Once the duty to preserve evidence has been triggered, the scope of the preservation obligation is the next issue for an organization to consider. Although there are guidelines from case law discussing the scope of the preservation duty, the cases are not consistent across the states, the federal circuits or even in individual district courts. As a result, organizations vulnerable to litigation in more than one jurisdiction, “cannot look to any single standard to measure the appropriateness of their preservation activities, or their exposure or potential liability for failure to fulfill their preservation duties,” according to the decision in Victor Stanley, Inc. v. Creative Pipe, Inc.

Since a national organization cannot effectively operate with a different preservation policy for each state and federal circuit, how does an organization respond to a preservation trigger? The only “safe” way to respond is to design a policy or response protocol that will satisfy the most demanding requirements of courts that have addressed the issue, even though that may impose burdens and expenses that exceed what is required in other jurisdictions in which they conduct business activities.

Once the duty to preserve is triggered, a company should err on the side of caution when deciding what to safeguard since “relevance” is very broad under the state and federal rules of civil procedure. Not only must an organization with notice of actual or potential litigation preserve potentially relevant evidence in its possession, it also must safeguard potentially relevant evidence under its control. Ordinarily, a document is under a litigant’s control when it has the “right, authority, or practical ability to obtain the documents from a non-party to the action.” Id. But in some jurisdictions, courts also require a litigant to notify an opponent if potentially relevant evidence is in the hands of a third party.

When deciding what to preserve, an organization should identify the relevant time period, subject matter and location of potentially relevant information. Beyond that, determining the scope of the duty requires nuance because a court will determine what was reasonable under the specific circumstances and will consider whether there were “reasonable and good faith efforts to retain information that may be relevant to pending or threatened litigation.” The Sedona Conference, The Sedona Principles: Best Practices Recommendations & Principles for Addressing Electronic Document Production. Therefore, when determining what information to preserve, an organization should preserve the documents, data and things necessary to prosecute or to defend its case. Beyond that, an organization must consider a potential opponent’s theory of the case because the duty to preserve extends to the data and documents that may be helpful and relevant to the case of the company’s opponent.  

Some courts have suggested that the scope of the duty to preserve discovery material should be proportional to the amount in controversy and the costs and burdens of preserving the information based on the scope of discovery provided in Rule 26 of the Federal Rules of Civil Procedure. But other courts have indicated that this standard may be “too amorphous” to be of much guidance to a party deciding what files or data it may delete or which backup tapes it may recycle because proportionality is a “highly elastic concept.” One Comm’s, Inc. v. Numerex Corp. As a result, several courts have rejected that standard as imprudent and indicated that unless operating under a court-imposed preservation order, an organization cannot rely on the proportionality standard to create a safe harbor. So, until there is a more precise definition created by rule or case law, prudence favors issuing a broad legal hold notice and preserving all relevant materials in the organization’s possession, custody or control. Alternatively or in addition, once litigation is commenced an organization may want to consider promptly obtaining a specific preservation order. We will discuss the appropriate components of a legal hold notice in our next post.