Has Your Company Adopted and Implemented Appropriate Electronically Stored Information (ESI) Preservation Procedures?

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Recently, the importance of adopting and implementing appropriate safeguards for the protection and preservation of electronically stored information (“ESI”) was addressed in Chura v. Delmar Gardens of Lenexa, Inc., No. 11-2090-CM-DJW, 2012 U.S. Dist. LEXIS 36893 (D. Kan. Mar. 20, 2012).  In Chura, the Court ordered an evidentiary hearing to discuss the defendant’s failure to produce any electronically stored information (“ESI”).  The hearing was to include a review of the adequacy of defendant’s attempt to preserve and search for responsive ESI1. ESI is information that is created, manipulated, communicated and stored in digital (or related) form, requiring the use of computer technology.

The Chura  case highlights the importance of these procedures in the context of  an employment dispute.  In the Chura case, plaintiffs had requested that defendant produce information regarding ten individuals who had been cited as possibly having knowledge of the facts regarding the plaintiffs’ claims of sexual harassment and hostile work environment.  The defendant responded to the various requests by referring plaintiffs to the complaints and personnel files of the plaintiffs.  Plaintiffs, in their motion, said that defendant failed to produce any responsive ESI or other documents that a defendant would typically produce in this type of case.  Defendant argued in response that “it cannot produce what does not exist.”  Plaintiffs also claimed that defendant never produced a litigation hold letter (a letter directing employees to preserve and segregate, notwithstanding the document retention policy, any and all documents and ESI that are, or arguably may be, relevant to threatened or actual litigation).  Defendants stated that there was such a letter, but referred to its original objection to plaintiffs’ interrogatory that the letter was subject to attorney-client privilege (but failed to discuss or support this privilege assertion).

As a result of defendant’s failure to produce responsive ESI and other documents, the Court found that such failure “raises justifiable concerns that Defendant may have 1) failed to preserve relevant evidence, or 2) failed to conduct a reasonable search for ESI responsive to the discovery requests.”  Accordingly, the Court asked the defendant to be prepared to present evidence with respect to the defendant’s litigation hold process, its system of creating and storing ESI, its efforts to preserve ESI, and the methods for searching and producing relevant ESI.

Based on the foregoing, the Court was to determine “whether 1) defendant has made reasonable efforts to search for responsive documents and ESI, 2) whether it should be compelled to make further efforts and 3) what those efforts should be.”

Now, more than ever, companies need to be aware that courts expect that they are properly preserving, searching and producing ESI.  Further, companies must appreciate the fact that a court will thoroughly review a company’s litigation hold and preservation standards and processes in order to make such a determination.  Having a comprehensive document retention policy that all employees understand and abide by is a crucial part of ensuring that ESI is correctly maintained should litigation arise in the future.

1 Please note that the Court cancelled the hearing as the parties reached a settlement of the case.

As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.

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