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Sanctions for no pre-litigation hold on electronic documents

Technology for Lawyers

Published: May 17, 2013

A lawyer can tell a client about litigation holds until the cows come home, but if the hold runs against company policy, look out. On the other hand, judges will step in and take command at the drop of a hat.

And so it went in Kirgan v. Fca Llc, 2013 U.S. Dist. LEXIS 51747 (C.D. Ill. Apr. 10, 2013).

The Kirgan court was very specific about when a litigation hold should begin: parties to a suit should stop destroying potential evidence when “a party had to know or had reason to know that litigation was forthcoming.”

In this case, it came out in a deposition that the defendant had a calendaring system in which each day’s calendar events were routinely deleted after that day was over with.

Despite the litigation hold, that policy continued to be implemented, and potential evidence was lost.

The defendant had also offered testimony that it did not have a calendaring system at all, which was a falsehood.

The judge was not amused, and sanctions followed. The court followed a three-part analysis to determine the proper sanctions: A breach of the duty to preserve or produce documents; the level of culpability for the breach and the prejudice that results from the breach.

The decision stated that all three of these considerations warranted sanctions against the defendant.

While the court discussed the potential of a default judgment, it opted for slightly less severe sanctions:

1. The jury was to be given a spoliation instruction, which permits the jury to draw a negative inference from the defendant’s failure to preserve and its destruction of relevant documents.

2. Defendant could not use, at any juncture, any evidence or argument that may have been contained in the destroyed calendars, unless that evidence or argument was corroborated by other documentary evidence or by testimony of independent witnesses.

3. Defendant was ordered to pay double attorney’s fees to the plaintiff for the fees counsel incurred in preparing the motion. The amount was doubled in “a rough effort to compensate Plaintiff for the efforts that were made.”

So remember—a pre-litigation hold is a pre-litigation hold!