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Finding “Safe Harbor” in a sea of electronic discovery

In Part I of this series on e-discovery, we discussed the amendments to the Federal Rules of Civil Procedure, which require parties to address and resolve issues regarding the discovery of electronically stored information ("ESI"). Without a plan of attack or a system of satisfying your obligation to preserve relevant ESI, you may unnecessarily be placing your company at risk. This article discusses how to minimize those risks and find “safe harbor” from the potentially severe consequences of not having a plan at all.

Why Safe Harbor?

The reasons for providing litigants with limited "safe harbor" when certain documents are destroyed through routine record management systems are clear. Implicit within the recently amended rules is the recognition that given the sheer volume of ESI, it is often difficult, if not impossible, for litigants to guaranty to the court and their opponents that their duty to preserve relevant ESI has been met with 100 percent certainty. More than 95 percent of all information generated today is stored in electronic form (i.e. computer hard drives, digital phones, Blackberries/PDAs, CDs, DVDs, flash cards, etc).

Not surprisingly, this information rarely gets reduced to paper form. In 2003, it was estimated that a single day's worth of e-mail traffic was almost equal to the annual delivery of all mail delivered by the U.S. Postal office.

Given this reality, companies often are faced with the competing need to purge voluminous information through routine record retention and document-management systems and the legal obligation to take appropriate steps to preserve ESI when litigation is reasonably anticipated. Failing to preserve relevant ESI often leads to allegations of destruction of evidence, known as "spoliation." Sanctions for spoliation can be quite harsh, ranging from severe monetary penalties and adverse inference jury instructions to the outright dismissal of claims and defenses.
Against the backdrop of sanctions, the question often arises: Is there any way to avoid potential sanctions when documents are merely destroyed according to the company's normal record retention/destruction schedule? If you find yourself asking this question, congratulations! The answer is a qualified "yes," and the “congratulations” is for your company's decision to take the first and most prudent step to sanction avoidance - establishing a records-management policy.

No record retention policy, no Safe Harbor

The recent amendments to the Federal Rules of Civil Procedure only provide "safe harbor" to those companies that have a valid document-management system in place and that is consistently followed, updated, and suspended under the appropriate circumstances. This is because the drafters of the amended rules anticipated that documents may be destroyed as a result of a company's routine document-management system and that it would simply be unfair to equate such routine destruction as intent to destroy. Thus the creation of amended Rule 37(f), which provides that no sanctions will be imposed where electronically stored information is lost due to routine overriding or deleting data, so long as a party acts in "good faith."

Good faith is measured by the reasonableness of actions undertaken when attempting to meet the duty to preserve. Simply hiding behind a policy will not suffice if a policy is designed solely for the purpose of thwarting discovery or when the implementation of the policy is out of sync with applicable statutes or circumstances governing the action.

Rule 37(f) merely reflects a collective judgment by the Judicial Conference of the United States, the U.S. Supreme Court, and Congress that protection from sanctions should predominate over other considerations in the limited area of losses from routine operations of information systems. As the Advisory Committee properly noted: when dealing with complex information systems, "reasonable steps do not always preserve everything. Things slip through. That is the point of safe harbor."

If your company does not have a document-management system in place, you may want to reconsider this position and pay careful attention to our next article on the importance of successfully implementing a record retention policy.

Related articles

Tim Hansen: Quick peeks, Clawback Agreements, and the rules of electronic discovery

Fusion 2007: IT threats make risk management paramount

Fusion 2007: In “e-legalities,” CIOs and lawyers combine to provide business value

Juan Ramirez is an associate and a member of the Litigation Practice Area with the Milwaukee office of Michael Best and Friedrich. He earned his Juris Doctor degree in 2002 from the University of Wisconsin-Madison Law School, and he is a member of the Board of Governors' Young Lawyers Division.

The opinions expressed herein or statements made in the above column are solely those of the author, and do not necessarily reflect the views of Wisconsin Technology Network, LLC.

WTN accepts no legal liability or responsibility for any claims made or opinions expressed herein.

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