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Breakdowns and Tune-Ups: Getting the Litigation Hold Process Right

When Volkswagen pleaded guilty this month to obstruction of justice charges stemming from its use of emissions “defeat devices,” legal counsel for the automobile manufacturer probably started to take inventory on what it might have done differently to have avoided such a fate. While that list likely included any number of entries, somewhere near the top had to be an action item to revamp its process for supervising the preservation of electronic data from company executives and employees.

Breakdowns in that process resulted in the comprehensive destruction of key information by approximately 40 Volkswagen employees. This in turn led to the guilty plea, along with criminal indictments against several of those employees and $4.3 billion in criminal and civil fines.

Most organizations are unlikely to confront the staggering scenario facing Volkswagen, yet many have not taken the necessary steps to tune-up their litigation hold process. Indeed, some organizations would shrug off shortcomings or inconsistencies in their hold processes as being inconsequential and unlikely to affect the outcome of a lawsuit.

Such an attitude flies in the face of litigation requirements. It also runs contrary to many court decisions from the past year, which confirm that litigants suffer adverse consequences without a defensible hold process.

The Fundamentals of a Litigation Hold Process

Litigation holds are an obligatory aspect of every lawsuit. Once litigation is reasonably foreseeable, a party must take reasonable steps to preserve relevant information in its possession, custody, and control. For corporate litigants, that means developing a litigation hold process that includes the following:

  1. Designate officials responsible for issuing a hold,
  2. Identify key players and data sources that have relevant information,
  3. Prepare a hold notice that intelligibly communicates the precise hold instructions,
  4. Immediately circulate the hold notice to prevent data loss, and
  5. Take appropriate follow up measures to ensure continued compliance with the hold.

All of these elements are essential. If even one of them is bypassed, a hold may not be properly implemented, leaving organizations vulnerable to data loss and court sanctions. This is apparent from various court decisions over the past few months that show the importance of these elements.

Case Examples of Litigation Hold Breakdowns

One such example is found in Security Alarm Financing Enterprises v. Alarm Protection Technology[1] where plaintiff failed to preserve relevant audio recordings. While plaintiff identified the existence of the recordings in its initial disclosures, its “general litigation hold” neglected to specify that the recordings be preserved. This breakdown, which resulted in the destruction of the recordings, led the court to issue a jury instruction providing that plaintiff “was under a duty to preserve its Alaska recordings but failed to do so.”

Another litigation hold breakdown – this time in GN Netcom v. Plantronics[2] – resulted in the destruction of thousands of relevant emails. In contrast to Security Alarm, defendant in GN Netcom undertook a fairly comprehensive effort to preserve vast stores of relevant information. Nevertheless, a senior executive disobeyed the hold instructions, destroying relevant emails and ordering subordinates to do the same. Holding that more decisive action could have prevented or mitigated the email destruction, the court issued an adverse inference instruction, along with a $3 million monetary sanction against defendant.

A final hold breakdown occurred in Browder v. City of Albuquerque,[3] where defendant failed to preserve relevant video footage. While the relevant footage was lost as a result of human error, the court found that error resulted from defendant’s ineffective litigation hold process: “The City clearly failed to have an effective system in place to ensure that relevant and correct evidence was preserved.” To address the loss of evidence, plaintiff would be allowed to present evidence and argument to the jury regarding the spoliation.

Getting a Litigation Hold Tune-Up

These cases and others demonstrate the folly of a laissez-faire approach to litigation holds. Organizations lacking a defensible hold process should address this vulnerability by tuning up their process to satisfy the above-referenced requirements. This may include engaging counsel, discovery consultants, or service providers with the legal and technical expertise to assist with the development of that process. They can also look to authoritative sources such as Driven’s newly published white paper that delineates best practices and other considerations for a defensible litigation hold process.



[1] Sec. Alarm Financing Enterprises, L.P. v. Alarm Protection Tech., LLC, No. 3:13-cv-00102-SLG, 2016 WL 7115911 (D. Alaska Dec. 6, 2016).

[2] GN Netcom, Inc. v. Plantronics, Inc., No. 12-1318-LPS, 2016 WL 3792833 (D. Del. July 12, 2016).

[3] Browder v. City of Albuquerque, --- F. Supp. 3d ---, 2016 WL 3946801 (D.N.M. July 20, 2016).

Philip Favro
Philip Favro
Philip Favro acts as a trusted advisor to organizations and law firms on issues surrounding discovery and information governance. Phil provides guidance on data preservation practices, litigation holds, data collection strategies, and ESI search methodologies. In addition, he offers direction to organizations on records retention policies and the need to manage dynamic sources of information found on smartphones, cloud applications, and social networks. Phil is available to serve as a special master on issues related to electronic discovery. Phil is a nationally recognized thought leader and legal scholar on issues relating to the discovery process. His articles have been published in leading industry publications and academic journals and he is frequently in demand as a speaker for eDiscovery education programs. Phil is a member of the Utah and California bars. He actively contributes to Working Group 1 of The Sedona Conference where he leads drafting teams and serves as the Steering Committee project manager. Prior to joining Driven, Phil practiced law in Northern California where he advised a variety of clients regarding business disputes and complex discovery issues. He also served as a Judge Pro Tempore for the Santa Clara County Superior Court based in Santa Clara, California.