Legal Holds and Trigger Events

New York Trial Court Issues Sanctions For Litigation Hold Failure

 
A Manhattan real estate company was sanctioned an estimated $100,000.00 for its failure to implement a litigation hold and misrepresentations to the court about missing e-mails. The case of Einstein v. 357 LLC, N.Y. Sup. Ct. Manhattan Co., No. 604199/07, 11/4/09 is significant because it is the first time that a New York State court has weighed in on the need to implement a litigation hold.  Citing a host of well known cases from the Southern District of New York, the judge took defendants' to task for defendant's failure to take any steps to preserve e-mail following the initiation of litigation.

The court held that:

"[T]he failure to implement any litigation hold, not only after the commencement of litigation, but also after this court's repeated warnings that counsel should 'read [their] client the riot act', was grossly negligent and rises to the level of 'culpable conduct' required for a finding of spoliation."

BlackBerrys Make Legal Holds Tougher

  
An article in the just released December 2009 Issue of InsideCounsel magazine titled "Burned by BlackBerry's" discusses Mechanical Services, Inc. v. Brody, a case we reported on back in September.  In short, the suspicious lack of data on several BlackBerries owned or used by some of the litigants led to sanctions, including an adverse inference jury instruction.  To read our original post, click the case name or here.

What InsideCounsel contributes is a quote from e-discovery commentator Ralph Losey.  Mr. Losey  

points out that keeping track of data and managing e-discovery holds was a bit easier in the “old days,” three or four years ago, before the advent of PDA’s, thumb drives, smartphones, Internet-based e-mail and instant messaging accounts and other cloud computing data.  Such technologies now permit the storage of data in many other locations beyond an institution’s servers and data map.

Court Orders Litigation Hold

Synventive Molding Solutions v. Husky Injection Molding Systems, 2009 U.S. Dist. LEXIS 105306 (D. Vt. Mar. 13, 2009), involves a hotly contested patent infringement lawsuit.  The case is interesting because the court ultimately orders plaintiff to implement a litigation hold as to personnel likely to possess discoverable information.  As follow up to the court’s litigation hold order, the court also orders plaintiff to file a sworn declaration, including, among other things, a description of the “nature and extent of the litigation hold put in place in response to this Order, including the individual [ ] personnel affected by the hold.” 

For those involved with implementing legal holds the case is a worthwhile read.  It also contains an important lesson.  When a party accuses an opponent of not implementing a litigation hold, and preservation of evidence is cloudy at best, it is probably a good practice to implement a litigation hold as soon as possible.  For a discussion on how to avoid the result in Synventive v. Husky, read our post on Pinstripe, Inc. d/b/a Acctknowledge v. Manpower, Inc., 2009 U.S. Dist. LEXIS 66422 (ND Okla. Jul. 28, 2009) (Extra Effort by Defendant to Recover Deleted ESI After Failure to Issue Litigation Hold Avoids Harshest Sanctions.)

In Synventive v. Husky, defendant filed a motion to compel plaintiff to implement a litigation hold and other relief related to plaintiff’s alleged discovery abuses.  During discovery it became clear to defendant that plaintiff was not taking its preservation obligations seriously.  In response to the motion plaintiff argued, in so many words, that there was a lack of evidence of a failure to preserve (meaning “hey if we preserved the evidence then who cares how we preserved it.”)  It also made an argument that the Federal Rules of Civil Procedure do not contain a rule requiring implementation of a “litigation hold.”  The short answer here is that plaintiff was rebuked on both arguments.  We will address the arguments in reverse order.

ACC's Litigation Master's Series Helps GC's Tackle Litigation Holds

The Association of Corporate Counsel held round two of its Litigation Master's Series on October 9, 2009.  If you missed the presentation or are not a member of the ACC, the presentation slides remain available to view at the ACC's website.

The first part of the program covers internal investigations and the second part covers litigation holds.  The presentation hits the basics and the slides contain some practical tips for General Counsel charged with implementing litigation holds for their organizations.

Here is an excerpt from the program description:

Also, while new technologies assist greatly in sending out a litigation hold, in-house counsel remains responsible for making the call to issue and direct the hold. This panel will provide practical guidance for establishing effective litigation hold procedures.

To see the ACC's post for this program click here.  To download a copy of the Presentation Slides click here.  (Litigation Hold slides start on page 15).

Book Review: 7 Steps for Legal Holds

 

We have had great feedback from readers following the release of Seven Steps for Legal Holds of ESI and Other Documents (ARMA, June 2009).  Now comes a favorable review of the book, posted at Law.com (in both its Technology and Corporate Counsel sections) further demonstrating that all the hard work was worth it.  Law.com certainly got the message as demonstrated by the closing lines of the review:

Isaza and Jablonski don't have the last word on legal holds, but they certainly have the right ones, in seven, digestible steps, to get your organization started in fashioning a legal hold policy and procedure to respond to an event that triggers the duty to preserve evidence. In the end, you will want to get out there and put a legal hold on something.

To read Law.com's review click, here.  To read more about the book, click here.