employment record retention and destruction

Presenting a live 90‐minute webinar with interactive Q&A

Employment Record Retention and Destruction: d f l lGuidance for Employment Counsel

Implementing Document Management Policies to Mitigate Risk, Reduce Costs and Minimize Discovery Challenges

T d ’ f l f

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

WEDNESDAY, MAY 8, 2013

Today’s faculty features:

Jonathan D. Wetchler, Partner, Duane Morris, Philadelphia

Charles H. Wilson, Member, Cozen O’Connor, Houston

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RECORD RETENTIONAND DESTRUCTION*

P t d bPresented byJonathan A. Segal, Esq. and Jonathan D. Wetchler, Esq.

*Participation in this conference does not establish an attorney-client relationship between Duane Morris LLP (or the Duane Morris Institute) and any participant (or his or her employer.) F th t t t d i thi f i th t i l h ld b t d l l d i i l di t i i t ifi f t l it ti

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Further, no statements made in this conference or in the materials should be construed as legal advice, including as pertaining to specific factual situations.

DM2/3245941.4

Current State of Your Efforts?

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Determining Period for Retention

1. Statutory requirements2. Statutes of limitations2. Statutes of limitations3. Internal consistency4 Practicality in implementation4. Practicality in implementation


Determining Period for Retention

State limitations period typically is longer than statutory requirementsy q

• PA breach of contract – 4 years• NJ breach of contract – 6 years• EEO: 1 year from date of decision• Affirmative Action: 2 years under

41 C.F.R. §60-1.12] but 3 years as practical matter*

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* Data must be retained for current and preceding affirmative action year.

8

Separate Files

1. Personnel2. Medical2. Medical3. Immigration4 Payroll4. Payroll5. EEO demographics6 I ti ti6. Investigations7. Attorney-Client Communications


Personnel Files

Content (examples)

• Application for Employmentpp p y• Resume• Interview notes• Verifications of education, licenses etc.• References


Personnel Files

Content (examples)

• Offer of Employment p y• Job Description• Benefits enrollment forms (excluding PHI)( g )• Authorizations for required withholdings from

pay (Form W-4)


Personnel Files

Content (examples)

• Authorizations for deductions from payp y• Performance appraisals• Change of status documentation g

(e.g., promotions) • Changes in personal information

( h dd )(e.g., home address)


Personnel Files

Content (examples)

• Attendance records• Training• Disciplinary memosy• COBRA notices• Other documents relating to the employee’s

employment history, including termination documents


Personnel Files

Exclusions (examples)

• Medical records (broadly defined)( y )• Employment demographics• I-9s


Personnel Files

Retention Options• Employment, plus 3 (minimum)p y , p ( )• Employment, plus 4 (1981) • Employment plus, longest likely state statute of y g y

limitations but no less than 3/4


Personnel Files

Retention Options• Employment, plus 6 *p y , p

Consistency for multi-state Consistent with medical records, below

* S bject to longer retention in certain states based on contract stat tes of

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* Subject to longer retention in certain states based on contract statutes of limitations

16

Medical Files

Security• Separate and distinct – 42 U.S.C. p

§12112(d)(3)(A)• Locked and secured


Medical Files

Separating HIPPA from non-HIPAA records• Strongly recommended by EEOCg y y• Key is to make sure HIPAA documents are not

improperly used or disclosed


Medical Files

Content (examples)

• Results of pre- or post-employment p p p yexaminations


Medical Files

Content (examples)

• Medical documentation submitted by employee y p yrelative to: ADA accommodations FMLA or other leaves of absence Documents relating to STD, LTD and Workers’

CompensationCompensation Health insurance election and claims forms Other doctor’s notes (with medical information)

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( )

20

Medical Files

Retention Options• Hybridy

HIPAA – 6 years from date created or in effect* Non-HIPAA – 3 years

• Employment plus 6 (consistent with personnel files)

* HIPAA: 6 years from date created or date in effect whichever is later

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HIPAA: 6 years from date created or date in effect, whichever is later [45 C.F.R. §164.530j(2)]

21

Medical Files

Special OSHA Retention Rules• Employment plus 30 years for certain medical p y p y

and employee exposure records [29 C.F.R. §1910.1020(d)]

