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The Importance and Effect of a Litigation Hold: Spoliation Sanctions Cases

Posted on December 27th, 2016

Attorney signing contract documentSpoliation of electronic evidence can be a relatively common occurrence. Many corporate entities routinely delete ESI as part of document retention policies, particularly when an employee has left the company and his or her computer is reclaimed. For that reason, in litigation involving the production of ESI, a litigation hold letter is an essential tool for parties to pin down their opponents and prevent the destruction of electronically stored information.

A litigation hold letter puts the other party on notice that litigation is forthcoming, and if one has been issued, loss or destruction of documents thereafter could result in sanctions. Likewise, if you are on the receiving end of such a litigation hold, you will need to make sure to preserve your records carefully to avoid punitive measures. Corporate entities should issue litigation hold alerts to all staff and IT departments involved, and they must follow up with these employees on a regular basis to ensure the hold is being obeyed moving forward.

Litigation Hold Letters and Spoliation Sanctions Cases in 2016

  • Stinson et. al. v. City of New York et. al., Case No. 10-4228 (S.D. N.Y., Jan. 2, 2016): In 2010, Plaintiffs sued Defendants for practices surrounding issuance of summonses without probable cause. Despite receiving the lawsuit, Defendants did not issue a litigation hold internally until 2013, and certain relevant records were destroyed, including emails and text messages between police officers. The court sanctioned Defendants, finding that their failure to implement a litigation hold was not justified, and that they had a duty to preserve evidence as early as 2008. Finding that Defendants were grossly negligent, the court ordered an instruction to the jury that the missing evidence could have helped Plaintiffs, although Plaintiffs still had the burden of proof.
  • O’Berry et. al. v. Turner, et. al., Consolidated Case Nos. 15-00064/15-00075 (M.D. Ga., April 27, 2016): Plaintiffs were seriously injured when a tractor trailer slammed into their car, causing them to hit a light pole in June 2013. In August 2013, Plaintiffs’ counsel faxed a litigation hold letter to Defendants requesting preservation of driver logs and truck data. Defendants’ counsel responded, promising to preserve evidence, but during discovery and despite multiple requests, Defendants did not produce the data. Defendants eventually admitted that the information had been inadvertently destroyed by the third party vendor that stored the truck’s data and driving logs on a remote site. The court sanctioned Defendants, finding that their failure to preserve the data amounted to intent to deprive Plaintiffs of the information. The court ordered an adverse inference instruction that the missing data must be presumed to have been favorable to Plaintiffs.
  • Danna v. The Ritz-Carlton Hotel Co., LLC, et. al., Case No. 15-0651 (La. App. 4th, May 11, 2016): Plaintiff sued Defendants, his former employers, for breach of contract, defamation, retaliation, and spoliation of evidence. The spoliation claim was based upon the destruction of certain email data pursuant to a document retention policy. After suit was filed, Plaintiff’s counsel sent a letter to Defendants to notify them that he had been retained. A litigation hold letter was not sent out until 2013. Years of discovery disputes plagued the suit, and Plaintiff eventually won several counts on summary judgment, although his spoliation of evidence claim was denied. He appealed the denial of the spoliation claim. Looking at Louisiana law, the appellate court determined that the spoliation issue should not have been disposed on summary judgment, because a showing of intent, good faith, motive and knowledge was required.
  • In re Shawe & Elting, LLC, Case Nos. 9661-CB, 9686-CB, 9700-CB, 10449-CB (Del. Ch. Ct., July 20, 2016): Business partners Shawe and Elting were in an acrimonious business relationship, and Shawe began a campaign of spying on Elting, obtaining the assistance of third parties to monitor her phone calls and emails, image her hard drive, and remotely access her computer, all without her knowledge or consent. Cross-lawsuits were filed, and litigation hold letters were issued. Shawe, through various machinations, destroyed his iPhone, deleted thousands upon thousands of electronic files from his computer, submitted false answers to interrogatories, and testified falsely in his deposition and at trial. Under Delaware law, a prevailing party can obtain attorneys’ fees when the losing party acted in bad faith, and despite the litigation hold letters and his knowledge of the litigation, Shawe’s conduct was egregious, and the court awarded Elting all her attorneys’ fees and costs for seeking sanctions and one third of her total attorneys’ fees for trial.

Speak with our Plaintiff ESI Discovery Experts Before Litigation is Commenced

Preservation of electronic evidence by sending a litigation hold letter prior to filing a lawsuit is of the utmost importance. The assistance of a third party electronic discovery firm can help you plan and draft an effective litigation hold, as well as preserving and organizing your client’s electronic records. Contact the eDiscovery experts at ILS today to streamline the electronic evidence process.

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