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Practical Tips for an Effective
and Defensible Litigation Hold
Association of Corporate Counsel
February 5, 2014
When does it attach?
• “All circuits recognize the duty to preserve information
relevant to anticipated or existing litigation. This duty arises at
the point in time when litigation is reasonably anticipated
whether the organization is the initiator or the target of
litigation.” The Sedona Conf., Working Group On Electronic
Document Retention & Production.
• “The duty to preserve material evidence arises not only during
litigation but also extends to that period before litigation when
a party reasonably should know that the evidence may be
relevant to anticipated litigation.” Silvestri v. Gen. Motors
Corp. (4th Cir. 2001).
Duty to Preserve
Duty to Preserve What does “Anticipation of Litigation” really mean?
• “[W]hen a party has notice that the evidence is relevant to litigation or
… should have known that the evidence may be relevant to future
litigation.” Rimkus Consulting Group Inc. v. Cammarata (S.D. Tex.
2010).
• “[W]hatever hopes Samsung might have subjectively held for a license
or other non-suit resolution, [a comprehensive written summary of
claims by Apple] would certainly put a reasonably prudent actor on
notice that litigation was at least foreseeable, if not on the horizon.’”
Apple Inc. v. Samsung Electronics (N.D. Cal. 2012).
• Even if a party acted in bad faith to the extreme detriment of another
party in litigation but did so before a duty to preserve arose, there can
be no finding of spoliation and no sanction. Slep-Tone Entertainment v.
Granito, 2014 BL 4257 D. Ariz. (01/08/14).
Plaintiffs: “Reasonable anticipation of litigation arises when
[an organization] seriously contemplates initiating litigation,
or when it takes specific actions to commence litigation.”
Spanish Peaks Lodge, LLC v. Keybank Nat’l Ass’n (W.D.
Penn. 2012).
• “Seeking advice of counsel, sending a cease and desist
letter or taking specific steps to commence litigation may
trigger the duty to preserve.” Id.
When Does Duty Arise?
Defendants: “Reasonable anticipation of litigation arises when
[an organization] is on notice of a credible probability that it will
become involved in litigation.” Spanish Peaks Lodge, LLC v.
Keybank Nat’l Ass’n (W.D. Penn. 2012).
• Defendants may reasonably anticipate litigation upon
“[r]eceipt of summons or complaint, issuance of a subpoena,
a formal notice that [the company] is the target of an
investigation or the filing of an EEOC charge.” Id.
When Does Duty Arise?
In some instances, the duty to preserve can
come within hours of the litigation-causing
event.
• “The report [issued 30 minutes after the accident]
noted that the accident caused extensive property
damage and resulted in a fatality…based on these
factors [the company] had institutional notice of the
likelihood of litigation within hours of the accident.”
Berrios v. Jevic Transportation, Inc. (R.I. Sup. Court
2013).
When Does Duty Arise?
Adopting and consistently following a policy or practice is one factor
that can demonstrate good faith.
•“The failure to adopt good preservation practices is one factor
in the determination of whether discovery sanctions should
issue.” Sekisui Am. Co. v. Hart (S.D. New York 2013).
•Though failure to timely institute a litigation hold does not
automatically constitute gross negligence, in this case plaintiff’s
failure to institute litigation hold for 15 months qualifies as gross
negligence. Id.
•Look to Local Rules and agreements with opposing counsel
where possible.
Demonstrating Good Faith
Who needs to receive the notice?
• The duty to preserve evidence includes an obligation to identify, locate and
maintain information that is relevant to specific predictable and identifiable
litigation. Key custodian interviews are critical.
• It is generally recognized that when a company has a document retention
policy it is obligated to suspend that policy and implement a litigation hold to
ensure the preservation of relevant documents after the preservation duty
has been triggered.
• Must include more than just the key player. Goodman v. Praxair Services,
Inc. (D. Md. 2009).
• At a minimum should include all individuals identified in Rule 26
Disclosures. Surowiec v. Capital Title Agency, Inc. (D. Ariz. 2011).
Scope of a Proper Legal Hold
• Defendants contention that this contract dispute involves
little more than the terms of the contract and the conduct
of the Plaintiffs’ employee and thus any emails after the
contract was signed – fails. “In a contract dispute, the
conduct of the parties subsequent to a contract’s
execution is relevant to the interpretation of terms . . . ”
Dataflow, Inc. v. Peerless Ins. Co., (N.D.N.Y. 2014).