• Does not include: Health Insurance records maintained separately

from employer’s medical programfrom employer s medical program First aid records of one-time treatment for

certain minor injuries


EEO Investigations

Content (examples)

• Complaintp• Notes of interviews• Witness statements• Findings of fact• Memos to employees


EEO Investigations

Retention Options• Employment, plus 3 (minimum)p y , p ( )• Employment, plus 4 (1981)• Employment, plus 6 *y

Consistency for multi-state Consistent with medical records, below Check with counsel

* Subject to longer retention if litigation hold is required and in certain states based

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Subject to longer retention if litigation hold is required and in certain states based on contract statutes of limitations

24

Payroll Records

Content (examples)

• Payroll stubs (or equivalent)y ( q )• Time records (or equivalent)


Payroll Records

Time frame• Retain on “rolling” basisg• Not “employment, plus”


Payroll Records

Retention Options• 3 years for FLSA or state wage payment, y g p y ,

whichever is longer (minimum)• 6 years – longest statute of limitations for

likely common law claim* Accountants suggest 7 years from date of

filing of the federal tax return for the yearfiling of the federal tax return for the year covered

* S bj t t l t ti i t i t t b d t t t t t f

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* Subject to longer retention in certain states based on contract statutes of limitations

27

EEO Demographic Information

Content (examples)

• Voluntary AA Formsy• EEO-1 Data• RIF EEO analysisy• Accommodations or protected leave logs



Exclude From• Consideration in decision-making regardingg g g

Compensation Promotion/demotion Evaluations and discipline Termination Oth t d diti f l t Other terms and conditions of employment

• Personnel filesFiles relating to decision making

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• Files relating to decision-making

29


Retention Options/Requirements• EEO-1 Reports – 6 calendar years after p y

December 31 of the year in which the report is filed EEO (required)


Retention Options

Retention Options/Requirements• Analysis/logs – consult with counsel regarding y g g g

purpose of specific document• Affirmative Action: 2 years

[41 C.F.R. §60-1.12]*

* Practical effect for affirmative action employers is 3 years when you maintain affirmative action data including applicant flow for current plan year and

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affirmative action data, including applicant flow, for current plan year and preceding plan year

31

Attorney Client Communications

Label• Outside counsel• Inside counsel



Security• Separation of filesp• Access limitations



Content (examples)

• Notes• E-mails• Letters



Retention Options• Discuss with Counsel


Pre-Employment Records

Content (examples)

• Advertisements • Postings • For “applicants” not hired

Resumes Applications

• Employment agency orders and communications



Federal retention requirements• EEO: 1 year from date of decisiony• Affirmative Action: 2 years

[41 C.F.R. §60-1.12]*

* Because employer must maintain applicant flow and other affirmative action data

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Because employer must maintain applicant flow and other affirmative action data for current and preceding affirmative action year, practical effect is 3 years.

37


Retention Options – from date of decision • 1 year (unless more than 1 required by state y ( q y

law) • 2 years (required for affirmative action

employers and recommended for other employers to ensure adequate comparators)*

* Practical effect for affirmative action employers is 3 calendar years from year of employment decision when you maintain affirmative action data, including

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p y y , gapplicant flow, for current plan year and preceding plan year.

38


Retention Options – from date of decision • 4 years (1981) y ( )• 4 years or longest statute of limitations for likely

common law claim, whichever is longer


Immigration Records

Content (examples)

• Completed Form I-9p• Back-up information upon which form is based


Immigration Records

Retention• IRCA – Active employment, plus 1 year, but no p y , p y ,

less than a total of 3 years [Title 8 U.S.C. §1324a(b)(3)]

• Law requires retention of I-9s only but recommend retention of back-up documents too

• Electronic storage: final rules effective• Electronic storage: final rules effective August 23, 2010; see 8 CFR 274(a).2(e)(4)


Retention of Supervisors’Informal Employees Fileso a p oyees es• Coextensive with length of employment of

employeeemployee • Collection upon termination of employee


Retention of Attendance Records

• No less than 3 years or state wage payment statute of limitations, whichever is greater g


