The Perils of eDiscovery
Guest Post by Julia Romero Peter, Esq.
TERIS Vice President, Business Development
For the past thirty years, electronic data storage systems have evolved so rapidly that many corporations struggle to understand the legal ramifications of inappropriate information retention methodologies. While it is immediately seen as unethical and illegal to physically shred incriminating documents in anticipation of litigation, the failure of some companies to preserve their information adequately is often viewed as equally improper. In the event of litigation, it is critically important that all parties have sufficient electronic documentation retention systems in place. This was the case in Scentsy, Inc. v. B.R. Chase LLC, where questionable information retention practices had surprising and, to many in the legal profession, frightening consequences.
In the case of Scentsy, the defendants argued that the plaintiffs failed to submit key documents due to deliberate spoliation resulting from an improper litigation hold. There, the litigation hold was given orally, not in writing. It was argued by defense counsel that while the litigation hold was issued around the time that the claim was filed—two months before the claim was filed, specifically—the plaintiffs anticipated filing suit the previous year, thereby giving them time to eliminate critical data from their electronic files.
The argument called into question the plaintiff’s document retention practices. Their system, which saved all non-email documents on either the user’s personal computer or the company server; but automatically deleted emails after six months, was considered inadequate by the court. Additionally, the method of litigation hold raised great concern. Even though the defendant was unable to admit any evidence that pointed to the plaintiff’s having deliberately destroyed files, the court found that the information retention policies and procedures were so dubious that it issued an order that the plaintiff was to cover the cost of the defense’s deposition (including attorney’s fees) of the relevant individuals in the plaintiff’s organization. Furthermore, the court found that if it later determined that spoliation did occur, then many of the plaintiff’s charges would be dismissed.
The collection of electronically-stored information (ESI) for the purpose of submitting it into evidence is the process of eDiscovery. If this information is gathered improperly, it is inadmissible as evidence and, as indicated by the court’s ruling in Scentsy, Inc. v. B.R. Chase LLC, it can lead to outright dismissal or other negative consequences.
Having effective Legal Hold and eDiscovery practices in place is crucial, but it is equally important that those practices are defensible. Having information governance and eDiscovery experts provide consultations and comprehensive, defensible best practices and solutions will ultimately result in a thoroughly defensible approach to ESI.
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