• Hospital did not spoilate emergency room video tapes
when it did not know the tapes would be relevant to
claims brought by a patient. McCann v. Kennedy Univ.
Hospital, Inc., (D.N.J. 2014).
What Data Should Be
Identified and Preserved?
Preservation vs. Collection vs. Review
REVIEW PRESERVE COLLECT
Is an oral litigation hold sufficient?
• “The Court has serious concerns with Scentsy’s
retention policy and litigation hold process. Generally
not deleting documents and orally requesting certain
employees to preserve relevant documents
concurrently with filing a lawsuit is completely
inadequate . . . to such an extent that it borders on
recklessness.” Scentsy, Inc. v. B.R. Chase, LLC (D.
Idaho 2012).
Notice of Legal Hold
• Be aware of potential system changes – any changes in the scope
of the hold or any system changes need to be documented in
writing.
• Prepare for departing employees – failure to preserve departing
employees’ computers could result in an adverse jury instruction.
Hallmark Cards, Inc. v. Monitor Clipper Partners, LLC (W.D. Missouri
2012).
• “A party’s discovery obligations do not end with the implementation
of a ‘litigation hold’…counsel must oversee compliance with the
litigation hold, monitoring the party’s efforts to retain and produce
the relevant documents…counsel must make certain that all sources
of potentially relevant information are identified and placed ‘on
hold’.” John B. v. Goetz (M.D. Tenn. 2010).
Maintaining the Legal Hold
• FRCP 30(b)(6) requires an organization to designate one
or more persons to testify on its behalf regarding specific
topics identified by the opposing party.
• In the E-Discovery context, purpose is to determine (1)
existence of ESI, (2) location of ESI, (3) preservation of
ESI, and (4) extent to which ESI has been produced in
discovery.
• Testimony by corporate representative can be used
identify additional discovery requests or to support a
motion to compel, motion for sanctions, or request for a
spoliation instruction.
E-Discovery 30(b)(6)
Deposition
• Identify potential corporate witnesses when the litigation hold is
implemented.
• Don’t be afraid to designate an IT employee as the corporate
witness, but educate them on the issues in the case.
• The witness isn’t required to have personal knowledge.
• The witness must be prepared to testify based on the information
reasonably available to the organization.
• In the eyes of the Court, presenting an unprepared witness is
essentially a failure to appear at the deposition.
• Taking the time to designate an appropriate witness oftentimes will
prevent costly discovery disputes and, potentially, sanctions.
Tips to Prepare for An
E-Discovery 30(b)(6) Deposition
A request for a corporate deposition regarding a party’s
efforts to respond to written discovery “necessarily and
almost exclusively concerns the ‘mental impressions
developed in anticipation of litigation or for trial by or for a
party or a party’s representatives’ and consists of the
‘attorney’s representatives’ mental impressions, opinions,
conclusions or legal theories’ subject to protection as work
product and core work product.” In re Exxon, (Tex. App.—
Beaumont 2006).
Tips to Prepare for An
E-Discovery 30(b)(6) Deposition
• The historic presumption is that each party bears its own litigation costs in the
absence of a statute or contractual agreement providing otherwise.
• Both FRCP and TRCP give a court discretion to order cost shifting or
condition discovery on the requesting party’s payment of cost.
• Zublake decisions require a preliminary finding of “inaccessible data”. While
some courts continue to apply these factors, others have recognized that
“inaccessible data” is not a mandatory precursor to cost shifting.
• In cases of asymmetrical discovery, inaccessibility may not be required for
cost shifting. Boeyanames v. LA Fitness International, LLC, (E.D. Pa. 2012).
• Without addressing accessibility, the court ordered cost shifting for a third ESI
search because of the plaintiffs’ failure to accurately communicate search
terms to the defendants in the two prior ESI searches. Surplus Source Grp.,
LLC v. Mid Am. Engine, Inc., (E.D. Tex. Apr. 8, 2009).
• Texas state courts emphasize the “least intrusive means” must be employed
to collect and review ESI. In re Pinnacle Eng’g, Inc., (Tex. App.—Houston
2013).
The Progression of Cost Shifting
Proposed Amendment to Rule 37:
• If a party fails to preserve information, the potential
remedies are limited to permitting additional discovery,
ordering curative measures, or paying the reasonable
expenses caused by the failure to preserve.
