Resource Library

Whys and Hows of Litigation Holds

Date: September 2014

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.

Although the term “litigation hold” was first coined in the seminal case of Zubulake v. UBS Warburg, LLC, 220 F.R.D. 212 (S.D.N.Y. 2003), the concept behind a litigation hold is not new. Parties to a lawsuit have long been under some form of a duty to preserve evidence in litigation. With paper and tangible items, this task was much easier. In the world of electronic data, however, this task has become increasingly complex.

This complexity stems from the fact that it is much easier for electronic data to be accidently and unintentionally overlooked and destroyed. Additionally, unlike paper documents, which were often limited in number and stored in a designated place such as a file cabinet, electronically stored information (ESI) is found in numerous places and in a variety of formats.

Litigation holds are primarily implemented to prevent the automatic or unintentional destruction of possibly relevant documents or data that could be used as evidence in a lawsuit. This is a particular issue for electronic data, which may be set to automatically destruct. For example, to save server memory, e-mail and voicemail systems are often set up to delete messages after a set number of days. Video or audio recording systems, such as security cameras, often have similar set ups to save space.

There can be severe consequences for a party or individual who fails to implement or ineffectively implements a litigation hold and relevant evidence is lost or “spoiled.” “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] Depending on the extent of the spoliation and prejudice to the opposing party, courts have ordered severe sanctions such as default judgment against the spoiling party or adverse jury instructions, such as requiring or permitting the jury to assume that the missing evidence was detrimental to the spoiling party.[2]

Failure to implement a timely or effective litigation hold can also have monetary consequences. Courts have ordered parties to undertake the expensive task of restoring systems from backup tapes or media in order to recover lost evidence.[3] Courts have also ordered spoiling parties to pay attorney fees and expenses of the opposing party who is seeking evidence that should have been preserved.[4]

Aside from court-imposed sanctions, a party that fails to initiate an effective litigation hold can be harming its own defense or prosecution of a civil lawsuit. Critical evidence to prove the party’s own case may be lost through routine destruction processes.

On an individual level, the known failure to implement a necessary litigation hold or the failure to comply with a hold after being instructed to do so could be grounds for employment discipline.

[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] E*Trade Sec. LLC v. Deutsche Bank AG, 230 F.R.D. 582 (D. Minn. 2005).