March 29, 2006
DON’T
WAIT UNTIL IT’S TOO LATE:
What You Need to Know NOW
About Preserving Electronic Evidence
If you have read Constangy’s client publications over the past year, you
know that we have sounded like a broken record (or scratched CD?) regarding the
need to preserve electronic evidence. Well, here we go again . . . because the
Federal Rules of Civil Procedure have been revised to deal with electronic discovery
issues and because the changes to the rules give us yet one more excuse to convey
the message. Some very nasty verdicts have come from cases where one party failed
to preserve or produce electronic evidence.
We hope that most of our readers are familiar with Zubulake, a decision from
a federal court in New York, in which the employer’s failure to preserve
electronic evidence in a discrimination case entitled the plaintiff to an “adverse
inference” jury instruction – that is, the judge told the jury to
infer that the missing documents were favorable to the plaintiff. The verdict
was $29MM.
Last spring, in a fraud case, Morgan Stanley & Co. was hit with a verdict
of $1.5 billion, in large part because of another “adverse inference” jury
instruction given by the judge after the firm failed to comply with the court’s
Orders regarding electronic discovery.
Don’t let this happen to you! While you still can, get familiar with the
new rules, and have a plan in place.
Ninety-eight percent of information created today is digital and stored electronically.
The displacement of tangible documents by electronic ones has caused a great
deal of confusion in our legal system, specifically in the practice and procedure
of litigation.
Here are the highlights of the new federal rules, which will take effect at the
end of the year:
A “DOCUMENT” IS A DOCUMENT. For litigation purposes, electronic documents
are no different from any other documents. They must be maintained and produced
during discovery just like tangible, paper documents.
AVOID “SPOLIATION.” PRESERVE! The law imposes a duty to preserve
information relating to a matter in litigation. The duty arises as soon as one
knows, or reasonably should know, that a dispute will result in litigation. The
duty to preserve is particularly important in the electronic environment where
documents, e-mail correspondence and other electronic information is subject
to being altered or routinely purged from the host computer system. It is imperative
that businesses implement procedures for placing a “litigation hold” on
all e-documents, e-mail correspondence and other electronic information relating
to any matter that may result in litigation to preserve it and exempt it from
being automatically altered or deleted from the computer system. In that vein,
we have provided a proposed “Preservation Protocol” for clients’ use.
Click HERE to see it.
DON’T WAIT TO BE SUED. Don’t wait until you get a lawsuit to start
preserving electronic evidence. When an employee threatens to sue, or files an
administrative charge, that is the time to start preserving the evidence. Remember
that the guideline is whenever the company knew or reasonably should have known
that litigation would result.
“EVERYDAY FORMAT” IS OK. Unless otherwise requested or ordered by
the court, electronic information may be produced in the form in which it is
maintained in the ordinary course of business or in a form that is reasonably
usable.
DON’T PROCRASTINATE. When litigation begins, the rules require the parties
to discuss electronic discovery issues early in the discovery process and to
address any issues involving the discovery of electronic information in a joint
discovery plan. In light of this requirement, parties must consult with counsel
at the earliest possible opportunity about the nature and scope of electronic
discovery issues raised by the litigation.
DON’T FORGET IT. With all due respect to the legal profession, lawyers
are not particularly well-equipped to know how to preserve and retrieve relevant
electronic evidence. Therefore, any consultations about preserving electronic
evidence should include the client’s IT specialists and, if necessary,
outside IT consultants. IT specialists should be integrated into the litigation
team to provide access to the party’s electronic data and technological
support as appropriate during the course of the lawsuit.
A WORD ABOUT INSTANT MESSAGING. Employers should be aware that instant messages
are discoverable, too. Many employees will load their “private” instant
messaging programs onto their workplace computers, and send instant messages
throughout the workday. Retrieval of instant messages through “private” programs
may be difficult and expensive. Moreover, instant message communications tend
to be even more casual and more potentially “inappropriate” than
e-mail communications. Employers have two good options for dealing with instant
messaging by employees: (1) ban it completely, and make sure the system blocks
the operation of all such programs; (2) allow it, but make sure a system is in
place to preserve all instant message communications and – most importantly – make
sure all employees understand the risks involved in instant messaging – particularly
about workplace topics.
DO ALL THESE THINGS, AND ENJOY SMOOTH SAILING INTO THE “SAFE HARBOR” The
new rules have a “Safe Harbor” provision, which protects against
sanctions where a party has lost, altered, or destroyed relevant electronic evidence “in
good faith.” A court’s inquiry into a party’s good faith will
focus on the party’s knowledge that the information was relevant to the
matter in litigation, the party’s efforts to preserve the information,
and whether the information was lost, altered or destroyed despite the party’s
efforts to preserve it. Following all the other steps described in this Bulletin
will make it much more likely that your company will sail into the Safe Harbor.
Again, click HERE for a copy of
our Preservation Protocol. And, as always, if you have any questions about preservation
of electronic evidence, please contact any member of the Litigation Practice
Group, or the Constangy attorney of your choice.
If you have questions or need assistance in amending your wage deduction
policies
in light of these amendments, feel free to contact any attorney in Constangy’s
Asheville or Winston-Salem, NC, offices, or the attorney of your choice.
Constangy, Brooks & Smith, LLC has counseled
employers, exclusively, on labor and employment
law matters since 1946. The firm represents
Fortune 500 corporations and small companies
across the country. More than 100 lawyers work with clients
to provide cost-effective
legal services and sound preventive advice
to enhance
the employer-employee relationship. Offices
are located in Georgia, South Carolina,
North Carolina, Tennessee, Florida, Alabama,
Virginia, Missouri, and Texas. For more information about
the
firm's labor and employment
services, visit www.constangy.com, or call
toll free at 866-843-9555.