Retention of Benefits Forms

• Retirement – participation plus 6 years• LTD – benefits plus 6 yearsLTD benefits plus 6 years• Life insurance – life plus 6 years• Retiree medical benefits plus 6 years• Retiree medical – benefits plus 6 years



COBRA notices and other forms: • Regulations are silentg• Since COBRA amended ERISA, recommend

following ERISA• ERISA: 6 years from the date of the record



Grandfathered health plans under Health Care Reform:

Must retain indefinitely records that document coverage in effect on March 23, 2010 as well as

h d h bli h df h dother documents that establish grandfathered status


Special Considerations

On site versus off site• Control • Security



Hard copy versus scanned• Legal significance g g• Retention off site



When and how to Shred • Assigned dates g• Use of assigned calendar dates to implement

rolling periods• Documenting dates• Destruction method

Best practices State laws


How Not To Shred



Electronically Stored Information (ESI)• Broad definition • General rule – delete/overwrite after specified

time frame (e.g., 6 months)



Electronically Stored Information (ESI) Exceptions to General Rulep

• Electronic records subject to “litigation hold”• Electronic records required to be retained by

government statute or regulation • Electronic required valuable business

i f tiinformation


Duty to Preserve

1. A party has a duty to preserve evidence relevant to current or reasonably foreseeable yfuture litigation


Duty to Preserve

2. Good faith effort must be made to identify and preserve all “documents” which are:pa. Relevant to the action;b. Reasonably calculated to lead to the discovery

of admissible evidence;c. Reasonably likely to be requested in discovery;

d/and/ord. Subject of a pending discovery request


Duty to Preserve

3. “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 f bl liti ti ”foreseeable litigation.”Mosaid Technologies, Inc. v. Samsung Electronics Co Ltd 348 F Supp 332 335 (D N J 2004)Co., Ltd., 348 F.Supp. 332, 335 (D.N.J. 2004) (quoting Zubulake v. UBS Warburg LLC, 2004 U.S. Dist. LEXIS 13574 (S.D.N.Y. 2004))


Duty to Preserve

4. Triggers for Duty to Preserve – Notice of:a. Lawsuitb. Administrative chargec. Government investigationg


Duty to Preserve

5. Possible Triggers for Duty to Preservea. Letter from opposing counselpp gb. Complaint by employee or non-employee

i. Formalii. Informal

c. Certain occurrences


Duty to Preserve

6. What Kinds of Documents, ESI and Other Tangible Things May Be Subject to Litigation g g y j gHold?a. Hard copy documentsb. Electronic documentsc. Hardwared. Mediae. Recordings

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f. Other tangible things58

Duty to Preserve

7. Key Components of Duty to Preservea. Determine who may have documents which y

must be preservedb. Issue litigation hold on destruction or alteration

of documents within scope of duty to preserve until further notice

c Reissue litigation hold periodicallyc. Reissue litigation hold periodicallyd. Monitor compliancee Document your efforts

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e. Document your efforts

59

Result of Ignoring Document Management


Action Plan

Step One: Identify Litigation Holdsa. Identify existing holdsy g

Determine whether each is still needed Ideally, an inventory of all litigation holds

should be kept in one place


Action Plan

Step One: Identify Litigation Holdsb. Identify any holds that should be implemented y y p

Ask in-house counsel Consider whether this inquiry should extend to

other areas, such as HR


Action Plan

Step Two: Gather Existing Document Retention Policies

a. Which features of the old policy worked? Which didn’t?

b. What is outdated? Consider changes in technology C id h i h l Consider changes in the law


Action Plan

Step Three: Address Legal/Regulatory Concernsa. Identify any legal and/or regulatory reasons for y y g g y

keeping recordsb. Areas to consider include, but are not limited to:

tax, corporate and employmentc. Note that legal/regulatory issues will apply

equally to emails and hard copy documentsequally to emails and hard copy documents


Action Plan

Step Four: Address Business Concernsa. Identify records that should be kept for business y p

reasonsb. Examples:

Contracts – but consider discarding drafts and keeping only final, executed version of each contractcontract

Medical Records


Action Plan

Step Four: Address Business Concerns (continued)

b. Examples (continued):p ( )

Accounting Records Personnel Records Policy Manuals Corporate Records (minutes and the like)N h f d h ld b b hc. Note that for some records there could be both legal and business reasons for retention


Action Plan

Step Five: Revise Document Retention Policya. Policy should be comprehensivey p

Covering all types of records (HR, medical, accounting, etc.)

