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The Art of the Litigation Hold: Lessons Learned for eDiscovery

Those with an interest in civil discovery have been closely following the development of case law interpreting the recently enacted amendments to the Federal Rules of Civil Procedure. This attention is understandable given the apparent impact the rules amendments are having in discovery practice. From the focus on proportional discovery under FRCP 26(b)(1) to the modified sanctions framework created by FRCP 37(e), the amendments are causing counsel and clients to rethink existing litigation readiness practices so they are better prepared to discharge their discovery duties. Nowhere is this need more apparent than in the area of litigation holds.

An effective litigation hold process is a lynchpin for success in litigation. Without a defensible approach to litigation holds, the entire discovery process may very well collapse. Data must first be preserved if it is to be produced in litigation. If key players and data custodians are unaware that certain documents must be retained, those documents may be unavailable for discovery. Indeed, employees and data sources may discard or overwrite electronically stored information (ESI) if they are oblivious to a preservation duty. This would leave clients vulnerable to data loss, satellite litigation, and court sanctions. Perhaps no recent case is more instructive on this than HM Electronics v. R.F. Technologies.

HM Electronics v. R.F. Technologies

In HM Electronics, the court sanctioned defendant R.F. Technologies and its counsel for widespread discovery misconduct. The order included monetary sanctions and a recommendation that issue sanctions and an adverse inference instruction be imposed on R.F. Technologies since it “threatened to interfere with the rightful decision of the case.” One of the most critical breakdowns the court identified was the failure of R.F. Technologies’ lawyers to “craft and implement a litigation hold, or otherwise communicate to Defendants the importance of preserving relevant documents.”

Instead of issuing a hold and taking other efforts to preserve relevant information, counsel relied on a representation from the chief executive (Noorian) of R.F. Technologies that the company does “not delete documents in the normal course of business.” Despite that representation, R.F. Technologies did “not have a written policy requiring employees to preserve and not delete data.” Nor did R.F. Technologies back up every employee computer on which relevant data might have been found. Finally, R.F. Technologies did not take any steps to ensure that its employees kept relevant information. All of which – particularly when juxtaposed against Noorian’s instruction to his employees that they “destroy highly relevant documents because of their relevance to Plaintiff’s claims” – resulted in the loss of key information and the court’s sanctions order.

Litigation Hold Lessons

HM Electronics underscores the importance of developing an effective litigation hold process as part of the organization’s overall information governance plan. As HM Electronics teaches, counsel should work with clients to identify what key players and data sources may have relevant information. Designated officials who are responsible for preparing the hold should next draft the instructions in an intelligible fashion. The hold should then be circulated immediately to prevent data loss. Finally, counsel should take appropriate follow up steps to ensure the client’s continued compliance with the hold.

It is only by following these suggestions and other best practices that lawyers and litigants can ensure the information subject to a preservation duty is actually retained. These matters and other nuanced issues relating to this critical litigation readiness process were discussed during a webinar on The Art of the Litigation Hold that Driven hosted on Wednesday, April 27, 2016. The recording of this webinar is available here.

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.