I DON'T WANT TO SCARE YOU . . . BUT BE WARNED

Posted on February 7, 2011 by Stephen E. Herrmann

The Problem
In the world of environmental claims, there are numerous ways that a duty to preserve documents and particularly e-documents can arise before litigation is filed.


The Problem Becomes a Sanction
E-discovery sanctions have reached an all-time high after three decades of litigation over alleged discovery wrongdoing. “Sanctions motions and sanction awards for e-discovery violations have been trending every-upward for the last 10 years and have now reached historic highs,” according to a King & Spalding study published at 60 Duke Law Journal 789 (2010).


King & Spalding lawyers analyzed 401 cases before 2010 in which sanctions were sought and found 230 sanctions awarded, including often severe sanctions of case dismissal, adverse jury instructions and significant money awards. Sanctions of more than $5 million were ordered in five cases, and sanctions of $1 million or more were awarded in four others. Before 2009, the highest number of sanctions awarded against lawyers in a single year was five. However, 46 sanctions were awarded in 2009, the last year covered by the study.
 

Defendants and their lawyers were sanctioned for e-discovery violations nearly three times more often than plaintiffs. When sanctions were awarded, the most common misconduct was failure to preserve electronic evidence.


That is why prospective environmental litigants and their counsel must be aware of the issue. Even if the client does not realize that the duty to preserve has attached, and electronic information disappears, the client and its lawyers are subject to spoliation claims, and increasingly sanctions.
 

Pinpointing The Problem Is Not Easy
A duty to preserve represents a legal requirement to maintain relevant records for litigation. Hence, identifying the trigger of the duty to preserve is essential. The duty to preserve arises before a complaint is filed when a party reasonably should know that the evidence may be relevant to anticipated litigation. When that time occurs is anything but certain.


Unlike the paper world where documents are often maintained in central storage, in the electronic world, every employee is a file keeper. E-mails can disappear with the stroke of a key. A company’s records management system may provide for relatively short timeframes for e-mails in mailboxes to eliminate data clutter. Be aware that storage systems used for disaster recovery are periodically recycled.


So, when should environmental lawyers instruct their clients on preserving documents, and particularly e-documents, for litigation? It is not at all easy to pinpoint. But, the courts have made it increasingly clear through sanctions that lawyers must figure it out. Making it even tougher are the differing views among judges on such issues as:

 

  1. Can a prospective plaintiff or defendant have a duty to preserve if counsel has not been retained to explain the duty?
  2. Must a client’s lawyer have knowledge of a claim before a duty to preserve can be triggered?
  3. If an environmental agency is pursuing other entities in an industry but not your client, does that trigger a duty to preserve?
  4. Does a notice of violation sent by a regulatory agency represent “anticipation” of litigation.

Conclusion

I repeat -- In the world of environmental claims, there are numerous ways that a client’s duty to preserve documents, and particularly e-documents, can arise before litigation is actually filed.
 

Be careful out there!



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