Resource Library

Implementing Litigation Holds

The What, When and How of Implementing and Managing Litigation Holds

Date: June 2016

What Is a Litigation Hold?

In the most basic terms, a litigation hold is a written notice to employees and individuals under an entity’s direction and control, instructing them to retain any documents, videos, property, etc. related to a certain issue that is or may be subject to a lawsuit. A litigation hold is a formal means or a process by which routine document retention and destruction is suspended and relevant documents, data and other evidence are identified and preserved for potential use in a lawsuit.

The notice is issued to prevent the spoliation of evidence. “Spoliation” is “the destruction or significant alteration of evidence, or the failure to preserve property for another’s use as evidence in pending or reasonably foreseeable litigation.”[1]

Why Are Litigation Holds Important?

There can be severe legal consequences for a party who fails to initiate or ineffectively implements a litigation hold and relevant evidence is lost, destroyed or spoiled.

Depending on the extent of the spoliation and prejudice to the opposing party, courts have ordered severe sanctions, such as:

  • granting default judgment against the spoiling party (the spoiling party loses the case regardless if other facts exist to dispute this).
  • issuing adverse jury instructions (e.g., requiring or permitting the jury to assume that the missing evidence was detrimental to the spoiling party[2] ).
  • paying the other side’s attorney fees and expenses.
  • requiring the expensive and time-consuming task of restoring systems from backup tapes or media to recover lost evidence.[3]

Any of these not only increases costs of litigation, but also often ends up as a story in the newspaper and can cause a reputational black eye for an entity. For example, the public may presume the entity is trying to hide the truth and got caught.

What Information Should Be Preserved, Identified in a Litigation Hold?

The litigation hold notice should tell individuals what information/documents they should be keeping. In legal terms, it is data and information that is:

  • known or reasonably should be known to be relevant to the action.
  • reasonably calculated to lead to the discovery of admissible evidence.
  • likely to be requested during the discovery process.
  • the subject of a pending discovery request.[4]

In practical terms, if the data is related to the issue identified—for example, the employment of John Doe—it should be kept.

Individuals should be notified and reminded that this data can be in many forms. The form and location does not dictate whether it needs to be kept. Litigation hold notices should identify physical evidence such as:

  • hard copies of documents, whether printed or handwritten, including but not limited to:
    • letters, memoranda or correspondence.
    • forms and reports.
    • external and internal literature and books.
    • schedules, worksheets or plans.
    • minutes, transcripts or journals.
    • bulletins, brochures, newsletters, notices or press releases.
    • calendars, appointment books or diaries.
  • photographs.
  • audio or video (tapes, DVD or CD).
  • other tangible items.

Electronically stored information (ESI) covered by a litigation hold may include, but is not limited to:

  • electronic documents and files.
  • e-mail messages and attachments.
  • voice mail messages.
  • digital audio or video files.
  • text messages or instant messages.
  • Internet and intranet website information.
  • social media posts and messaging.
  • calendar information.
  • contact lists.
  • telephone logs.
  • security card logs.
  • databases.
  • Internet files and usage data.

Litigation holds are not limited to formal or final documents. They apply to all drafts of documents and any handwritten notes or work papers, whether electronically stored or in hard copy.

Sources of the documents and ESI may include, but are not limited to:

  • all paper (hard copy) files.
  • computer hard drives.
  • computer servers.
  • voice mail systems.
  • removable media (CDs, DVDs, flash drives, backup tapes).
  • laptop or tablet computers.
  • telephones.
  • cell phones and smartphones.
  • cloud storage.
  • any other locations where hard copy or electronic data is stored.

Litigation holds apply to all information that existed prior to the litigation hold being initiated and after the hold is issued.

Most importantly, where the documents are stored does not necessarily matter. Therefore, the hold also likely applies to information stored in locations other than at the government entity, including information stored at employees’ homes and stored on individuals’ personally owned devices or accounts, such as:

  • home computer, personal laptop or tablet.
  • personal cell phone or smart phone.
  • home or personal e-mail account.
  • private social media accounts.

PRACTICE TIPS

  • The question to ask is, does it relate to the subject of potential litigation, not where or how is it saved or stored?
  • It is usually not permissible under a litigation hold to destroy an electronic version of a document if a hard copy exists or vice versa. All documents in all media should be preserved, regardless of duplication. The reason is because metadata (the data about data) exists in electronic documents.

