US Update: The Duty to Preserve Documents and Data When on Notice of Litigation or Threatened Litigation

When an employer receives notice of a lawsuit or a threat of a lawsuit, the employer has a duty to preserve records, including personnel, employment and any other records that may relate to the matter. Courts will assess sanctions against an employer when it determines that the employer failed to preserve information that was in the employer’s control, the employer failed to take reasonable steps to preserve the information, and the loss of the information impacts the litigation. As a result, it is critical that a litigation hold notice be issued upon notice of a lawsuit or a threat of a lawsuit. In Punzo v. Sugarhouse Casino, the United States District Court for the Eastern District of Pennsylvania recently found that an employer’s duty to preserve related documents began upon receipt of an email sent by an applicant who was not hired that raised an employer’s alleged discriminatory motives. 2022 U.S. Dist. LEXIS 2548 (E.D. Pa. Jan. 5, 2022).

A litigation hold notice is a legal notification sent from an employer or its legal counsel instructing specified employees not to discard paper documents or delete electronically stored information that may be relevant to a legal matter. This duty to preserve all documents, data and records that may relate to a legal action applies when an employer receives notice of a lawsuit or reasonably anticipates litigation. The duty has been addressed by courts and requires that a party preserve all relevant data and documents related to the matter. When the preservation obligation begins, employers must suspend standard document destruction policies. Failure to preserve can result in serious legal consequences in litigation, including monetary penalties, preclusion of evidence and adverse inferences. See, e.g., Animal Legal Def. Fund v. Lucas, 2021 U.S. Dist. LEXIS 167535, at *19 (W.D. Pa. Sep. 3, 2021) (finding that sanctions were warranted when a party intentionally discarded relevant evidence).

The litigation hold notice typically takes the form of a written letter issued by an employer or employer’s legal counsel that provides notice to specified employees who have information, documents, and/or electronically stored data related to the issues, about their duty to preserve the data and documents. The notice will inform the employees (or “custodians”) about the litigation matter, the key facts and claims, and the duty to retain all relevant information. The custodians are also typically requested to provide copies of the data and documents to legal counsel. Counsel then indexes the information and develops custodian files. This information is used to develop the defense, the response to the lawsuit, and responses to discovery requests. It is also used to prepare the employee to testify at a deposition and trial.

In the event you receive notice of a potential lawsuit or are served a lawsuit, it is essential that a litigation hold notice be issued as soon as possible.

By Nancy Conrad, White and Williams, US, a Transatlantic Law International Affiliated Firm.

For further information or for any assistance please contact us@transatlanticlaw.com

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