Today’s Take: Sanctions for the Automatic Deletion of Evidence by Computers
In my recent blog post entitled Preserving Evidence Through Demand Letters, we discussed how a demand letter can trigger the duty to preserve evidence, including electronically stored information (ESI). In today’s take, we discuss the implications of data retention policies and the automatic deletion of evidence by computer systems.
Upon receiving a demand letter, the best practice is to place a litigation hold on any potential evidence that is relevant to the subject matter of pending litigation. Many companies implement policies where data is often automatically “scrubbed” and overwritten, or backup volumes are recycled at periodic time intervals, at which point the data becomes irretrievably lost. Therefore, after the duty to preserve triggers, a party must suspend its routine document retention/destruction policy as part of a litigation hold or face potential sanctions.
A court generally relies on its inherent authority to sanction parties in cases of discovery misconduct. Sanctions for discovery violations follow in descending order of severity from: 1) dismissal, striking pleadings or entry of default judgment; to 2) adverse inference instruction; 3) evidentiary determinations and preclusion; and/or 4) fines, attorney’s fees and costs. California provides subpoenaed parties with protection from sanctions in the case of good faith accidental destruction of evidence through the routine operation of an electronic information system. (CCP §1985.8(l)(1)). However, sub-part (2) of that section makes those protections inapplicable to an obligation to preserve discoverable information. In other words, this provision appears to imply that although protection is available if subpoenaed evidence is accidentally deleted generally, it is not available if the data is accidentally deleted by a party who is under a duty to preserve evidence triggered by a demand letter.
The Federal Rules do not provide the same protections as California in the case of subpoenaed parties. Instead, federal district courts generally determine the severity of sanctions for destruction of evidence under a culpable state of mind standard ranging from unintentional simple negligence, warranting the least severe penalties, to willful and intentional (gross) negligence, warranting the most severe penalties.
To avoid sanctions, the best practice is to cast a wide yet reasonable hold on ESI that may be relevant to pending litigation upon the receipt of a demand letter. The hold may be limited in scope, which dramatically reduces costs by allowing a company to continue its normal IT operations while preventing the accidental destruction of relevant data. The best course of action, therefore is to consult an attorney upon the receipt of a demand letter so that he/she can work with IT personnel to determine a course of action to prevent accidental destruction of evidence.
Today’s Taste: The length of time you have to retain ESI depends on the course of the case. Therefore, I recommend a bottle of Vietti Barbera d’Alba Scarrone 2009—this complex bright, dark red ages well and is best from 2013 through 2016. Whether your case settles early or proceeds to trial, this 2009 Barbera will be ready to enjoy. This is also my personal recommendation as I had the opportunity to enjoy lunch with the producers of Vietti while visiting Piedmont, Italy.
On Writs and Wine is the blog of ECJ’s Litigation Department, featuring our takes on a variety of litigation-related issues, plus a wine recommendation for your palate’s delight. Your feedback—on both the takes and the wine—is much appreciated. Enjoy!