A Packrat Mentality of Evidence/Document Preservation

A Packrat Mentality of Evidence/Document Preservation

When I was a kid, every year at Hanukah, my mom had a one in one out policy for toys. If I got a new Transformer, I had to donate an old toy to Goodwill. It taught me two important lessons: always think of those less fortunate and try to keep the clutter in your home to a minimum.

My fiancé cannot bear to part with anything. About five years ago she lost weight and went from a size 14 to a size 8. Today, half of her closet is filled with clothes that are 6 sizes too big for her.

Which one would you rather have for a client?

In Gallagher v. Crystal Bay Casino, LLC et al., 2010 U.S. Dist. LEXIS 124421 (D. Nev. Nov. 8, 2010), the court held that my fiancé was a good client, but my mom would likely suffer some serious adverse consequences in trying to defend herself in a lawsuit.

In Gallagher, the plaintiff lost two Compact Discs whose metadata would have likely contained important evidence about the timeframe in which those CDs were burned. Defendants brought a Motion for Sanctions due to spoliation of evidence at issue in this case. Specifically, defendants asked the court to dismiss the plaintiff’s case in its entirety as penalty for the spoliation. The court declined to dismiss, but gave the defendants leave to file a new Motion for Sanctions seeking other, less severe, penalties.

The court found that dismissal is only warranted when “Plaintiffs acted with willfulness, fault, or bad faith…” Since defendants had made no showing of willfulness, fault, or bad faith, dismissal is not warranted in this case. The court did, however, indicate strongly that other sanctions seemed appropriate given that plaintiffs failed to secure the evidence and apparently lost it. (Absent proof to the contrary, the court seems opposed to a finding of bad faith.)

Ok, we have the legal meaning of this case, but how does it break down for an average company who does not consult a lawyer until they are in trouble and it may be too late? All companies, big and small, should plan to be involved in a lawsuit at some point. Have good record keeping. Keep detailed human resources files. Keep ledgers and accounting records as long as is feasible, not for only as long as is statutorily required. In the day an age of computers, a business does not need large amounts of physical storage to keep records. Scan them into PDFs and store them electronically. The retrieval will be faster and it is certainly cheaper and less cumbersome than storing original documents. This is the safest route.

Even if a company does not keep everything, every company needs to consult a lawyer and draw up guidelines for when to trigger an in house litigation hold to preserve evidence for a potential lawsuit. The attorney and management should endeavor to identify possible litigation triggers that would necessitate preserving evidence.

Whether a company keeps everything, or waits until a trigger to begin preservation, they should consult a lawyer to develop the proper plan for their company.

Comments (6):

  1. I agree that a firm, regards if it is big or small, should take proactive measures and work with an attorny to develop a feasible litigation hold policy. However, I doubt that keeping everything is the best way to go. Yes, electronically stored information takes up a fraction of the space traditional paper file take up, but recoverying these files from the back up tapes will be very costly in the end. Especially if these tapes contain everything the company’s employees have ever produced. Document review will not only be more expensive, but also more time consuming and even more tedious.

  2. I’m inclined to agree with Jessica. It’s easier to preach over-inclusiveness than to practice it, mainly because it becomes cumbersome and expensive. I think Eric hit the nail on the head with the instruction to consult a lawyer – develop an internal policy and stick to it. Regarding the court’s refusal to dismiss this action absent a showing of bad faith: this seems to almost bar the sanction of dismissal. Any evidence of this nature would likely be exclusively in the offending party’s possession.

  3. The burden that retaining ALL documents would have on a small firm is large. It would likely require manpower and a salaried position just to file and maintain records that go back years. I agree with everyone that the internal policy may be the best move. Make sure it is implemented early and that all employees are made aware of it and how to use it when they are hired. You have to start somewhere.

  4. I tend to agree more with Eric – keeping everything really might be the safest route. It’s not that difficult to store information, and if your firm puts time and effort into the appropriate way to store information, it can be done in a cost and time efficient manner. There is definitely some truth to the saying “you’re better safe than sorry.” If nothing else, hopefully this will show firms of all sizes that this issue is something we need to be aware of.

  5. Although the cost of preserving a large amount of evidence may be costly for a law firm, I believe the benefits of doing so far outweigh the problems associated with NOT doing so. Beyond the financial penalty via sanctions for not properly preserving evidence, a law firm also has to be concerned about its reputation with the court and with its current and potential clients. In addition, litigation is burdensome enough-having to litigate not only the main issues but also side discovery issues is costly and time-consuming. Discovery issues such as these can be avoided easily by erring on the side of caution when preserving evidence and only benefits the firm and its clients in the long run.

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