To Whom Does a Litigation Hold Apply?

Litigation holds apply to anyone who might have possession or access to documents, electronically stored information or tangible items that are relevant to a claim.

This likely includes employees and elected officials. It may also apply to former employees and elected officials, depending on the subject matter and timing of the litigation hold.

If a government entity has a contract or other working relationship with an outside vendor, independent contractor, consultant or someone else and has a right or practical ability to obtain documents, data or items from those individuals or organizations, the individuals or organizations might be subject to a litigation hold.

 

When Should a Litigation Hold Be Implemented?

The duty to preserve evidence arises during the period before the litigation when a party reasonably anticipates a lawsuit and should know that the evidence may be relevant to the anticipated legal action. [5] If the entity receives a notice of claim, administrative complaint or civil complaint, a litigation hold should be instituted.

When May Litigation Be Reasonably Anticipated?

Factors to consider:

  • the nature and specificity of the complaint or threat
  • the party making the claim
  • the relationship between the parties
  • whether the threat is direct, implied or inferred
  • whether the party making the claim is known as aggressive or litigious
  • whether the party who could assert a claim is aware of the claim
  • the strength, scope or value of the known or reasonably anticipated claim
  • whether there have been similar claims or reports of claims against the party or someone similarly situated
  • any press or industry coverage of similar claims[6]

Determining whether litigation is or should be reasonably anticipated is based on a good faith and reasonable evaluation of relevant facts and circumstances. Members should work with their legal counsel to determine whether litigation is reasonably anticipated such that a litigation hold should be implemented.

As a rule of thumb, however, members should consider implementing a litigation hold when there is:

  • an actual or potential legal filing, such as a summons and complaint or notice of an administrative hearing.
  • a notice of a credible threat of a legal filing or litigation event, such as a notice of claim or a letter from an attorney indicating action is imminent and/or requesting document preservation.
  • an internal trigger or event that often leads to litigation.

Determining whether a specific internal trigger or event is of sufficient significance to require a litigation hold may be difficult. Often it requires a fact-intensive, case-by-case evaluation. Examples of internal triggering events are:

  • complaints or grievances alleging harassment or discrimination.
  • termination of an employee for cause.
  • contract dispute.
  • incident involving death or serious injury.

PRACTICE TIP

Threat of litigation has to be probable, which is more than a mere possibility.[1]


Implementing the Hold

Consult with Legal Counsel

Because time may be of the essence in a litigation hold situation, legal counsel should be contacted as soon as possible after a triggering event occurs or is suspected. In the event that legal counsel is unavailable on short notice, staff may need to move ahead with identification and preservation efforts, particularly when it comes to suspending automatic or routine records destruction.


PRACTICE TIP

Litigation holds supersede any requirement, permission or authorization to destroy documents or data under the records retention schedule or from the State Historical Society or another entity.


Identify the Subject Matter and Scope of the Litigation Hold

The legal hold notice should identify the matter and scope in enough detail so that individuals subject to the hold understand what they need to keep. The subject matter and the scope of the litigation hold depends on the circumstances underlying the triggering event.
In the initial stages, it is best to define the scope broadly to make sure that all pertinent items are preserved and retained. The scope can always be modified and narrowed at a later date when more details are known about the possible claims.

Determine Individual(s) Responsible for Managing Litigation Hold Process

A decision should be made about who within the government entity oversees the litigation hold process for a particular hold. Although there may be multiple individuals who need to comply with the litigation hold, the litigation hold process should be managed by one individual, a litigatin hold coordinator.

When beginning to determine who may have relevant information and where it may be stored, a multidisciplinary effort, including individuals from legal, information technology (IT), records management, administration and/or the affected department, may be the most effective. This approach provides expertise from a variety of areas that may be affected.

Identify Key Players and Data Custodians

A crucial step in the litigation hold process is informing the “key players” and “data custodians” of the litigation hold and their obligations relative to it.

“Key players” are those individuals who are most likely to possess relevant documents, electronically stored information or be witnesses in any litigation. “Data custodians” are individuals who may have access to relevant documents or data but are not necessarily key players in the litigation, such as IT employees.

The key players and data custodians should be asked about what relevant evidence may exist and where it may be stored. They may also know of others who potentially have items that should be preserved. Often in-person meetings work best to gather this information and to explain the obligations of a litigation hold.

