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The Litigation Hold Letter

Labor and Employment Alert | August 21, 2012
by: Nancy Conrad*

Employers often receive a litigation hold letter from their counsel or outside counsel when a lawsuit is threatened or filed. This article will outline the contents of the litigation hold letter and your obligation to preserve evidence identified in the letter.

What is a Litigation Hold Letter?

It is a notice given a party due to current or anticipated litigation to avoid spoliation of evidence. The party then has a duty to maintain all documents, pictures, charts, graphs, and other data in a reasonably usable form.

What Evidence is Relevant under a Litigation Hold Letter?

Under the Federal Rules of Civil Procedure, "relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence. All discovery is subject to the limitations imposed by Rule 26(b)(2)(C).” If the burden or expense of the proposed discovery outweighs the benefit, if the party seeking discovery has had ample opportunity to access the information, or if discovery sought is unreasonably cumulative or duplicative, or can be obtained from another some more convenient, less burdensome, or less expensive source, then the evidence is irrelevant under Rule(b)(2)(C).

What Sanctions am I Subject to Under a Litigation Hold Letter?

Under the Federal Rules of Civil Procedure, if a party fails to comply with discovery, the court may issue sanctions such as: direct that designated facts be taken as established for purposes of the action, as the prevailing party claims;  prohibit the disobedient party from supporting or opposing designated claims or defenses, or from introducing designated matters in evidence; strike pleadings in whole or in part; stay further proceedings until the order is obeyed; dismiss the action or proceeding in whole or in part; render a default judgment against the disobedient party; or treat as contempt of court the failure to obey any order.

Is Electronic Information Included Under a Litigation Hold Letter?

Yes, but according to the Rules, “a party need not provide discovery of electronically stored information from sources that the party identifies as not reasonably accessible because of undue burden or cost.”

What if I Mistakenly Lost Electronic Information?

According to the Rules, a party that did not act in bad faith is not subject to sanctions. “Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system.”

In conclusion, an employer has an obligation to preserve categories of information that are relevant to a lawsuit or threatened law suit. The failure to preserve evidence can result in serious sanctions and employers should institute measures to maintain all information identified in the litigation hold letter.

For more information regarding this alert, please contact Nancy Conrad at 610.782.4909 or conradn@whiteandwilliams.com.

*Megan Janowiak, a Summer Associate with White and Williams LLP assisted with this article.

This correspondence should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult a lawyer concerning your own situation and legal questions.
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