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Information Management. Judge Peter Flynn Rich Lauwers. The Duty to Preserve (if there is one …) and Litigation Holds Creating and managing – and revisiting Spoliation
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Information Management Judge Peter Flynn Rich Lauwers
The Duty to Preserve • (if there is one …) and • Litigation Holds • Creating and managing – and revisiting • Spoliation • 4 types: Plainly deliberate destruction; inferentially deliberate destruction; “negligent” destruction; accidental destruction (e.g., Miller v. Gupta, 174 Ill.2d 120 (1996)) • Over-Retention of Information • (“We’re drowning in data, most of which we can’t use because it’s too hard to find”)
The Setting • ESI is any electronically stored information; if it isn’t hard copy, it’s ESI – • E-Mail (average corporate user sends/receives over 100 e-mails every day) • Websites (yours and those you visit; the site or your ISP will have a history) • Word/WordPerfect/Adobe/Excel documents (different on the computer because of metadata) • Thumb drives, DVDs, CDs, smartphones • Personal laptops and other things at home
Facebook, LinkedIn, Twitter, MySpace, other social media • Not just what you post, but what others post • Very, very leaky: Facebook says “only 0.06% of 1 billion logins per day are compromised,” but that’s 600,000 daily hacking attempts, often using stolen credentials • Databases (e.g., accounting records, bank accounts)
In Short: • Over 95% of all business data is ESI – and never printed out • All – 100% - of your civil cases involve ESI: • Unfair competition (employee’s e-mails, laptop) • Divorce (spouses’ social media, I-Pass, etc.) • Landlord-Tenant (landlord’s database/records) • Fender-benders (www.cyberdriveillinois.com)
Cases involving any banking transaction • Personal injury and med-mal (hospital records, e-mails, online databases) • Probate (might we use a decedent’s e-mails or personal computer records as guides to intent or undue influence?)
The Problem Is the legal system causing information users (persons, businesses, governments) to over-preserve, through the actual or imagined threat of “spoliation” liability, damages, and sanctions?
The “Duty to Preserve” • “The general rule is that there is no duty to preserve evidence.” • Boyd v. Travelers Ins. Co., 166 Ill.2d 188, 195 (1995)
“… [H]owever, a duty to preserve evidence may arise through an agreement, a contract, a statute … or another special circumstance. Moreover, a defendant may voluntarily assume a duty by affirmative conduct.” • Boyd, 166 Ill.2d at 195.
“In any of the foregoing circumstances, a defendant owes a duty of due care to preserve evidence if a reasonable person in the defendant’s position should have foreseen that the evidence was material to a potential civil action.” • Boyd, 166 Ill.2d at 195
Boyd potentially applies to any kind of evidence, not just the common sort of ESI. • Martin v. Keeley & Sons, Inc., 2012 IL 113270 (concrete I-beam from collapsed bridge) • Dardeen v. Kuehling, 213 Ill.2d 329 (2004) (sidewalk bricks) • Kilburg v. Mohiuddin, 2013 IL App (1st) 113408 (taxi and event data recorder) • Miller v. Gupta, 174 Ill.2d 120 (1996) (X-rays)
What Boyd Does Not Do • Boyd does not tell people how, or when, or whether, to preserve information, outside the context of “a potential civil action.” • So Boyd does not apply in everyday life – or in everyday business. • Unless the everyday routine includes lawsuits? • Put another way: Boyd says preserving is the exception.
What Ends Up Happening • Corporations rely on counsel to instruct what to preserve for “a potential civil action.” • “We need to make a copy of all our email today” • (Would a smart counsel say that? Why not?) • Legal holds are developed with fear of missing relevant information in unknown repositories • “keep all of our backup tapes in case we need to produce them” • RAID backup method causes problems
Burden of Preservation • The digital universe is more than doubling every two years. • In 2010, the world created more than a zettabyte of information. • Nine iPhones for every person on Earth • Variety, velocity and volume of information growth is overwhelming organizations of all sizes and in all industries. • Sources and types of information rapidly evolving due to commercialization of enterprise IT • In litigation, only 1 in every 1100 documents collected is even deemed “relevant” – let alone actually useful
Collection of Everything • As behaviors and patterns of communication and collaboration change there will soon be no way to collect every occurrence of digital information. • The difference between personal and corporate computing is gone
Information Governance • Organizations must address the information explosion in order to: • Leverage information value for agile decision making and innovation • Facilitate productivity • Establish appropriate corporate transparency • Meet recordkeeping compliance requirements • Cost-effectively and defensibly respond to litigation and investigation • Mitigate risk and cost of non-compliance or sanctions in litigation LITIGATION AND INVESTIGATION IS NOT NUMBER 1
Normal • Everything created, touched, saved and sent has an end. • Corporations need to know and manage their information • What is kept and more importantly what isn’t • Where it is preserved • How long it is retained • There are policies and processes for responding to litigation and investigation • Management intervention by exception • Preservation of materials likely to be relevant • Each matter is reviewed periodically
Industry Focus • Reducing the cost of eDiscovery by working harder faster • Industry leaders focus on AI • Responding to regulatory complexity • Use the same tools to find what you need • If you already keep what you must, then why keep the rest? • Mature information management programs help
Who does this? • Competitive industries are creating companies that use information management as an advantage e.g. bio/pharma, electronic • Any organization that has written big eDiscovery checks. • The cover of the WSJ is a motivator • XXXXX fined $500M after email disclosure
So how do smart people deal with litigation holds? • Don’t over-ask • Don’t agree to over-comply
A very good source for guidance and common sense is The Sedona Conference Commentary on Legal Holds: The Trigger & The Process, available as a free download from thesedonaconference.org.
