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Issuing a Legal Hold: Some still don't know when to do it

Created on July 13, 2011

Vice President, E-Discovery

case-law1-300x221.pngFor five years, the 2006 amendments to the Federal Rules of Civil Procedure (FRCP) have been in effect, which in part extended the scope of litigation holds to electronically stored information. By now corporations, especially those dealing in interstate commerce should know and be familiar with these federal rules and what practices are needed to stay compliant. In 2008, the federal court set a judicial precedent that…

“A party has a duty to preserve evidence when it knows, or should have know, that litigation was imminent."

This standard seems pretty straightforward and simple. When a party knows that they are going to be sued or have a complaint filed against them, they should…issue a legal hold. However, time and time again we see companies ignore or disobey these rules and end up paying for it in the form of sanctions or judicial reprimands.

One such example, in Haraburda v. Arcelor Mittal (AM), AM failed to issue a litigation hold when litigation was known to be imminent. The plaintiff, Marie Haraburda, a former AM employee, filed an employment discrimination complaint against her employer, AM. In anticipation of her lawsuit, Haraburda inquired with AM concerning the data retention policy for the information stored on her computer. AM's HR Manager responded by stating that “files stored on company computers are company property and can be assessed and/or deleted as the company views appropriate."

Haraburda subsequently requested that AM put in place a legal hold to preserve all relevant evidence to her case. AM refused, arguing that it was premature to issue a legal hold or any other preservation requests before a Meet and Confer conference had taken place. The court disagreed with AM, granting Haraburda's Motion for Order to Preserve Evidence and directed AM to place a legal hold on all documents “that may reasonably related to the pending litigation" based the duty of the defendant "to preserve attaches at the time the defendant becomes aware of the threat of litigation." As the court noted, the duty to preserve may occur before Meet and Confer, reinforcing the judicial precedent that the triggering basis for the issuance of when a legal hold is when the defendant becomes "aware of the threat of litigation".

What can this case teach us? First, it tells us that despite the FRCP rules and judicial precedent, some organizations are still clueless about legal hold requirements. Second, it should serve as a reminder that the first step to establishing a defensible legal hold process is understanding the rules and recognizing the challenges. A good place to learn more about legal holds and how to overcome these challenges is to check out this white paper, Five Steps to Overcome Common Legal Hold Mistakes.

Haraburda v. Arcelor Mittal USA, Inc., No. 2:11 cv 93, 2011 WL 2600756 (N.D. Ind. June 28, 2011)

Mike Hamilton, J.D. is the E-Discovery Market Analyst at Exterro, Inc. Hamilton works in a product management and marketing role to ensure Exterro's Fusion e-discovery applications closely reflect the needs of legal teams. Within the complex e-discovery world, Hamilton's knowledge, legal acumen and experience give him a valuable perspective on bridging the gap between IT and legal teams.