Why You Should Hold Onto That Evidence a Little Longer

By James Floyd and Ryan Owen, Adams and Reese.  

Learn about a recent Florida court decision about data preservation and what actions are now required to meet document preservation obligations. 

Adams and Reese advises that if your company is faced with litigation, there are certain steps that are required to satisfy document and data preservation obligations. Rather than operating like normal, a company should suspend its normal document destruction practices and collect/store the relevant documents and materials. Since no one wants their case to end because the proper paper trail isn’t in place, here are steps that should be followed so that you don’t threaten your case.  

When does evidence need to be preserved? 

The obligation to preserve documents and data starts as soon as the company realizes it is or could be a party to a lawsuit. At that point, the company must not destroy unique, relevant evidence that might be useful to the opposing party. To meet this obligation, the company must immediately take active steps to ensure and prevent the destruction of evidence, including electronic data. This duty to preserve evidence applies to all employees who are likely to have relevant information to the pending or future lawsuit and the “key-players” in a lawsuit. This can include ordinary, non-management staff. 

A company and its employees must retain and preserve those documents and materials that the company knows, or reasonably should know, are: i) relevant to the potential or actual lawsuit; ii) reasonably calculated to lead to the discovery of admissible evidence; or iii) reasonably likely to be requested during discovery, not just those that are already subject to a pending discovery request. 

What happens if a company does not take reasonable steps to preserve evidence? 

In a recent case, a Contractor was sanctioned due to its failure to preserve cell phone data, including text messages and photographs. During construction, a hurricane made landfall and pushed equipment owned by the Contractor into a bridge, causing damage that closed the bridge and prevented travel. Thereafter, the Contractor was sued by businesses who claimed they suffered losses resulting from the bridge closure. 

Despite being aware of a potential lawsuit and issuing a written litigation hold, the Contractor failed to take appropriate steps to prevent the destruction of cell phone data that was potentially relevant to the lawsuit. Multiple cell phones used by non-management employees on the project were wiped, lost, or otherwise unavailable. As a result, text messages and photographs were deleted and were not recoverable. 

The Contractor was unable to explain why it did not timely collect the cell-phone data. The Court concluded that the Contractor acted in bad-faith by not preserving the data. The Court then sanctioned the Contractor by awarding presumptions requested by the claimants that (1) the cell phone data was relevant and favorable to claimants; and (2) the data would have shown that it was not the specific employees whose cell phone data was lost that caused the equipment to damage the bridge. 

Finally, the Court imposed monetary sanctions against the Contractor totaling over $90,000.00 to reimburse the claimants for costs incurred. 

What steps should be taken? 

When faced with a lawsuit or a potential lawsuit, the following steps should be taken: 

• Identify all employees who are likely to have relevant information; 

• Inform those employees that they may have information and documents which needs to be collected and preserved; 

• Issue a written litigation hold as soon as possible to the applicable employees suspending routine document/data destruction; 

• Obtain written confirmation that the employees have received the litigation hold and that they understand their responsibilities; 

• Clarify any questions or misunderstandings that the applicable employee might have regarding their document/data preservation obligations; 

• Make copies or backup all relevant documents and materials, including electronically stored information; 

• Collect and store the potentially relevant documents and materials; and 

• In the event that any identified employees leave the company, instruct them to follow appropriate document preservation steps prior to their departure. 

Conclusion 

A company faced with future or pending litigation must ensure that a litigation hold is implemented, its normal document destruction practices are suspended, the relevant documents and materials are collected and stored, and confirm that the applicable employees fully understand their document preservation obligations. Without taking those steps, a party risks losing the case and paying their opponent for the privilege of doing so. 

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The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.

Original article source: Adams and Reese