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

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

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

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

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

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%

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

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

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

Case Law  Coleman Holdings Inc. v. Morgan Stanley  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  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  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

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

The Future The End of the Adversary Discovery Process?