Consideration should be given to the Minnesota Government Data Practices Act (MGDPA) when discussing reasons for issuing a litigation hold with key players and data custodians. Under the MGPDA, some employees and officials may only need to know about the litigation hold in broad terms, not the specifics of the allegations.

Involve Information Technology (IT) Personnel at Early Stages

The key to a smooth litigation hold process is being able to identify, manage and preserve ESI when a triggering event occurs. To that end, it is important to involve IT personnel as early as possible. IT staff should be able to assist in:

  • identifying relevant data systems and the ability to search and retrieve ESI from those systems.[7]
  • identifying and preserving any ESI that may be at risk of deletion.
  • suspending any automatic ESI destruction.
  • identifying any planned upgrades to computer systems or hardware that may affect a litigation hold.
  • identifying the existence and status of any archived data and the ability to preserve this data if necessary.

PRACTICE TIP

Entities may have automatic deletion of e-mails after a certain period, such as 90 days or when a certain size is reached in a mail box. Discussions should happen early with IT regarding any such settings and a plan made so relevant electronically stored information is not destroyed. Also, if replacing servers or computers, certain hard drives may need to be kept until the litigation hold is released.


Identify How, Where and in What Form Potential Evidence Is Stored

From discussions with IT, key players and data custodians, an entity should know how, where and in what form potential evidence is stored. Knowing this assists in determining how data will be preserved and whether there is any risk for accidental destruction. It may also help legal counsel prepare for discovery if a lawsuit is filed.

Send a Litigation Hold Letter to All Pertinent Individuals

A best practice is to provide a written litigation hold notice to all key players and potential data custodians. As discussed previously, this may include individuals or entities outside of the government entity, depending on the location of the potential evidence. Those receiving the notice should be required to provide acknowledgement that they received the letter.

A written litigation hold letter confirms any verbal instructions that have been given, provide a reference to key players and data custodians of their obligations, and serve as evidence supporting that the litigation hold was sufficiently communicated and understood.

The litigation hold coordinator should keep a record of everyone who received the letter via the acknowledgment.

Members should work with legal counsel when issuing a litigation hold letter. When drafting letters, it is important to keep the letter simple, but thorough. The letter should express the urgency and importance of the matter. An effective litigation hold letter:

  • sets forth a brief description of the case or situation, keeping the Minnesota Government Data Practices Act in mind.
  • identifies preservation obligations.
  • defines what should be preserved.
  • defines where it may be located.
  • references personal computers, devices and accounts.
  • instructs how to identify and preserve documents and data.
  • identifies the risks of noncompliance.
  • directs that records destruction and automatic deletion be suspended.
  • directs that future documents on the subject matter be maintained.
  • notifies that the litigation hold supersedes other records retention requirements.
  • sets forth the timeframe to preserve.
  • provides contact information for questions.
  • requires written acknowledgement of the litigation hold.

A sample litigation hold letter is available for download from MCIT’s online Resource Library.

All litigation hold acknowledgements should be kept in a litigation hold file for future use. As a best practice, there should be follow up with any individuals who do not return the acknowledgement.

Keep a Record of All Litigation Hold Activities

As a best practice, all aspects of the preservation process should be documented for future use, including:

  • why the litigation hold was needed.
  • who the key players and data custodians are, and why.
  • who received a copy of the litigation hold letter.
  • the steps taken to preserve documents, electronically stored information and other tangible items.
  • the basis for selecting certain documents and ESI for preservation.

Send Periodic Reminders About the Litigation Hold

Periodic reminders about the litigation hold should be sent to all key players and data custodians with an instruction to inform the sender about any changes or development in data preservation activities.

Consider the Litigation Hold for Departing Employees

Develop procedures for preserving the documents or data of key players or data custodians who are leaving employment with the government entity. For example, computer hard drives may need to be preserved, as may e-mail folders and other documents or data files. If the departing employee has ESI on a personally owned computer or device, arrangements may need to be made to preserve that information, if it has not already been done. This includes a personal phone that the employee may have used for government business.


PRACTICE TIP

Some organizations have color-coded the computer hardware or flagged server and e-mail files that may be under a litigation hold so that they are not automatically reformatted or disposed of when an employee leaves.


Periodically Review the Scope of the Hold

The scope of the litigation hold should be reviewed occasionally to ensure that it is still covering all relevant documents, electronically stored information and other items. In some instances, it may be possible to scale back the litigation hold as potential legal claims and defenses become clearer.

