Today’s reality is that much of your business’ information and most of its documents are stored in electronic form only. Because of this, the rules governing the procedure to be followed in civil litigation in federal courts recently have been amended. Of particular interest to companies presently or potentially involved in civil litigation, the Federal Rules of Civil Procedure now specifically address the fact that parties to a lawsuit are obligated to maintain and disclose electronic documents during the course of – and sometimes even before the institution of – lawsuits in federal court.
The amended Federal Rules identify electronically-stored information as a separate category of information that is “discoverable” in civil litigation -- meaning electronic information also must be provided to opposing counsel during the discovery period of the case. Beginning when a lawsuit is initiated, parties are encouraged to plan for and cooperate toward the efficient exchange of electronic information relating to the case.
For example, during the first meeting between the parties required under the Federal Rules, which is to occur even before the court meets with the litigants, the parties are required to discuss the preservation of discoverable information and the need and anticipated process for disclosure and discovery of electronic information in the case. Within approximately two months of filing a lawsuit in federal court, parties either must be able to produce a copy of electronically-stored information to the opposing party or describe by category and location all electronically-stored information the party may use to support its claims or defenses. In addition, electronic information relating to the case must be produced in response to specific requests for information or documents from the opposing party.
The fact that the Federal Rules now directly require parties to litigation to identify and produce electronic information and documents relating to the case should signal more than just a sign of the times to the prudent employer. The obligation for an employer to identify and produce such information gives rise to an underlying obligation to understand what electronic information the employer maintains in the first place.
For example, IT departments may retain multiple copies of back-up tapes, which can be quite expensive to search, going back several years in time without any legitimate business purpose for doing so. Most companies create electronic data on a consistent basis, but the length of time data are maintained can vary widely from company to company. If companies do not rigorously police the retention of electronic data so as to ensure that only files with a business purpose are retained, the cost of separating the wheat from the chaff in order to satisfy court rules can be an extreme burden. A consistently-applied document retention policy that specifically includes guidelines for the maintenance and routine destruction of electronic information is advisable for businesses of any size.
However, mere maintenance of the information, even if done consistently and according to a written policy, is not necessarily enough – companies also are expected to preserve electronic information and documents in certain situations. The so-called “litigation hold” rule requires a party to preserve information and documents as soon as the party reasonably should know that the information or documents may be relevant to anticipated litigation regardless of normal procedures calling for the destruction of the information or documents. The litigant who fails to do so risks a spoliation of evidence claim, or even adverse inferences or rulings on the merits of its case based on the absence of the evidence. In cases where the impending possibility of litigation over a specific issue was found to be apparent to one or more of the parties, several courts already have extended this preservation obligation to a period beginning several months before a complaint was even filed.
For electronic information and documents, this preservation obligation is complicated by the manner in which many electronic data management systems maintain – or rather, fail to maintain – electronic information as a result of normal system operation. In other words, without any action on the part of a company, its electronic data management system may override or delete information automatically over a set period of time. If such information later becomes relevant to litigation, it may not be retrievable, and, if so, perhaps only through costly computer forensics procedures.
The revised Federal Rules do, however, recognize the potential for relevant electronic information and documents to be lost by the normal operation of a company’s data management system, without anyone from the company acting to destroy or hide the information. The rules now provide limited protection from sanctions being placed on a party for information “lost as a result of the routine, good-faith operation of an electronic information system.”
The parameters of this “safe harbor” will be defined by courts over the next several years, but the drafters’ comments to the revised Federal Rules indicate that the berth is narrow indeed. The Committee Note to Federal Rule 37(f) points out that a party is only protected by the rule if the operation of its electronic information system was “in good faith,” which it specifies “may involve a party’s intervention to modify or suspend certain features of that routine operation to prevent the loss of information, if that information is subject to a preservation obligation.” In other words, in the opinion of the drafters of the revised Federal Rules, a company can be required to supercede the normal operation of its electronic data system as part of a “litigation hold” once it becomes aware that information in the system could be relevant to a pending or anticipated claim.
The prospect of overriding a complex electronic data management system can be daunting for some companies, and can require the involvement of outside data or systems specialists. However, the revised Federal Rules’ increased emphasis on the role of electronic information in civil litigation reinforces the necessity that companies are informed about the operation of their electronic data management systems and their potential obligation to preserve the information and documentation stored on them.