And covering all types of information (hard copies on site, hard copies in storage, emails, back-up tapes, hard drives, voicemail, etc.)p p , , , )

b. Make sure policy states the process for enacting litigation holds


Action Plan

Step Six: Do a Final Sweep for Litigation Holds

Make sure nothing has come up since the initial surveythe initial survey


Action Plan

Step Seven: Alert Employees of New Policya. Some companies elect to implement in stages p p g

(e.g., tackle hard-copy documents first)b. Some companies schedule a clean-up

day/week/month


Action Plan

Step Eight: Identify and Conduct Necessary Trainingg

Possible issues Use of home computers Use of personal email address Compliance with litigation hold


Action Plan

Step Nine: Document the Plana. It is wise to document that each of the above

steps was taken, when, and by whomb. Some companies keep a binder with relevant

memos detailing the plan, along with appendices, such as certificates of record destruction from off-site storage facilitiesdestruction from off site storage facilities


Action Plan

Step Ten: Push the Button!


Thank You!Jonathan D. Wetchler

Partner30 South 17th Street

Philadelphia, PA [email protected]

www.duanemorris.com



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E l R d Employment Record Retention and Destruction: Guidance for Employment Guidance for Employment Counsel

Presented By:

Charles H. Wilson

Cozen O’Connor

Houston, Texas

© 2013 Cozen O’Connor. All Rights Reserved

AGENDAAGENDA

1.1. Litigation HoldsLitigation Holds

22 D t P ti d S li tiD t P ti d S li ti2.2. Data Preservation and SpoliationData Preservation and Spoliation

3.3. Discovery ResponsesDiscovery Responses

75

LITIGATION HOLDSLITIGATION HOLDS

76

What Is A Litigation Hold?

“ A legal obligation to g gpreserve documents relating to current or impending litigation ”impending litigation.

Daniel Renwick Hodgman, Comment, A Port in the Storm?: The Problematic and Shallow Safe Harbor for Electronic Discovery, 101 Nw.

U. L. Rev. 259, 260 (2007).

77

Timing of Litigation Holdsg g

Once a party is or should be bl f ti i t dreasonably aware of anticipated

litigation, the party must suspend its document destruction policy and preserve documents relevant to p

the litigation.

Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 218 (S.D.N.Y. 2003).

78

Timing of Litigation Holds

A litigation hold should be issuedwhenever a party is or should be p y

reasonably aware of ti i t d liti tianticipated litigation.

Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 216-17 (S.D.N.Y. 2003).

79

Timing of Litigation HoldsLitigation is reasonably anticipated

“when an organization is on notice of awhen an organization is on notice of a credible probability that it will become

involved in litigation seriouslyinvolved in litigation, seriously contemplates initiating litigation, or

h it t k ifi ti twhen it takes specific actions to commence litigation.”

Sedona Conference Commentary on Legal Holds, Guideline 1.

80

Defendant’s Triggers• Filing of EEOC charge.

Chirdo v Minerals Techs Inc No 06 5523 2009 WL 2195135 at *2 3– Chirdo v. Minerals Techs., Inc., No. 06‐5523, 2009 WL 2195135, at 2‐3 (E.D. Pa. July 23, 2009).

• Receipt of a summons or complaint.p p

• Official notice of a government investigation.

• Discovery requests. – MOSAID Techs. Inc. v. Samsung Elecs., Co., 348 F.Supp.2d 332, 336

(D N J 2004)(D.N.J. 2004).

81

Defendant’s Triggers• May arise before a charge is filed.

– Employee told employer she retained an attorney p y p y yand intended to sue.

• EEOC v. Smokin’ Joe’s Tobacco Shop, Inc., No. 06-01758 2007 WL 1258132 at *4 (E D Pa Apr 27 2007)01758, 2007 WL 1258132, at 4 (E.D. Pa. Apr. 27, 2007).

– Employee’s litigious history.

– “Almost everyone” associated with employee was– Almost everyone associated with employee was aware of her potential suit.