Keep Legal Counsel Up-to-date About Any Developments

Notify legal counsel if there are any issues with data preservation or compliance with the litigation hold.

Release the Litigation Hold When Finished

As a final matter, individuals (and outside entities) should be informed when a litigation hold is no longer needed, and they can go back to the normal retention and destruction schedule. As a best practice, this release should be provided in writing and contain a reminder to ensure that the documents or ESI are not subject to another litigation hold in another matter before individuals destroy evidence per the records retention schedule.

The length of time that a litigation hold must be in place will depend on the circumstances prompting the hold. If there is ongoing litigation, the hold should be kept in place until the litigation has been completed. If the hold was initiated in advance of litigation, it may need to remain in place until the statute of limitations on possible claims expire. This could be anywhere from one to six years or more. Consult with legal counsel before removing or modifying a litigation hold.

Plan Ahead

The best practice for managing litigation holds is to plan ahead. Government entities should not wait for a litigation hold situation to arise before considering how best to identify and preserve documents and electronically stored information. By adopting and consistently following a policy or plan, an entity is demonstrating reasonableness and good faith in the litigation hold process.

A litigation hold policy, plan or process may:

  • identify who should be notified of a triggering event and the person(s) who may need to be involved in a litigation hold.
  • identify an IT contact person or position and require involvement of that individual at early stages. If a government entity is outsourcing the IT function, consider incorporating assistance with litigation holds into the contract. Entities should also consider any additional budgeting that may be needed for outsourced IT in the event of a litigation hold.
  • identify where physical documents are stored and methods for preserving that data.
  • identify where electronically stored information is stored in active systems, backups and archival systems, including:
    • where the systems are physically located.
    • who the data custodians for the ESI are.
    • how the ESI is accessed and the format in which ESI is kept.
    • how easy or difficult it is to access the ESI.
    • possible methods for preserving ESI.
    • any automated destruction processes attached to the ESI.
  • develop procedures for suspending automatic destruction and preserving data that may be under a litigation hold, particularly for departing employees.
  • consider document and data preservation for departing employees. If documents or data are not under a litigation hold, require that all work-related data be returned and wiped off of employees’ personal devices.
  • provide any necessary training for individuals managing litigation holds, IT contacts and key employees on litigation holds and process.
  • consult with legal counsel regarding all aspects of any policy, plan or process.

Government entities should continue to follow their records retention schedule and planned destruction for documents and data that are not under a litigation hold. This is important as it limits the amount of data and documents to be identified and preserved. Entities may want to audit records retention and destruction to ensure compliance with the schedule.

Members are encouraged to contact their legal counsel for more information regarding litigation holds or a specific litigation hold currently in place.

[1] Zubulake, 220 F.R.D. at 215. See also, Miller v. Lankow, 801 N.W.2d 120, 127-28 (Minn. 2011).

[2] Sentis Group, Inc. v. Shell Oil Co., 12-3623, 2014 WL 3953987 (8th Cir. Aug. 14, 2014); Stevenson v. Union Pac. R. Co., 354 F.3d 739 (8th Cir. 2004); E*Trade Sec. LLC v. Deutsche Bank AG, 230 F.R.D. 582 (D. Minn. 2005).

[3] Escamilla v. SMS Holdings Corp., CIV. 09-2120 ADM/JSM, 2011 WL 5025254 (D. Minn. Oct. 21, 2011).

[4] Zubulake, 220 F.R.D at 217.

[5] See Silvestri v. General Motors Corp., 271 F.3d 583, 591 (4th Cir. 2001). See also, Best Buy Stores, L.P. v. Developers Diversified Realty Corp., 247 F.R.D. 567, 570 (D. Minn. 2007); Miller v. Lankow, 801 N.W.2d 120, 127-28 (Minn. 2011).

[6] The Sedona Conference, Commentary on Legal Holds: The Trigger and The Process, 11 Sedona Conf. J. 265 (Fall 2010)(also at https://thesedonaconference.org/publications)

[7] Because metadata can easily be changed or destroyed when data files are open, it is best not to open any data files unnecessarily when searching for relevant ESI. IT personnel may be able to search files without opening.

The information contained in this document is intended for general information purposes only and does not constitute legal or coverage advice on any specific matter.