January 06, 2014

The first step in performing a proper preservation often involves the issuance of a litigation hold instruction. Typically these instructions are provided in writing, although that is not necessarily the case since substance should prevail over form.

The litigation hold can often involve providing notice to both parties—client and opposition.

The notice should occur whenever litigation is reasonably anticipated. This trigger can occur considerably before the actual start of litigation. It could occur as early as when counsel is retained on a consulting basis to consider a problem. In the recent case of The Pension Committee of the University of Montreal Pension Plan v Banc of America Securities, LLC, et al, 2010 WL 184312 (Jan 2010) the trigger point was when counsel was retained by the Plaintiffs. In Doe v Norwalk Community College, Slip Copy, WL 2066497, D.Conn (July 2007) it could have occurred much earlier than it actually did since a different but related event was already under investigation.

When the litigation hold is triggered, the instructions should be formalized and it is best if communicated in writing. In addition, counsel must communicate directly with key players in the litigation regarding their preservation duties. Furthermore, counsel should instruct all employees to produce electronic versions of their relevant active files as well as ensure that all relevant backup media are preserved and secured in a safe place.

While the decision in Pension Committee identifies the failure to issue a written litigation hold as grossly negligent, the Sedona Conference in its commentary on litigation holds cites Kinnally v. Rogers Corporation, 2008 WL 4850116, (D. Ariz. Nov. 7, 2008), as a case holding that sanctions do not lie merely because a written litigation hold was never issued and a party has taken “the appropriate actions to preserve evidence.” Of course, Judge Scheindlin in Pension Committe found almost every grossly negligent act as rebuttable. So, to claim the lack of a written litigation hold as grossly negligent is perhaps an overstatement.

The litigation hold should be issued no matter a party’s position in the case--as plaintiff or defendant. In Pension Committee, for example, the sanctioned parties were all plaintiffs who became targets of various defenses raised by the defendants. The same situation clearly can happen in covenant litigation. Furthermore it can extend beyond the issue of the covenant agreement to related communications, practices and financial data for damages. When it includes trade secrets it can extend to efforts and procedures to protect the data.

Author: Gregory L. Fordham, Fordham Forensics

• Founded Fordham Forensics in 2012
• Experienced computer forensic expert in trade secrets matters and accepted expert in numerous courts
• Live investigator and certified steganography investigator
• B.B.S. degree, Emory University in Atlanta; certified computer examiner, Security+; Microsoft® certified professional
• Can be contacted at 770-777-2090 or [email protected]

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