• Zubulake v. UBS Warburg, LLC, 220 F.R.D. 212, 217 (S D N Y 2003)(S.D.N.Y. 2003).

– Asking employees to sign a waiver of legal rights.Scott v IBM Corp 196 F R D 233 249 (D N J 2000)• Scott v. IBM Corp., 196 F.R.D. 233, 249 (D.N.J. 2000).

82

Plaintiff’s Triggers

• Seeking advice of counsel.

• Sending a cease and desist letter.

• Commencing litigationCommencing litigation.

Sedona Conference Commentary on Legal Holds Guideline 1Sedona Conference Commentary on Legal Holds, Guideline 1.

83

“Gray Area” Triggers

• Receipt of a preservation notice from an opposing partyopposing party.

• Information that the corporation is a target of litigation.


84

Consider:Consider:– Credibility of the information.

Specificity of the information– Specificity of the information. – Industry standards.

Awareness of litigation by– Awareness of litigation by others (public, competitors, coverage).

– Party making the claim.– Type of threat (direct, implied,

i f d)inferred).

S d C f C t L l H ldSedona Conference Commentary on Legal Holds, Guideline 4.

85

Issue an Effective Notice


86

Target Personnel

• Key custodians and witnesses – Employees– Employees – Secretaries– Others with access to main custodian’s ESI– Former employees

C t t f ll ti• Contact person for all preservation-related questions

• Members of the IT department who are responsible for overseeing the holdresponsible for overseeing the hold– Arrange face-to-face meetings.

87

Effective Communication• Describe the litigation generally.

• Describe how to preserve ESI in plain English• Describe how to preserve ESI in plain-English.

• Explain consequences for non-complianceExplain consequences for non compliance.

• Avoid legal and technical jargon.

Broadly describe sources of ESI• Broadly describe sources of ESI.

• Pin-point types of data to preservedPin point types of data to preserved.– Paper and electronic documents

88

Appropriate Form• Issue written litigation hold.

• Receive written acknowledgementsacknowledgements.– Received hold– Understand hold– Understand hold – Agree to hold

• Identify one person for preservation-relatedpreservation related questions.

89

Direction on Preservation

• Give specific instructions h don how to preserve data.

• Stress the continuing nature of the hold.nature of the hold.

• Explain the importance of• Explain the importance of not destroying or altering datadata.

90

Litigation Hold

• Litigation Holds:

1. Suspend routine document/data destruction.

2 S / d li f b k t2. Save/suspend recycling of back-up tapes.

3. Notify archival facilities to suspend destruction and to preserve ESI.

4. Monitor compliance and send periodic updates/reminders.p p p

91

Litigation Holdg

5 Notify employees of the hold5. Notify employees of the hold.

6. Get bit-map images for key and departing employees.

7. Certifications from IT personnel to establish chain-of-custody.

8. Form ESI discovery/document-retention team.

92

Periodic Review

• Review scope of legal hold notice.

• Review sufficiency of legal hold notice.y g

• Consider changes in types of data• Consider changes in types of data.

• Determine if new players are involved.

Sedona Conference Commentary on Legal Holds, Guideline 7.93

Counsel’s Duty to Monitor

Some courts require outside counseli d i h li i i h ldto supervise and monitor the litigation hold:

• Communicate with parties and witnesses.Communicate with parties and witnesses.

• Secure backup media.

• Directly instruct employees on documents to be d i th liti ti h ldpreserved via the litigation hold.

94

Document Enforcement Efforts

Documenting a litigation h ld d t t khold, and steps taken to enforce the hold, helps demonstrate a

corporation’s reasonableness and

good faith in gimplementing the hold.Sedona Conference Commentary on Legal Holds, Guideline 9.

95

Releasing The Litigation Hold

When Is party is no longer requiredWhen Is party is no longer required to preserve data?

• Passage of timePassage of time• Judicial resolution

Cond ct inconsistent ith anticipation of• Conduct inconsistent with anticipation oflitigation

96

Discovery of Litigation HoldsDiscovery of Litigation Holds

Generally not discoverable unless there is aGenerally not discoverable unless there is a spoliation issue.

