Preservation Obligations: Preserving Potentially Relevant Evidence in California Litigation

As businesses become more reliant on technology, when found litigating in California, businesses will find that a larger share of potentially relevant evidence is digital or electronically stored information (“ESI”). ESI evidence differs from hard document evidence, due to ESI’s ability to be unintentionally altered or destroyed by simply accessing the digital evidence. Given the ability to unintentionally alter or destroy ESI, attorneys representing businesses in California litigation matters, should be aware of ESI preservation duties and when these duties attach to ensure the preservation of such potentially relevant evidence. While California has its own law that governs the preservation of potentially relevant evidence, to comprehend preservation duties under California law, attorneys should first look to the federal rule. Federal law requires the early preservation of potentially relevant evidence. In Napster, Inc. Copyright Litig. it was found that “a litigant is under a duty to preserve evidence which it knows or reasonably should know is relevant to the action.” In re Napster, Inc. Copyright Litig. 462 F. Supp. 2d 1060, 1067 (N.D. Cal. 2006). Six years later, in Apple Inc. v. Samsung Electronics, the Court bluntly defined the timing when preservation attached as “from the moment that litigation is reasonably anticipated.” Apple Inc. v. Samsung Electronics Co., Ltd., 881 F. Supp. 2d 1132, 1136 (N.D. Cal. 2012). Once litigation is anticipated, a party “must suspend its routine document retention/destruction policy and put in place a ‘litigation hold’ to ensure the preservation of relevant documents.” Zubulake v. UBS Warburg, 2020 FRD 212, 218 (S.D.N.Y. 2003). In practice, attorneys should consider the receipt of demand letters, summons, complaints, subpoenas, employee accidents, and discrimination allegations as a non-exhaustive list of examples of when one should reasonably anticipate litigation and undertake affirmative actions to ensure preservation.

In California, the law slightly differs from its federal cousin. The California Civil Discovery Act of 1986 (“CDA”) governs civil discovery within the Golden State. While the CDA is where one would expect the prohibition of the intentional destruction of evidence, surprisingly, the CDA does not explicitly bar the deliberate destruction of relevant evidence before a lawsuit has been filed or before a discovery request. See, e.g., Dodge, Warren & Peters Ins. Services, Inc. v. Riley, 105 Cal. App. 4th 1414, 1419 (2003). However, a failure to preserve evidence is not without consequences under California law. In Cedar-Sinai Med. Ctr. v. Superior Court, the Court addressed an attorney’s preservation duty, noting, an “important deterrent to spoliation is the customary involvement of lawyers in the preservation of their clients’ evidence and the State Bar of California disciplinary sanctions that can be imposed on attorneys who participate in the spoliation of evidence. As a practical matter, modern civil discovery statutes encourage a lawyer to marshal and take charge of the client’s evidence, most often at an early stage of the litigation. In doing so, a lawyer customarily instructs the client to preserve and maintain any potentially relevant evidence, not only because it is right for the client to do so but also because the lawyer recognizes that, even if the evidence is unfavorable, the negative inferences that would flow from its intentional destruction are likely to harm the client as much as or more than the evidence itself.” Cedar-Sinai Med. Ctr. v. Superior Court, 18 Cal. 4th 1, 12-13, 954 P.2d 511, 518 (1998). A violation of a duty to preserve evidence may result in a court order of evidence preservation or an adverse jury instruction where evidence has been destroyed. See, e.g., Judicial Council of California Civil Jury Instruction 204.

Additionally, attorneys may face discipline for failing to preserve relevant evidence under the California Business and Professions Code (“Cal. Bus. & Prof. Code”) and the California Rules of Professional Conduct (“Cal. Rules Prof. Conduct”). Under the Cal. Bus. and Prof. Code, attorneys may be subject to discipline, including suspension and disbarment, for participating in the suppression or destruction of evidence. Cal Bus. & Prof. Code § 6106. Cal. Bus. and Prof. Code § 6077 bound the law to all licensees of the State Bar and made the willful breach of the rules involving the “commission of any act involving moral turpitude, dishonesty or corruption … constitutes a cause for disbarment or suspension.” Id., § 6077. Additionally, the Cal. Rules of Prof. Conduct provide that a “member shall not suppress any evidence that the member or the member’s client has a legal obligation to reveal or to produce.” Cal. Rules Prof. Conduct, rule 5-220. Given the judicial power to order preservation or give an adverse jury instruction, suspension or disbarment, or the possibility of removal to federal court where there is a more defined standard, attorneys litigating in California should follow the federal standards to determine when preservation attaches. By doing so, an attorney will likely meet their California duties of preservation and be well prepared if the matter is removed to federal court.

