Litigating in the 21st century brings special considerations

By G. Phillip Shuler

In a number of prior articles, we have discussed ways of avoiding lawsuits through prudent and proactive employment practices. Promulgating policies and procedures prohibiting harassment and discrimination in the workplace is a necessity. So is making sure that your employees are aware of what is, and is not, acceptable behavior in your workplace.

Of course, promptly investigating complaints of alleged harassment or discrimination, and taking prompt remedial action where necessary, are also actions that employers must do to stay out of the courthouse.

But what happens when, despite your best efforts, you are sued? More specifically, what obligations do you as a litigant have to safeguard and produce documents and electronic evidence as the lawsuit evolves?

A recent federal lawsuit sheds some light on what attorneys and the parties themselves must do to avoid a dangerous litigation discovery trap.

In Zubulake v. UBS Walberg LLC, 2004 US Dist. Lexis, 13574, 2004 WL 1620866 (SDNY July 20, 2004), an employer (UBS) was sued for discrimination and was asked to produce documents and electronic evidence such as e-mails, which may or may not have been relevant to the case. When the employer was unable to produce the requested documents, the employee sought sanctions against UBS for its failure to produce relevant electronic information and its tardy production of such materials, particularly discoverable e-mails.

When the dispute with its employee first arose, UBS in-house attorneys and outside counsel provided verbal and written instructions to the employer to place a "litigation hold" or sequestration on all relevant documentation involving the employee. Thereafter, there was some follow-up by counsel for UBS, but it proved ineffective in preserving all relevant electronic documents.

The end result of the miscommunication between attorneys and the employer was that some relevant documents and emails were no longer available. Attempts to find the e-mails in computer hard-drives were unsuccessful and the court imposed sanctions on the employer for its failure to safeguard the documents and electronic evidence.

The court also spelled out the following obligations of a litigant with respect to discovery of electronic evidence:

• Once a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a "litigation hold" to ensure the preservation of relevant documents. A "litigation hold" is only the beginning and counsel "must oversee compliance with the litigation hold, monitoring the party's efforts to retain and produce the relevant document."
  

• Outside lawyers, in-house counsel and those within the company responsible for ensuring compliance with legal advice, all have the duty to become fully familiar with the client's document retention policies, as well as the client's "data retention architecture" which will involve speaking with Information Technology personnel who can explain system-wide backup procedures, and communication with the "key players" in the litigation. To the extent it may not be feasible to speak with every key player, lawyers should request the client to run a system-wide key word search, so that counsel can then preserve a copy of each "hit" for a relevant key word in the case.
  
• Once a party and counsel have identified all the sources of potentially relevant information, there is a continuing duty to ensure preservation of electronic evidence according to the Zubulake opinion:
  
  a. Counsel must periodically re-issue the "litigation hold" so that new employees of the client are aware or it and so that it is fresh in the minds of all employees of the client.
  b. The "key players" e.g. the people identified in the company's initial disclosures to the court and the plaintiff, should be periodically reminded that the preservation duty is still in place.
  c. Counsel should instruct all employees of the client to list and preserve all electronic copies of their active files that may contain relevant electronic information and make sure that all backup media that the party is required to retain is identified and stored in a safe place.

While the obligations imposed by the court in Zubulake fall primarily upon the attorneys representing the litigant - both outside counsel and in-house attorneys - the onus for protecting and safeguarding documents and electronic evidence falls squarely upon the litigant itself.

Human resources managers must be aware of the company's continuing obligation to produce and safeguard potentially relevant emails and documents, and this obligation must be made clear to both "key players" and others who might later be called upon to produce documents or electronic evidence.

Failure to produce such discovery items can have serious repercussions. A court may decide that a negative inference should be drawn against the party who fails to produce requested e-mails or documents. That is to say, the court may conclude that the "lost" e-mails contained information that would have been damaging to the company's case.

The court might also instruct a jury that it may reasonably infer that documents not retained would have been helpful to the plaintiff. These are very serious developments in a jury trial, and may even prove to determinative of the central issues in the case in the minds of the jurors. A court might impose other sanctions upon a party for its failure to preserve and produce electronic and other evidence, including monetary sanctions and in extreme cases, the striking of defenses.

The bottom line is that employers must at the very least be aware of this issue, and be prepared to comply fully with their attorneys' directions regarding preserving and safeguarding electronic and other evidence. It may be helpful to discuss this issue with your office manager, IT department, or human resources professional now, before a lawsuit develops, so that you and your employees know what to do when the 'litigation hold' call comes from your attorney.

Special note: Thanks to Campbell Wallace of Chaffe McCall for his valuable contribution to this article.

Editor's Note: G. Phillip Shuler is a partner in the New Orleans office of Chaffe, McCall, Phillips, Toler & Sarpy.