“Document retention notices” were not discoverable, but plaintiff’s could ask questions about the facts regarding p q g gindividual efforts to collect evidence and preserve responsive information, including the identities of persons who received the notices”persons who received the notices

In re eBay Seller Antitrust Litigation, 2007 U.S. Dist. LEXIS 75498 (N.D.Cal.In re eBay Seller Antitrust Litigation, 2007 U.S. Dist. LEXIS 75498 (N.D.Cal.

Oct. 2, 2007).97

DATA PRESERVATION & DATA PRESERVATION & SPOLIATIONSPOLIATIONSPOLIATIONSPOLIATION

98

Avoid Spoliation

Once you are on noticeOnce you are on notice of a potential claim, you must preserve all potentially relevant documents and ESI.

A document retention policy is a key factor to determining if documents have been destroyed in bad faithdestroyed in bad faith.

99

Preservation Plan

Design a process to preserve data that can withstand gscrutiny of opposing counsel and judicial review

Timing• Timing

• Audience

• Message

• Creating a compliance record

• Follow-up100

Where is Key Data Found?The Desktop Environment:

Active Filesd f l d

y

•Current documents, files, and programs

Deletion Activity•“Deleted” files and partially overwritten fragments U f i /d f / bbi ili i •Use of wipe/defrag/scrubbing utilities

E-mail Folders•Locally archived e-mail, contact lists, calendar

Internet and Search History•Surfing and web-based email activity

S t P i h l A ti itSystem, Peripheral Activity•Sign-in logs; files printed or saved to CD, floppy•Installed programs or devices (e.g., thumb drive)

M t d t

101

Metadata•“Accessed,” “Created,” “Modified,” “Author”

101

Where else is data located?e e e se s data ocated•Desktops•Laptops•BlackBerry’s and other PDA’s•Storage Devices

(DVDs, CDs, Floppy Discs, Flash Cards, Th bd i )Thumbdrives)

•Servers (FTP, Web, E-mail, File,)

•Voicemail•Voicemail•Backup Tapes•Digital Fax Machines•Cell Phones•Cell Phones•Digital Cameras•Off-site StorageR ti d C t

102

•Retired Computers

102

Email

• Microsoft exchange server; Lotus notes

• Get snapshot of custodial in-boxes

• Look for evidence that confidential information was sent hhome

• Mass deletions – check the dumpster

• Use of web-based email

103

Search Protocols• Use third party/neutral expert

D l h t• Develop search terms• Apply to data set• Conduct privilege/relevance review• Privilege/relevancy logs• Privilege/relevancy logs

104

Back-up Tapes• Find out the rotation and media that is “backed-up”

• Stop rotation immediately

• Get oldest tape with snapshot of relevant emails etcGet oldest tape with snapshot of relevant emails, etc.

• Get all retention policies; find out retention practices

105

Phone Records• Shut-off immediately

• Testing issuesTesting issues

• Look for evidence of conspiracy/collaboration

• Secure land-line phone records

• Unusual patterns –especially immediately before resignation

• Phone number search services

106

Less Obvious Sources•Web 2.0 – Wikis, blogs, and other collaborative toolscollaborative tools

•Backup Tapes

•Enterprise databasesEnterprise databases

•Servers (FTP, Web, E-mail, File)

•Server logs

•Digital cameras

•Building access cards

•Video surveillance

107

What are theconsequencesif documents

are not properlypreserved?

108

Spoliation

109

What is Spoliation?

Spoliation is “the destruction or i ifi t lt ti f idsignificant alteration of evidence, or

the failure to preserve property for another's use as evidence.”

West v. Goodyear Tire and Rubber, Co., 167 F.3d 776, 779 (2d Cir. 1999).

110

Types of Spoliation Sanctions• Permissive and mandatory

inferences

• Stricken pleadings and defenses

• Admitted facts

• Attorney’s fees

• Contempt

• Fines

111

Spoliation of Evidence

FRCP 37(e) governs sanctions for spoliation of electronic discovery*of electronic discovery*– “Failure to Provide Electronically Stored

I f ti Ab t ti l i tInformation: Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronicallyrules on a party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system.”

112

What Does This Mean?