Once a duty of preservation attaches, attorneys should determine the appropriate scope of the preservation. Attorneys should ascertain which custodians and sources may possess potentially relevant evidence. When identifying custodians, attorneys should work inside out by first identifying which of the client’s relevant employees may have potentially relevant evidence, then moving onto third parties or outside vendors under the client’s control but not employed by the client. To determine whether there is client-control, an attorney should determine whether the client makes decisions regarding the client’s information and data. If a client has the final say over how information is handled or when it may be destroyed, one should assume that data is under client control. A review of a client’s organizational chart followed by employee interviews can help develop a thorough list of custodians, third parties, and outside vendors who may possess potentially relevant evidence. To prepare for custodian interviews, attorneys should inquire whether the client has a retention policy. A retention policy is a document that governs how the business and employees are to retain business information. If a client has a retention policy, this policy should serve as a baseline understanding of how a business’s retention is intended to work. However, merely reviewing a client’s retention policy, if one exists, should be avoided. A review of a client’s retention policy with custodian interviews is necessary because employee practices often differ from policy. Therefore, attorneys should use a retention policy to understand a client’s retention intent and custodian interviews to know how a client’s retention works in practice to ensure the preservation of potentially relevant evidence.

In addition to reviewing a client’s retention policy, attorneys should also inquire about any auto-delete policies. An auto-delete policy dictates how long specific software programs will retain the information until a set time for deletion. Auto-deletion policies can proactively reduce risk by complying with legal requirements and ensuring data is maintained for a condition’s duration, but not longer. Many Microsoft programs allow for administrators to enact such policies and are commonly used by businesses. Attorneys should consider interviewing a client’s system administrator, or other IT professionals that enact these policies, to ensure proper suspension and preservation. As previously stated, the rule from Zubulake is that once “a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a ‘litigation hold’ to ensure the preservation of relevant documents.” Zubulake v. UBS Warburg, 2020 FRD 212, 218 (S.D.N.Y. 2003). A litigation hold letter, often referred to as a “litigation hold”, is an email or letter sent to employees, third parties, or vendors under a respondent’s control, notifying the recipient of pending or current litigation and the obligation not to delete potentially relevant evidence and instructing the recipient of their preservation obligations. A litigation hold should notify the recipient of the matter’s name and the recipient’s obligations to preserve, safeguard, and retain potentially relevant evidence. An attorney will tailor a litigation hold to include specific examples of where a recipient might find potentially relevant evidence. Given that not all custodians will have experience with lawsuits, attorneys should include the contact information of the person overseeing the litigation hold in case recipients have questions. Lastly, to ensure compliance, a litigation hold should be returned by the recipient signed, and receipt and compliance acknowledged so there is a record of the action.

If you find your client being sued in California court, attorneys should immediately discuss preservation of potentially relevant evidence and take actions to ensure preservation. Frank discussions will lead to understanding where potentially relevant evidence resides and what immediate actions will need to be taken. Such immediate actions to ensure preservation will likely lead to compliance under both the federal and California law, saving an attorney the headache and potential punishment for failure to preserve potentially relevant evidence. Mark G. Griffin is a commercial litigation attorney in San Francisco whose practice includes contract disputes, trade secrets and employment matters, and issues relating to government investigations. With a background in litigation consulting, he provides clients with technology-based approaches to drive litigation forward to a desirable resolution. Mark writes commentary in various publications on eDiscovery and legal technology developments in the practice of law. This article was originally published in the Law Practice Management & Technology eNews.