• The more severe sanctions, such as adverse inferences,
would apply only where failure to preserve (i) caused
substantial prejudice and were willful or in bad faith, or
(ii) irreparably deprived a party of any meaningful
opportunity to present or defend claims in the litigation.
Changes Under FRCP
Do it early
Preservation Production
Interview key custodians and IT employees
Watch your Rule 26(a) disclosures
Document process with formal written notice
Anticipate a 30(b)(6) deposition on E-Discovery issues
Agreement on scope of preservation
Be aware of cost-shifting particularly in cases with asymmetrical
discovery
Key Takeaways
Contact Information
Julia Mann – 210-978-7761
Matt Swantner – 210-978-7782
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JULIA W. MANN
• Partner and Chair of the Litigation Section of the San Antonio Office
• Litigation, Electronic Discovery
• B.A., The University of Texas at Austin
• J.D., St. Mary's University School of Law
Julia W. Mann represents a wide range of clients in civil litigation, arbitration and appeals. Her primary focus is on commercial litigation matters, including contractual disputes, professional liability claims, shareholder disputes, and business torts such as fraud, negligent misrepresentation, breach of fiduciary duty, tortious interference, and creditors’ rights. Ms. Mann’s practice involves handling cases in federal and state trial courts, the Texas Court of Appeals, Texas Supreme Court, and the Fifth Circuit Court of Appeals, as well as alternative dispute resolution forums such as AAA and NASD arbitrations and mediations.
Admissions to Practice
Ms. Mann is admitted to practice by the Supreme Court of Texas and the Supreme Court of Oklahoma as well as in the United States District Courts for the Northern, Southern, Eastern, and Western Districts of Texas; the United States District Court for the District of Colorado; the United States Court of Appeals for the Fifth Circuit; and the United States Supreme Court.
Representative Published Opinions
• In re Helena Chemical Co., 286 S.W.3d 492 (Tex. App., 2009) – successful petition for writ of mandamus as related to trial court denial of motion to strike plea in intervention in toxic tort action.
• In re SI Restructuring, Inc., 532 F.3d 355 (5th. Cir., 2008) & In re SI Restructuring, Inc., 542 F.3d 131 (5th. Cir., 2008) – successfully overturning order of bankruptcy court subordinating debts of Schlotzsky’s Inc. to officers, directors and largest shareholders of the company prior to bankruptcy including disgorgement of attorney’s fees to provide fund for client’s secured claims.
• In re Kenwood Communications, No. 04-02-00377-CV (Tex. App. – San Antonio, 2003, pet. denied) – successfully compiling enforcement of arbitration agreement.
• Elias Diaz Vega v. Advance Auto Parts, Inc. et al., Civil Action No. SA-03-CA-D558-FB; In the United States District Court for the Western District of Texas, San Antonio Division – summary judgment on in favor of employer client on age and race discrimination claim.
JULIA W. MANN
9083392v.3
• In re Reliant Surgical, L.P., No. 04-06-00065-CV (TX 2/22/2006) (TX, 2006) – upholding order of trial court granting motion to compel arbitration of claims.
• Valores Corporativos, S.A. de C.V. v. McLane Co., Inc., 945 S.W.2d 160 (Tex.App.-San Antonio, 1997) –representation of McLane Co., Inc. and Wal-Mart Stores, Inc. in business dispute involving expansion of business in Mexico.
• Kaepa v. Achilles Corporation, 76 F.3d 624 (5th Cir. 1996); 83 F.3d 421 (5th Cir. 1996), reh. denied; 519 U.S. 821, 117 S.Ct. 77), writ denied; 216 F.3d 1080 (5th Cir. 2000), aff’d. - preventing Japanese corporation from filing similar suit in Tokyo, Japan.
MEMBERSHIPS
Ms. Mann is a Fellow of the Texas Bar Foundation. She is also a member of the American Bar Association, the San Antonio Bar Association, the Bexar County Women’s Bar Association, where she serves on the Board of Directors, the Federal Bar Association, Fifth Circuit Bar Association, and the William S. Sessions American Inns of Court.
In 2010, Ms. Mann was elected to the Board of Directors of Bexar County Women’s Bar Association. She was also accepted to Leadership San Antonio Class 2011.