• Rule 37(e) creates a safe harbor if the destruction of electronically storeddestruction of electronically stored information is the result of a routine

ti f l t i toperation of an electronic storage system and the destruction was in

d f ithgood faith.

• Thus sanctions may be appropriate ifThus, sanctions may be appropriate if an opposing party can prove destruction was intentional or recklessdestruction was intentional or reckless.

113

Rule 37(e) – Safe Harbor• Limited protection against sanctions for

failure to disclose relevant, electronically-stored informationstored information.

• No sanctions for routine destruction of ESINo sanctions for routine destruction of ESI due to the “routine-good-faith operation of an electronic information system.”

• The destruction must be in good faith.

• Not a deep harbor -- very limited

• Understand how clients’ systems work.114

Shallow Harbor

Advisory Committee: Safe harbor provisionprovision

does not apply when party fails to suspendsuspend

document destruction policy.C t f d t ll th d f d t t– Court refused to allow the defendant to claim the protections of the Rule 37 safe harbor because it failed to suspend its pdeletion policy upon notice of litigation.

Doe v Norwalk Cmty Coll 2007 WL 2066497 at *7 8 (D ConnDoe v. Norwalk Cmty. Coll., 2007 WL 2066497, at 7-8 (D.Conn. July 16,

2007). 115

Determining Spoliation Sanctions

1. Fault of the party that destroyed relevant idevidence

2. Extent of prejudice suffered

3. Whether a less severe sanction is available, and whether that sanction will deter future

ff i d toffensive conduct

116

Pension Committee• General failure to preserve, and submission of false

declarations relating to collection and production effortsefforts.

• Failure to issue a written litigation hold is per se gross negligencenegligence.

• If gross negligence or willful – relevance and prejudice are presumed; burden shifts to allegedprejudice are presumed; burden shifts to alleged spoliator to show no relevance or no prejudice.

• Second Circuit allows for severe sanctions based on• Second Circuit allows for severe sanctions based on negligent destruction of evidence.

Pension Comm. of the Univ. of Montreal Pension Plan v. Banc of Am.Sec.,Pension Comm. of the Univ. of Montreal Pension Plan v. Banc of Am.Sec.,

LLC, 2010 U.S. Dist. LEXIS 4546 (S.D.N.Y. Jan. 15, 2010).

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Cammarata• Terminating sanctions only if “irreparable prejudice” and

bad faith.• Granted adverse inference instruction and costs/fees

– Jury must decide if lost information would have been unfavorable to the defendants.

– If bad faith destruction, the jury can presume lost information would have been unfavorable.

• Sliding scale analysis between culpability vs level ofSliding scale analysis between culpability vs. level of prejudice.– Courts generally allow bad faith to substitute for relevance and

prejudice – avoids spoliator’s argument.prejudice avoids spoliator s argument.

Rimkus Consulting Group, Inc. v. Cammarata, 2010 U.S. Dist. LEXIS14573 (S D Tex Feb 19 2010)14573 (S.D. Tex. Feb. 19, 2010).

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More Spoliation Cases

• No spoliation sanctions where the defendant’s failure to preserve evidence was culpable, but did not result in permanent prejudice. p , p p j– May v. Pilot Travel Ctrs., LLC, 2006 U.S. Dist. LEXIS 94507, at

*12-13 (S.D. Ohio Dec. 28, 2006).

• Where insurance company lost a laptop that may have contained potentially relevant information, court allowed plaintiff to inform the jury of defendant’s actions and lowered plaintiff’s burden to prove th t f di t d i lithe terms of disputed insurance policy. – Great Am. Ins. Co. of NY v. Lowry Dev., LLC, 2007 WL 4268776,

at *4 (S.D. Miss. Nov. 30, 2007).

• Where wiping of laptops was done for maintenance purposes, court fund insufficient evidence for spoliation sanctions. – Maxpower Corp v Abraham 557 F Supp 2d 955 964 (W DMaxpower Corp. v. Abraham, 557 F.Supp.2d 955, 964 (W.D.

Wis. 2008).

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DEFENSIBLE COLLECTION “Avoid Spoliation”Avoid Spoliation

Copying – Captures Active Data by using standard application tools but will always change someapplication tools but will always change some metadata fields like last accessed date/time.

