Don’t Delete That E-mail! – Why a Litigation Hold May Be Insufficient to Meet a Party’s Document Preservation Obligations

Don’t Delete That E-mail! – Why a Litigation Hold

May Be Insufficient to Meet a Party’s Document Preservation Obligations

Written by:  Ryan W. Owen and James N. Floyd Jr.

Adams and Reese

Many companies will unfortunately be faced with the prospect of a potential or actual lawsuit.  Without giving much thought to how that lawsuit affects their day-to-day business operations, most companies will hire a lawyer, implement a litigation hold and continue to operate as if everything is normal (including continuing with its normal document destruction process). However, those steps—standing alone—are insufficient to meet a company’s document preservation obligations under federal law and can result in severe sanctions if relevant documents or evidence is deleted.

I.     When Does a Company Need to Preserve Evidence

A company’s obligation to preserve evidence arises when a party has “notice the evidence is relevant to litigation or when a party should have known the evidence may be relevant to future litigation.”[1]  In other words, if a company anticipates being a party or is currently a party to a lawsuit, that company must not destroy unique, relevant evidence that might be useful to the opposing party.[2]  If a company has an obligation to preserve evidence, a company must immediately take active steps to ensure and prevent the destruction of potential relevant evidence.  Importantly, the obligation to preserve evidence does not extend to every employee of a company.  Instead, the duty to preserve evidence applies only to a company’s employees who are likely to have relevant information to the pending or future lawsuit and the “key-players” in a lawsuit.[3]  

A company and its employees must retain and preserve those documents and materials that the company knows, or reasonably should know, are: i) relevant to the potential or actual lawsuit; ii) reasonably calculated to lead to the discovery of admissible evidence; or iii) reasonably likely to be requested during discovery and/or is the subject of a pending discovery request.[4] 

II.     What Happens if a Company Does Not Take Reasonable Steps to Preserve Evidence

In Matter of in re Skanska USA Civil Se. Inc., 3:20-CV-05980-LC/HTC, at p. 9 (N.D. Fla. August 23, 2021) (“In re Skanska”), United States Magistrate Judge Hope Thai Cannon analyzed whether a company’s document retention protocols were sufficient and ultimately sanctioned the company due to the company’s insufficient document preservation protocols.   Skanska USA Civil Southeast, Inc. and Skanska USA, Inc. (collectively, “Skanska”) contracted with the Florida Department of Transportation to design and construct two new portions of the Pensacola Bay Bridge in Pensacola, Florida, and to demolish the old bridge. During this construction, only one lane on the bridge was open for vehicular traffic.  On September 16, 2020, Hurricane Sally made landfall in Pensacola and pushed barges owned by Skanska into the Pensacola Bay Bridge thereby closing the bridge and preventing travel between Pensacola and Gulf Breeze.  Thereafter, a number of lawsuits were filed against Skanska by various businesses claiming economic loss from the bridge closure. 

Judge Cannon noted that Skanska was aware of a potential lawsuit by, at least, September 16, 2020 and in fact had issued a written litigation hold on October 14, 2020.  Nevertheless, despite issuing a litigation hold, litigation being commenced in November 2020 and the service of discovery requests, Skanska failed to: i) suspend its normal document destruction procedures; ii)  ensure its employees understood what the litigation hold entails; iii) ensure that the employees knew they had information which would need to be collected; iv) collect cell phone data from key employees; and v) take any steps to prevent the destruction of cell phone data potentially relevant to the lawsuit.  The net effect of Skanska’s numerous failures was that five of thirteen cell phones from key employees were wiped, lost or otherwise made unavailable.  As a result, the relevant text messages (and potentially photographs) were deleted and ultimately not recoverable.

Judge Cannon found that Skanska did not try to collect the cell-phone data until at least seven (7) months after it first anticipated litigation, nor did Skanska explain why it took no action to ensure its employees understood the litigation hold’s document preservation requirements.  Judge Cannon also noted that “the fact that Skanska may not have hit the ‘delete’ button in each case does not insulate it from responsibility” and “while the Court may be able to tolerate a ‘gap’ here or there, the Court cannot ignore Skanska’s wholesale failure to take any steps to collect the cell phone data from these custodians or, at minimum, to ensure the custodians were aware of and understood the litigation hold that Skanska issued in October 2020.”[5]  In short, due to Skanska’s numerous failures, omissions and “lack of any cogent explanation for these failures,” Judge Cannon concluded that Skanska acted in bad-faith.[6] 

Given these findings, Judge Cannon sanctioned Skanska and imposed two adverse inferences: i) the information contained in the cell phone data is relevant and favorable to claimants in the lawsuit; and ii) it was not the employees who had those cell phones whose conduct caused the barges to go adrift.[7]  Finally, Judge Cannon imposed monetary sanctions against Skanska for the costs ($32,629.96) and attorneys’ fees ($59,780.00) incurred in prosecuting the spoliation motion. 

III.     What Steps Should a Company Take to Meet Its Document Preservation Obligations

Given Judge Cannon’s findings and guidance in In re Skanska, if a company is under an obligation to preserve documents and other evidence relevant to a future or pending lawsuit, we recommend that it immediately take the following steps:

• Identify employees who are likely to have relevant information to the future or pending lawsuit;

• Inform the applicable employees that they may have information and documents which will need to be collected and preserved;

• Suspend the company’s routine document destruction policies;

• Obtain written confirmation that the company’s routine document destruction policies have been suspended;

• Issue a written litigation hold as soon as possible to the applicable employees;

• Obtain written confirmation from the applicable employees that they have received the litigation hold and that they understand the litigation hold’s contents and requirements and their document preservation responsibilities;

• Clarify any questions or misunderstandings that the applicable employee might have regarding their document preservation obligations;

• Require that the applicable employees make copies of or backup all relevant documents and materials, including electronically stored information;

• Collect and store the documents and materials relevant to the future or pending lawsuit; and

• In the event that the applicable employee(s) leave the company, instruct the applicable employee(s) to consult with the company’s legal counsel concerning what document preservation steps must be completed prior to leaving their employment.

IV.     Conclusion

In short, implementation of a litigation hold alone is insufficient for a company to meet its document preservation obligations.  A company faced with future or pending litigation must ensure that a litigation hold is implemented and its normal document destruction practices suspended, the relevant documents and materials are collected and stored and confirm that the applicable employees fully understand their document preservation obligations.  Without taking those steps, a company risks both monetary and legal sanctions.