When Does My Duty To Preserve End?

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Generally, a litigation hold letter* will issue to preserve documents and information potentially relevant to a reasonably anticipated lawsuit. However, when does one’s duty to preserve potentially relevant documents end? Unfortunately, the answer is not necessarily when the litigation ends. Indeed, a recent decision out of California reminds us there may be instances when one’s preservation obligations are ongoing, even after a litigation is dismissed (Thomas v. Cricket Wireless, LLC, 2021 WL 1017114 [N.D. Cal. Mar 16, 2021]).

Factual Background:

In 2015, a false-advertising lawsuit was filed against Cricket Wireless LLC (“Defendant”) alleged Defendant marketed unlimited 4G/LTE services, but did not have the capability to provide these services (see Barraza v. Cricket Wireless LLC, 2015 WL 6689396 [N.D. Cal. Nov. 3, 2015]). Defendant moved to compel arbitration, which was denied. Ultimately, Defendant made a Rule 68 offer of judgment, which plaintiff accepted.

At a hearing before dismissal of the case, the Court inquired “if there was any scenario under which the merits of the case could come back to life?” Plaintiffs’ counsel responded there was not.** Critically, however, at the time Barraza was voluntarily dismissed with prejudice, “the statute of limitations had not run on the hundreds of thousands of other putative class members’ claims against [the Defendant].” And so, there was very much a chance that the merits of the case could “come back to life,” albeit with different plaintiffs.

And, come back to life it did. Approximately one year later, a second lawsuit was filed against Defendant in Missouri, based on the same allegations as those in Barraza (see Thomas v. Cricket Wireless, LLC, No. 16-cv-1065 (W.D. Mo. Apr. 7, 2017) (“Thomas I”). Defendant again moved to compel arbitration, but the parties stipulated to a dismissal before a decision on the motion. The voluntary dismissal, which was without prejudice, was subject to a tolling agreement that expired on November 4, 2019.

And, like a cat with nine lives, the merits of the case came back to life a third time. In fact, after the tolling agreement expired, a putative class action lawsuit was filed (“Thomas II ”), in which the class (the “Plaintiffs”) alleged that Defendant engaged in a fraudulent marketing scheme surrounding the 4G/LTE devices.

These various iterations of the merits are worth mention because during discovery in Thomas II, Plaintiffs learned Defendant had discarded after Barraza several key documents and accounts. Specifically, Defendant (i) deleted the custodial accounts of key decision makers; (ii) failed to preserve any custodial accounts from the Sales & Operations Planning Committee; (iii) failed to preserve critical sales data related to 4G phone sales; and (iv) failed to preserve any 4G advertisements from the relevant time. Defendant was unapologetic because “it was entitled to stop preserving documents after Barraza” and had “been transparent about what documents were not retained.”

And so, Plaintiffs noticed a deposition regarding Defendant’s document retention. Just prior to that deposition, Plaintiffs moved to compel production of Defendant’s litigation hold letters from related lawsuits, including Barraza, arguing any presumptive privilege had been overcome by Plaintiff’s preliminary showing of spoliation. Defendant responded that compelled production prior to the depositions was premature. The Court denied Plaintiffs’ motion without prejudice to renew “if warranted after [the] completion of the upcoming deposition[s] … on document retention.”

The depositions were unhelpful substantively. Indeed, they demonstrated that Defendant’s witnesses either did not know or were counseled not to answer questions regarding the content of the litigation hold letters. And so, according to Plaintiffs, the only remaining mechanism to obtain the necessary information was to renew their motions to compel, which Defendant opposed on the ground “it had every right to dispose of the disputed documents and databases” and therefore no basis to compel the production of privileged hold letters.

The Court granted Plaintiffs’ motion to compel the production of Defendant’s litigation hold letters in Barraza and Thomas II, finding Defendant’s admissions about what it had destroyed or failed to preserve raised enough questions about its document retention and preservation efforts to allow Plaintiffs to take the initial step of discovering the content of Defendant’s litigation hold notices as necessary to investigate spoliation. In reaching its decision, the Court acknowledged several instances during the two depositions where the witnesses either “could not or would not answer questions specifically seeking information about basic details” surrounding the litigation hold letters.

Conclusion:

The Thomas II decision reminds us that the duty to preserve relevant documents may continue following the dismissal, settlement, and/or final judgment of a case depending on the facts and circumstances at issue. Where, as here, for example, it could be reasonably anticipated that additional plaintiffs would file suit, one’s obligation to preserve documents may be continuing. In addition, while a litigation hold letter is considered generally a privileged document, it is not immune from discovery, even in a subsequent lawsuit.

*See prior litigation hold blogs

**A statement that the Thomas II court later deemed specific to the two plaintiffs in the Barraza case – not the hundreds of prospective other class members.

Thank you to second year associate, James Maguire in the Firm’s Uniondale office, for his research assistance related to today’s blog.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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