AWARDS
Ms. Mann was named a “Super Lawyer” by Thomson Reuters (2012-2013). She was also featured in the San
Antonio Business Journal’s “40 under Forty” (2008) list, included in their 2012 and 2013 “Who’s Who in Energy”
list, and selected for their 2013 “Outstanding Lawyers” list. She was named a San Antonio “Best Lawyer” by S.A.
Scene (2009, 2012 - 2013).
PUBLICATIONS & SPEAKING ENGAGEMENTS
Ms. Mann’s publications and speaking engagements include the following:
• Author & Speaker, “Practical Tips for an Effective Litigation Hold” • Author & Speaker, “The Decision Tree Method of Litigation Risk Analysis,” Legal Assistant University
(2003) • Co-author, “Franchise Law,” 56 SMU Law Review 1753 (2003)
• Co-author, “Franchise Law,” 55 SMU Law Review 1057 (2002) • Co-author, “Preserving and Protecting Privileges and Immunities Under the Federal Rules,” Southern
Methodist University School of Law, Federal Civil Practice Seminar (1995) • Author, “Congressional Reform: Can Term Limitations Close the Door on Political Careerism,” 24 St.
Mary’s Law Journal 1361 (1993)
MATTHEW J. SWANTNER
Associate
Litigation
B.B.A., University of Texas at Austin
J.D., University of Texas School of Law
Matthew J. Swantner is an associate in the Litigation section of Jackson Walker. His practice focuses
on commercial litigation including contract disputes, business torts, creditor’s rights, collection
matters, oil and gas disputes, mineral and construction liens, and bankruptcy matters throughout
Texas and New Mexico. Mr. Swantner also has extensive experience in post-judgment remedies such
as issuing writs of execution and writs of garnishment, abstracting judgments, post-judgment
discovery, asset searches, and filing construction and mineral liens.
During law school, Mr. Swantner interned for the Honorable Robert Pitman, United States.
REPRESENTATIVE MATTERS
Defended bank in breach of contract and fraud action brought by borrower to prevent
foreclosure of large commercial property. Obtained summary judgment in favor of bank on
all borrower’s claims, foreclosed on property, obtained more than $2,500,000 deficiency
judgment against borrower, and collected more than $200,000 from borrower by
garnishing accounts identified in post-judgment discovery.
Represented agricultural chemical company in more than 40 collection lawsuits throughout
Texas and New Mexico. Lawsuits typically resulted in summary judgment or settlement and
the entry of an agreed judgment.
Represented joint operator in lawsuit brought by landowners to terminate mineral lease.
Lawsuit resulted in favorable renegotiation of lease.
Represented well servicer in multiple lawsuits to collect reimbursement of amounts owed for
goods and services provided.
Represented numerous property owners in lawsuits brought to terminate mineral leases for
non-production, non-operations, or breach of mineral leases.
MATTHEW J. SWANTNER
Represented subcontractor in lawsuit filed to foreclose mineral lien.
Defended numerous banks and other financial institutions in account disputes involving
claims of breach of contract, fraud, violations of the Fair Debt Collection Practices Act, and
violations of the Deceptive Trade Practices Act.
Represented equipment manufacturer to collect balance owed by customer. Negotiated
settlement agreement and agreed judgment that provided for payment of all amounts owed
and attorneys’ fees.
Represented construction subcontractor in lawsuit to collect more than $500,000 owed for
services rendered. Lawsuit resulted in favorable settlement to subcontractor.
Represented owner in lawsuit against general contractor to recover overpayment of
construction costs. Lawsuit resulted in favorable settlement and entry of agreed judgment
that provided for recovery of attorneys’ fees and costs.
Represented numerous health care providers in lawsuits brought to recover reimbursement
for services provided to patients.
MEMBERSHIPS
Mr. Swantner was recently accepted to the North Chamber of Commerce of San Antonio’s
Leadership Lab Class of 2012. He also participates annually in the Bexar County Community
Justice Program.
COMMUNITY INVOLVEMENT
Mr. Swantner also serves on the board of directors for Project Mend, which provides donated and
refurbished medical equipment to low income persons with disabilities.
ADMITTED
New Mexico
Texas
United States District Court for the Southern, Eastern, and Western Districts of Texas
United States District Court for the District of New Mexico
MATTHEW J. SWANTNER
EDUCATION
Mr. Swantner received his B.B.A. degree in Finance from The University of Texas at Austin and his
J.D. degree, with honors, from The University of Texas School of Law.
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