Harvesting – Captures Active Data by using specific tools that preserves metadata. Could be handled by kno ledgeable Client IT staff or O tside E pertknowledgeable Client IT staff or Outside Expert.

Forensic Image – Uses specific tools to take a bit Forensic Image Uses specific tools to take a bit stream copy “image” of data on hard drive. Allows for recovery of deleted data. Searches slack and unallocated space Must be handled by Forensicunallocated space. Must be handled by Forensic Expert.

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Defensible CollectionDefensible Collection Must have data collection plan!

Identify all potential Players (prioritize key players from entire universe and review first which may uncover new facts and strategies)

Interview all potential Players and IT Staff ( d t d h th Interview all potential Players and IT Staff (understand how the company network is structured and how each individual creates and saves his/her data)

Where is the data located ( lti l ffi it t l ti ) Where is the data located (multiple office sites, storage locations)

Proper chain of custody documented

Metadata is preserved and not inadvertently altered

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DISCOVERY RESPONSESDISCOVERY RESPONSES

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Rule 26(b)(2)(B) -- CostsRule 26(b)(2)(B) Costs• PRODUCING party generally must pay p y g y p y

costs for producing information from accessible sources.

• REQUESTING party may have to pay for all or part of the costs of producing information from inaccessible sources.

• Costs for relevance and privilege reviews should be factored.

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FRCP 26(b)(2)(B): Specific Limitations on ESI

A party need not provide discovery of ESI when not reasonably accessible. y

• Burden on the responding party to demonstrate “inaccessibility” – Too difficult or too expensive to provide the data– Not likely to find much responsive information

• Burden shifts to the requesting party d t t d f d ti– demonstrate good cause for production

– in spite of the burden and costMay lead to cost-shifting arrangementMay lead to cost shifting arrangement

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Rule 26(b)(2)(B)Rule 26(b)(2)(B)Information Source

Accessible w/o Undue Burden/Cost?

Must Intervene to Preserve?

Must Produce w/o Order?

Active e-mail Yes Yes (key actors and issues)

Yes

Databases, Not necessarily Depends Not necessarily,websites

y p y

Near-line archival storage

Probably Yes (key actors and issues)

Yes

Deleted data on hard drives

No No No

Magnetic No Not unless known NogDisaster Recovery Tapes

to contain unique information

Off line storage Probably Yes (key actors and NoOff-line storage Probably Yes (key actors and issues)

No

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The CostsThe Costs• $396,000 to select, catalog, restore and process a sampling of

emailemail.• $43,000 to $84,000 to produce requested email.• $395,000 to produce requested email.• Costs did not include time for attorney review, just email!Hopson v. Mayor and City Council of Baltimore, 232 F.R.D. 228

(D.Md. 2005) (citing cases)

• “No corporate president in her right mind would fail to settle a lawsuit for $100,000,” if cost of e-discovery would be $300 000 M P k A h ft 202 F R D 31 35 (D D C$300,000. McPeck v. Ashcroft, 202 F.R.D. 31, 35 (D.D.C. 2001)

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Undue Burden F tFactors

1. Specificity of the discovery request.

2. Quantity of information available from accessible sources.

3. Failure to produce relevant information that seems likely to have existed but is no longerseems likely to have existed but is no longer available on an easily- accessible source.

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Undue Burden Factors

4. Likelihood of finding relevant, responsive information that cannot be obtained frominformation that cannot be obtained from easily-accessible sources.

5 I t d f l f th t d5. Importance and usefulness of the requested information.

6. Importance of issues.

7. Parties’ resources.

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Proportionality• Rule 26(b)(2)(C)

• Court must limit discovery if:

• Discovery sought is unreasonably cumulative or duplicative or• Discovery sought is unreasonably cumulative or duplicative or same information can be secured by another, cheaper source;

P t ki th di h h d l t it t• Party seeking the discovery has had ample opportunity to seek the information through the discovery phase of the case; or

• Burden/expense outweighs likely benefit

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Contact InformationCharles H. Wilson

Cozen O’ConnorLyondellBasell Tower

1221 McKinney StreetSuite 2900Suite 2900

Houston, TX 77010 [email protected]@Direct: 713.750.3117 Mobile 713.907.2868