No company is immune to the possibility of litigation. In the case that a
claim arises, having policies concerning the retention and destruction of electronic data can take some of the hassle out
of an arduous and expensive process.
“Businesses should understand now
what their information technology (IT) systems are, how they work and what policies
and procedures they may want to adopt
with an eye toward the potential for litigation,” says Mark Goldner, associate at
Jackson Lewis.
Smart Business spoke to Goldner about
the new rules concerning electronic data
and discovery.
What’s new pertaining to rules of discovery?
The federal rules of civil procedure pertaining to discovery were recently amended to more explicitly account for electronic data. E-mail would be the first type of
electronic data that would come to people’s minds, but it could be spread sheets,
presentations, financial information, or
anything that is in electronic form.
A party in litigation has an obligation to
preserve information that may be relevant
to the claims or defenses as soon as it has
reasonable notice of a possible claim. That
obligation had always applied by implication to electronic data. The rule amendments, however, more explicitly deal with
how the parties should fulfill the obligation
in connection with electronic data.
This litigation obligation implicates what
employers should be doing before a claim
is made. In other words, employers should
consider how they are collecting, retaining
and destroying electronic data now.
What happens if a claim arises tomorrow?
If an employer is involved in a discrimination claim, the plaintiff has to go to a federal or state agency and file an administrative charge of discrimination as a precursor before he or she can actually sue in
court. Because it’s an administrative
charge and not a lawsuit, some employers
may not consider their obligations in litigation. However, a defendant’s obligation to
preserve evidence, including electronic
data, starts at the notice of the administrative charge, which could literally be two or
three years before the employer is sued in court. So at the notice of an administrative
charge, a company really should take steps
to identify and preserve any electronic data
residing in any of its systems.
How should data be managed?
There’s no magic list of particular protocols — but companies should have policies
in place to understand how data is collected, retained and lost. For example, the
company could have an explicit destruction protocol where it makes backup tapes
every 30 days, saves them for a year and
then destroys them. Or it may have a system where data is periodically overwritten.
The company’s IT department should be
integrated into the management team, particularly when there’s a claim against the
company. In litigation, you really rely on
the IT guys to explain what the systems are
and how they work and to help the human
resources and legal folks come to terms
with how the company fulfills its obligation
to preserve electronic data.
What are some common challenges involved
in electronic discovery?
One challenge of electronic discovery is
the cost. The cost of production to the opposing party, which may entail figuring out
what you’ve got, finding it and producing it, can be very onerous and include thousands of pages of documents. The other enhanced cost comes from discovery disputes. Disputes over electronic discovery
can be time consuming, expensive and
contentious. Imagine a company’s reaction
to a plaintiff’s lawyer being allowed to root
around the company’s electronic databases. Having good IT policies and procedures
that are actually followed places a company in a better position to meet its obligations in the most cost efficient manner.
What might be a common dispute?
The new rules have an explicit safe harbor such that a party cannot be penalized
for the loss of data due to the good faith
running of its policies and protocols. Say
all the emails on a company’s server are
destroyed every 31st day and the company
is put on notice of a claim on the 25th day
of the 31-day cycle. Let’s say that because
of reasonable notification procedures, it
doesn’t stop its destruction protocol and
loses all of those emails for that 31-day
cycle. But, it suspends its destruction protocols and preserves emails in the next and
subsequent cycles. If the company acted
reasonably and the emails were lost due to
a policy or procedure, it shouldn’t be penalized for the loss of that data.
On the other hand, if the company is put
on notice of the claim and doesn’t do anything for six or eight months, then it probably hasn’t acted reasonably and is subject
to what’s called a spoliation charge. If it’s
found to have engaged in spoliation —
whether through negligence or through
purposeful conduct — a company can be
subject to rather severe sanctions.
What should employees know about their
company’s policies?
Employees have to know the company’s
policies and understand what ‘deleted’
really means — in general and on the company’s system. Even when deleted, e-mails
often may be forensically recovered from a
computer hard drive. And because ‘deleted’ e-mail may be revealed in discovery,
employees should send every message as if
someone is looking over their shoulder.
MARK GOLDNER is an associate at Jackson Lewis. Reach him
at (412) 232-0404 or [email protected].