Remember the Rule 37(e) Safe Harbor: • “Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system.” • BUT: This means you must have such a routine system in place, well before the litigation arises. (It’s not “routine” if you just created it yesterday.)
Sedona Guideline 2 tracks Rule 37(e): • “Adopting and consistently following a policy or practice governing an organization’s preservation obligations are factors that may demonstrate reasonableness and good faith.” • Again: Have a system!
Mistakes happen. If they’re in good faith, a claim of “spoliation” is unlikely to succeed. • In Martin v. Keeley & Sons, Inc., 2012 IL 113270, “While plaintiffs were installing a handrail on [a] bridge” under reconstruction, “a concrete I-beam used to support the bridge deck collapsed, causing plaintiffs to fall into the creek where they were injured.” The next day, the contractor “destroyed the I-beam” by breaking it up with a hydraulic hammer.
The Supreme Court held that there was no actionable spoliation, because IDOT and OSHA had already inspected the site, IDOT wanted the beam removed, and (at that point) no one else had asked that the beam be preserved. Keeleyat pars. 15, 31. • The Supreme Court held that negligent spoliation requires two “prongs,” relationship and foreseeability:
“Under the … ‘relationship’ prong … a plaintiff must show that an agreement, contract statute, special circumstance, or voluntary undertaking has given rise to a duty to preserve evidence.” • That’s not enough. “Under the … ‘foreseeability’ prong, … a plaintiff must [also] show that the duty extends to the specific evidence at issue.”
The duty extends to the specific evidence at issue only if “a reasonable person in the defendant’s position should have foreseen that the evidence was material to a potential civil action.” • “If the plaintiff fails to satisfy both prongs …, the defendant has no duty to preserve the evidence.”
How is this affected by a “legal hold” request? • By separately addressing the general “duty” and its application to specific evidence, Keeley makes clear that even an existing general duty does not require preservation of everything. • In the legal hold context, this means that the judgment about what “specific evidence” to preserve is not made solely by the person demanding the hold. The respondent has at least an equal voice – maybe a greater voice.
Sedona Guideline 1: • “A reasonable anticipation of litigation arises when • an organization is on notice of a credible probability that it will become involved in litigation; • seriously contemplates initiating litigation; or • takes specific actions to commence litigation.” • This covers both an outside legal hold request (“on notice”) and an internal self-assessment.
Sedona Guideline 6 helps in assessing the response to a legal hold demand: • “The duty to preserve involves reasonable and good faith efforts, taken as soon as is practicable and applied proportionately, to identify and, as necessary, notify persons likely to have relevant information [a/k/a “custodians”] to preserve the information.” • Usually the party responding to the demand does the “identify[ing]” and “notify[ing]”. But the demanding party can and should help assess “practicability” and “proportionality.”
Per Sedona Guideline 7, don’t overlook “the relative burdens and costs of the preservation effort.” (Cf. Guideline 6, “applied proportionately”). • This should be the subject of good-faith discussion between the party requesting the legal hold and the party responding. See F.R.Civ.P. Rules 26(f)(2), 26(g)(1)(B)(iii); Ill. Sup. Ct. Rules 201(c)(1), 201(k).
Once a hold is in place, don’t forget about it. Sedona Guideline 9 points out that “Compliance with a legal hold should be regularly monitored” • not just to make sure it’s being followed, but also to make sure it’s not being overdone.
Sedona Guideline 11 is crucial: • “Any legal hold policy, procedure, or practice should include provisions for releasing the hold upon the termination of the matter at issue so that the organization can adhere to policies for managing information through its useful lifecycle in the absence of a legal hold.” • In other words: The hold is abnormal. Normal is managing information for the benefit of the organization, not the lawyers. A hold blocks management and substitutes preservation.
Common sense! It’s OK. Really.