitation, documents include “hard” copies,
originals or electronically stored information (“ESI”) including all drafts as
well as finalized documents, originals and copies of desk files,
attachments, memoranda, letters, work papers, drafts, handwritten
notes, typed notes, faxes, forms, trade data, reports, tables, , slides, or
other graphics, audio or video tapes, working or personal files,
guidelines, procedures, minutes, calendar entries, telephone messages,
computer disks, CD-Roms, voicemails, PowerPoints, and any other
document. ESI, in turn, without limitation includes e-mails and
attachments, e-documents (i.e., electronically maintained data of any
kind such as audio and video files), databases, and team rooms. Email
includes emails retained in the “in-box,” “sent items,” and “deleted
items” file locations. ESI may also be found or stored on network drives,
desktop, laptop, home computer, iPad, iPhone, tablet, blackberry,
Android based or other PDA’s, CDs/DVDs, diskettes, flash drives, and
back-up tapes.
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Documents that are known to be duplicates
of documents held by other persons or
entities must be maintained.
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Documents contained in or which arise from
the use of a home computer, personal laptop,
iPad, blackberry, iPhone, Android, note book,
and emails created or stored, received sent,
using a personal email account must also be
saved.
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Documents should not be altered or “marked
up” in any way. Any new documents,
including ESI, data or tangible objects created
relating to the litigation must also be
preserved.
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Immediately and proactively put a litigation
hold on any and all of its documents that
could in any way relate to the litigation
All of your employees, agents and
representatives, who are in possession of
relevant materials should provide all such
materials to you before leaving your company
or ceasing to act on your behalf.
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Protect and preserve the following documents.
All electronic mail and attachments sent or received by and party or
relevant non-party or their agents and representatives, and
information about electronic mail (including message contents,
header information, and logs of electronic mail system usage)
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All communications concerning, referencing or in any way related to
the litigation
Databases (including all records and fields and structural
information in such data bases) containing any concerning,
references to or information in any way relating to the litigation
All logs of activity on computer systems that may have been used to
process or store electronic data containing information concerning
issues related to the litigation
All word processing files, design program files, and file fragments
containing information about, concerning, referencing or in any
way related to the litigation
All electronic data and file fragments created by application
programs which process information about, concerning,
referencing or in any way related to the litigation
All electronic files and file fragments containing information from
file calendars and scheduling programs containing any references
to or information in any way relating to the litigation
All electronic data files and file fragments created or used by
electronic spreadsheet programs where such data files contain any
references to or information in any way relating to the litigation
All other electronic data containing information about, concerning
or referencing information in any way relating to the litigation
You should also
 Stop any recycling, automatic deletion programs or overwriting
of and backup storage media, including which occur as part of
catastrophic backup procedures.
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Save all “hard” and electronic documents that in any way relate to
the litigation
Collect and preserve any documents related in any way to the
litigation, including in electronic form, whether at the office, at
home, or on any laptop or PDA, including equipment used by
former employees or agents or representatives must also be
collected and preserved.
Ensure that all metadata and ordinary data are preserved under
any and all of your data and document retention programs.
You should also…
 Make mirror images of any relevant drives
before formatting or erasing of hard drives
occurs.
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Save, and do not dispose of or alter, any
software or equipment, even if it is being
replaced as part of routing upgrade
procedures.
Not scrub any files to remove metadata.
You should also…
 Protect against modification and deletion of any
electronic data files concerning, referencing or in
any way relating to the litigation that are
maintained in online storage and/or direct access
storage.
 Stop any activity that may result in the loss of
electronic data concerning, referencing or in any
way relating to the litigation, including in off line
storage including magnetic tapes and other
media. This activity includes rotation,
destruction, overwriting and/or erasure of such
media in whole or in part.
You should also…
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Not alter or erase electronic data concerning, referencing
or in any way relating to the litigation, and not perform
any procedures (such as data compression of disk
defragmentation or optimization routines) which may
impact such data on any stand-alone microcomputers
and/or network workstations, unless a true and correct
copy had been made of such active files and of completely
restored versions of such deleted electronic files and file
fragments and unless copies have been made of all
directory listings (including hidden files) for all directions
subdirectories containing such files, and unless
arrangements have been made to preserve copies.
You should also…
 Preserve copies of all application programs
and utilities that may be used to process
electronic data concerning, referencing or in
any way relating to the litigation.
 Maintain an activity log that documents all
modifications made to any electronic data
processing system that may affect the
system’s capability to process any electronic
data concerning, referencing or in any way
related to the litigation
You should also take the following steps immediately with
respect to all personal computers used by your employees,
agents and representatives concerning, referencing or in
any way relating the litigation.
 Make a true and correct copy of all electronic data on fixed
drives attached to personal computers relating to
concerning, referencing or in any way relating to your
company including active files and completely restored
versions of all deleted electronic files and file fragments.
 Collect and put into storage all diskettes, magnetic tapes
and cartridges, external data devices and other media in
connection in connection with computers prior to the date
of this letter and the directives it contains.
 Preserve copies and listings until the litigation is
completely and finally resolved.
You should also…
 Contact any outside services or consultants who are in
possession of documents or information that your company
controls and direct them to preserve all such documents and
information.
 If your company uses or has used any third-party vendor
services, such as “Cloud” based computing or data storage
companies, Softward as a Service (“SaaS”), Platform as a Service
(“PaaS”) or Application Service Provider (“ASP”), to hold
electronically stored information (“ESI”), please instruct the
vendors to maintain all such information.
 If your company uses or has used any third-party vendor
services, such as “Cloud” based computing or data storage
companies, Softward as a Service (“SaaS”), Platform as a Service
(“PaaS”) or Application Service Provider (“ASP”), to hold
electronically stored information (“ESI”), please immediately send
us all such vendor agreements so we may begin to understand
the vendor’s retention and notice procedures.
You should also…
 Immediately provide these directives to all those at your
company or who act on your company’s behalf with respect to
your company’s email network and computer systems as well as
those responsible for your company’s record management
program.
 Immediately provide these directives to all of your company’s
employees, agents or representatives who had any involvement
with or any knowledge of parties in or related to the litigation.
 Re-circulate these directives to all your company’s employees,
agents or representatives (including vendors and service
providers).
Each such person and entity who receives these directives should
sign an acknowledgement of that receipt each time these
directives are provided.
Hold Everything:
Requirements and Tips About Document Retention
If you have any questions, please contact John Stone at:
JStone@decotiislaw.com or 201-928-1100