Court Finds Duty to Preserve Triggered at Termination, Not Earlier
Li v. Merck & Co., Inc. (N.D. Cal. July 30, 2025)
Why This Alert Is Important
The decision underscores two recurring eDiscovery themes: the duty to preserve does not arise until litigation is reasonably anticipated, and Rule 37(e) sanctions require proof of actual loss of ESI. It also sends a reminder that Rule 26 makes attorneys—not clients—responsible for ensuring discovery responses are accurate.
Overview
In Li v. Merck & Co., Inc., (N.D. Cal. July 30, 2025), an employment dispute raised sharp questions about when preservation obligations begin and how courts address messy document productions.
The plaintiff consulted with counsel in December 2022 about workplace concerns. But she declined to pursue litigation and continued to engage with her employer’s HR processes. Merck argued that this consultation triggered a duty to preserve and claimed that subsequent deletions of notes, hard copy documents, and electronic materials constituted spoliation.
The plaintiff was terminated in March 2023 and filed suit thereafter. Merck moved for sanctions, seeking (1) an adverse inference instruction under the court’s inherent authority, (2) Rule 37(e) sanctions for alleged ESI loss, and (3) Rule 26 sanctions against plaintiff’s counsel for false discovery certifications.
For practitioners, the case is a reminder to document preservation decisions carefully, pursue sanctions only when loss is provable, and never rely solely on client memory when certifying responses.
Ruling Summary
- Duty to Preserve Triggered at Termination. The court rejected Merck’s argument that the duty to preserve attached in December 2022. It noted that a single attorney consultation—followed by continued HR engagement—did not indicate litigation was reasonably foreseeable, and dismissed Defendant’s allegation that Plaintiff “lawyered up” as “spin.” Termination in March 2023 was the first concrete event triggering preservation obligations, as “there is no indication she was contemplating suing Merck until she was fired.
- No Proof of Lost ESI Under Rule 37(e). The ruling described plaintiff’s production as “a complete mess,” as “it is obvious that counsel handed off document collection to their client, and documents were never collected in an appropriate way.” Nonetheless, Merck did not show that ESI was irretrievably lost, but rather that “there was something wrong with [plaintiff’s] document production, for sure, but it wasn't clear what.” Rule 37(e) sanctions require evidence that relevant ESI cannot be restored or replaced. “In denying Merck's Rule 37(e) motion, the Court does not mean to suggest that Plaintiff's piecemeal and untimely ESI production was satisfactory… but at the same time, Merck's ESI motion was a pure Rule 37(e) motion… the gating item under Rule 37(e) is lost ESI that can’t be restored or replaced, and [Defendant] ultimately came up empty.
- Counsel Sanctioned Under Rule 26. The court found plaintiff’s counsel violated Rule 26 by certifying discovery responses based solely on the client’s memory. The court explained that “ Counsel was required to ensure that her client's search for responsive documents was diligent, and a diligent search would have turned up the many documents responsive” to defendant’s requests for production. The ruling stressed that “Rule 26 doesn’t let counsel hand off responsibility… and just hope for the best.” Counsel was sanctioned $5,000, payable within 30 days.
The trigger for the duty to preserve (and institute a legal hold) is clear as a matter of law, i.e., when litigation is reasonably anticipated. But applying the rule is fact-dependent. Here, based on the evidence, the court concluded that the plaintiff was trying to work things out with HR without litigation, until the company fired her. Merely consulting a lawyer earlier was not enough to trigger the duty to preserve.Hon. Andrew Peck (ret.), Senior Counsel, DLA Piper
Data Privacy Tip
For practitioners, the case is a reminder to document preservation decisions carefully, pursue sanctions only when loss is provable, and never rely solely on client memory when certifying responses. Want a refresher on how the FRCP applies to e-discovery? Want to make sure your arguments align with critical rules governing e-discovery? Download this FRCP E-Discovery Layman’s Guide to get all your questions answered.
