A Spoliation Ace in the Hole

       A district court case decided last month shows how a company’s email retention and litigation hold policies can affect claims of spoliation by adverse parties in litigation. In Danny Lynn Electrical v. Veolia ES Solid Waste, No. 2:09CV192-MHT, 2012 U.S. Dist. LEXIS 31685, at *2 (M.D. Ala. March 9, 2012), the Plaintiffs filed a motion for sanctions alleging the Defendants had “blatantly disregarded their duty to preserve electronic information in this case.” Specifically, the Plaintiffs alleged that the Defendants failed to implement a litigation hold, deleted a number of email accounts, and failed to disable an email “auto delete” function after litigation commenced. They requested the full spectrum of sanctions, including monetary penalties, adverse evidentiary inferences, and the striking of affirmative defenses.

          Despite the Plaintiffs’ accusations, the court found that sanctions were unwarranted. First, the court explained that to evaluate whether sanctions are appropriate in a spoliation case, it must consider the importance of the destroyed evidence, the culpability of the defending party, fundamental fairness, and whether the destroyed evidence is available from other sources. Applying these factors to the case at hand, the court questioned whether any spoliation had actually occurred. Even assuming spoliation had occurred, however, the court found that the Defendants had not acted in bad faith.

          In coming to its decision, the court noted that while a few emails may have been accidentally deleted due to a computer virus, from the very beginning of the litigation, the Defendants regularly made tape backups of all emails. The tape backup system was later replaced by a system that created email backups on the company network. Throughout the course of the litigation, the Defendants regularly supplied emails from these backup systems in response to Plaintiffs’ discovery requests. The court concluded that even if some emails had been lost, the Defendants did not act in bad faith because they “have expended great effort to insure that the plaintiffs receive information from both their live and archived email system by providing document review technology and allowing access to its database.” Therefore, the court decided sanctions were not appropriate.

          The decision highlights how an up-front investment in data management technologies and policies can lead to real cost savings from a litigation standpoint. These investments not only decrease the costs – in both time and money – of responding to discovery requests, but also show good faith effort should an adverse party allege spoliation and request sanctions. A company that formulates sound email retention and litigation hold policies, documents and disseminates these policies, and conducts regular audits to ensure these policies are properly implemented will have a readymade shield to employ any time another party makes a spoliation claim. In the long run, these investments can save the company from the tedium of having to justify every email deletion on a case-by-case basis. When it comes to defending against potential spoliation claims, being proactive, rather than reactive, will go a long way to ensure you always have the winning hand.

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