Electronic Communication “ Litigation Holds”

1. Electronic Communication“Litigation Holds” Steven Raskovich University Counsel California State University PSSOA Conference – March 23, 2006

2. New Rules that Develop to Govern Electronic Information Are Applicable to Hard Copy

3. The “Litigation Hold” Doctrine • Applies wherever litigation is “reasonably foreseeable” • Requires that a “hold” be placed on all relevant information • Risk an adverse inference at trial for any missing information

4. When is litigation reasonably foreseeable?Not a bright line • A government claim, tort claim, special investigation, or regulatory audit • Contractual performance issues • A major accident or injury • Incident that results in a police report • When an employee is terminated • Whistleblower and whistleblower retaliation claims • Third party requests indemnification • A party says that s/he is going to sue

5. Other Situations • Multiple complaints about the same practice • Experience with similar situations • Investigations that corroborate complaints • Where the party holding information is contemplating its own lawsuit

6. Other Considerations • There must be actual notice of a specific and definite claim • The value of the claim is irrelevant • The scope or nature of the claim is irrelevant • ·personal injury cases - 24% • ·   intellectual property cases - 20% • ·contract cases - 18% • ·employment cases - 15% • ·other - 23%

7. What to do when circumstances call for a “Litigation Hold” • Must preserve evidence • Interrupt regular document retention/destruction schedules • Includes all forms of electronic communication in all locations and forms • Must protect against overwriting • What to do about “deleted” data? Back-up tapes? • Best to have a team to set up a unique plan • Must instruct all who hold evidence • Must repeat instructions • Must hold all evidence until litigation is resolved

8. Issues • Laptops and home computers • People forget – need repeated instructions • Failure to do a complete enough inventory at the start – voice information • Remember that some information will be “redacted” prior to production • Failure to appreciate technical issues - metadata

11. Consequences • Attorneys’ fees and costs • Preclusion of evidence at trial • Instructions to jury to draw adverse inference • Dismissal or default judgment

12. Case Law • Coleman Holdings Inc. v. Morgan Stanley - 2005 • Failure to coordinate search for backup tapes led to late discovery of more than 2,500 tapes, and partial default judgment, which contributed to a jury verdict of $1.5 billion • United States v. Philip Morris USA, Inc. - 2004 • Eleven senior executives failed to follow internal procedures for preservation of evidence; court barred witnesses from testifying at trial and imposed total sanctions of $2,750,000 • Zubulake v. UBS Warburg -- 2004 • Failure to communicate within organization and with counsel led to late production and loss of data, warranted adverse inference instructions; jury returned $29,000,000 verdict

13. Lessons Learned • Importance of having regular document retention/destruction policies • Importance of putting together a team to establish a plan for each unique case • Importance of good communication throughout process with the right persons

14. The Future The End of the Adversary Discovery Process?