Preservation & Litigation Hold Management

Sunday, January 3, 2010 by Thought Leadership Team

For those who remain in the dark, whether intentionally or inadvertently, this case, Pension Committee of the University of Montreal Pension Plan v. Banc of America Securities, LLC1, provides a much-needed guiding light for the murky area of preservation duties and litigation holds.

A party’s duty to preserve data is often considered the most challenging step of the ediscovery process. In Pension Committee, Judge Scheindlin revisits her findings from Zubulake IV2 and determines that “[i]t is well established that the duty to preserve evidence arises when a party reasonably anticipates litigation.” However, knowing when the duty to preserve arises is only half the battle. As further explained in this case, “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 failure to implement a written litigation hold constitutes gross negligence, and resulted in several plaintiffs receiving sanctions in Pension Committee.

Counsel can avoid a similar fate as the plaintiffs in Pension Committee by issuing a written litigation hold once the duty to preserve arises. Once a litigation (or legal) hold is implemented, counsel should take steps to actively monitor internal suspension measures and ensure compliance. This includes sending update notices to keep key players and new employees informed, reminding them of their preservation obligations. Detailed and accurate records should also be kept of what data has been preserved and how, should the opposing party bring preservation methods into question. Counsel should ensure the litigation hold is in effect until final judgment is made, a settlement has been reached and a formal release has been signed by all parties, or until the case is dismissed and no related claims remain outstanding.

In addition to the recent Pension Committee ruling, case law is peppered with incidents involving spoliation and sanctions requests. Indeed, according to Kroll Ontrack’s 2009 Year in Review, 66.7% of cases in 2009 that addressed sanctions involved preservation and spoliation issues. As these cases demonstrate, investing resources in proper preservation and litigation hold management now will pay off in the long run by ensuring your client’s practices withstand judicial scrutiny in the unfortunate event opposing counsel files a motion seeking spoliation sanctions.

1 2010 WL 184312 (S.D.N.Y. Jan. 15, 2010). 2 Zubulake v. UBS Warburg LLC, 220 F.R.D. 212 (S.D.N.Y. 2003).