The process of discovery — when the parties involved in litigation exchange information relevant to the case — has adapted to fit the way business is done today. Is your company ready for e-discovery?
“Times have changed,” says Melissa Evans, an attorney with Jackson Lewis LLP. “We are not living in a paper world any longer. Instead of office memos, you have e-mail. External communications that once would have been sent by U.S. mail are transmitted by e-mail. Even the fax has taken a backseat to e-mail.”
Traditionally, discovery in litigation entailed consulting paper documents that typically were segregated into labeled folders and file drawers. With electronic information, particularly e-mail communications, that level of file organization is rarely found. The combination of an increased volume of data with a failure to establish an organized system for file maintenance can potentially lead to problems if a company is faced with litigation.
Smart Business spoke with Evans about the challenges of e-discovery and what employers can do to prepare themselves for a potential lawsuit.
How is e-discovery different from traditional discovery?
The critical difference between traditional and e-discovery is volume. We retain information electronically in far greater volume than we ever would dream of doing with paper. This includes a substantial amount of information that is of no value to the business or to any litigation involving the business, such as e-mails announcing employee birthdays.
These files often continue to linger on your system. Electronic information is not like a piece of paper that you can toss in the trash. Just because you hit ‘delete’ on your keyboard doesn’t mean the file is gone. Another difference is the ease with which electronically stored information can be altered, which makes it difficult to maintain its integrity.
What can an employer do to prepare for e-discovery?
Every organization should have a standing document retention policy that governs how long documents are maintained and how they are maintained. Most policies address the former, but not always the latter. How the documents are maintained can become critical if the organization is taken to court.
Organizations keep information for their own purposes. But when you hold on to information longer than required by law or necessary to business functions, you create an ongoing ordeal for yourself if you should ever be sued. The costs of e-discovery can overwhelm litigation budgets. The best way to streamline the process is by having a document retention policy and enforcing it. Depending on which federal, state and local laws it must comply with, every organization faces certain obligations with respect to the preservation and retention of information. There are statutes of limitations on how long certain documents have to be retained, and those should form the basis upon which a company implements a document retention or document preservation and destruction process.
How can employers determine what information should be retained?
In an ideal world, electronically stored information (ESI) would be labeled and stored with the same precision traditionally applied to paper records. So if you send an e-mail, the subject line should be used not only to notify the recipient but also as a label for that information so it can be sorted and stored appropriately, creating a virtual filing cabinet.
ESI is a big problem because it is not until you are served with a complaint that you know with certainty that litigation is coming. The obligation to preserve potentially relevant information, both ESI and paper, is triggered when litigation is ‘reasonably foreseeable.’ This creates a subjective assessment of when the duty to preserve arises. For example, if your business manufactures a mechanical pump and you receive calls from people saying your pumps are exploding, a court might say it was reasonably foreseeable at that point that a products liability claim was coming. However, it is more likely that the duty would be triggered after a formal complaint is filed, but not necessarily a court complaint. Once you get notice from a federal or state agency that a claim has been made, your duty to preserve is likely triggered.
What consequences do employers face if potentially important evidence is unavailable for e-discovery?
While a reasonable document retention policy will protect an organization from sanctions for spoliation — the term for destruction of evidence — the failure to suspend document destruction after litigation commences can lead to a host of issues, including entry of judgment against the defendant. Thus, if the defendant is found to have willfully spoliated evidence, the courts can decide the case without the presentation of evidence by the defendant and an adverse judgment may be entered.
How can employers avoid that outcome?
When an organization receives notification it has been sued, the first step is to notify the IT department so that attempts can be made to avoid loss of information. Many organizations have set up an automatic purge of e-mails. The computer designates information for destruction based on the date it was received. There is no human eye assessing the value of the data, or if it is very important for the business or for potential litigation. As a result, you need to suspend those automatic purge functions if you receive a lawsuit, or even just the threat of a lawsuit.
Simply receiving a letter can be sufficient to trigger that ‘reasonably foreseeable’ clause. Waiting too long to suspend the policy allows documents to be lost because you didn’t take the appropriate steps to preserve them for e-discovery. The ultimate sanction is triggered by willful violation, but courts have given severe sanctions in several cases in which the loss of information was due to simple negligence.
Melissa Evans is an attorney with Jackson Lewis LLP. Reach her at (412) 232-0135 or [email protected].
