A Legal Hold Is Just a Letter, What Could Go Wrong? – Hold On Series, Part 1

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A multi-part series on achieving effective legal holds, including relevant case law, content to include, processes to employ, best practices to follow, available tools to leverage, and more

In January 2017, Volkswagen AG agreed to plead guilty to three criminal counts (including obstruction of justice), pay a criminal penalty of $2.8 billion, and pay civil settlements of $1.5 billion related to its use of “defeat devices” to fraudulently pass emissions tests for diesel vehicles.  Additionally, six executives and employees were individually indicted as part of the conspiracy, and an in-house attorney was named “as an unindicted co-conspirator.”

What does all this have to do with legal holds?  A mishandled legal or litigation hold process for the matter resulted in the deliberate destruction of relevant records by “at least 40 employees” and criminal charges against the company.

Prior to the official hold being put in place, an internal attorney communicated with custodians who would later be subject to that hold.  In those communications, the attorney tipped them off about the coming hold, encouraged them to check what they had, and discouraged them from saving any new harmful materials to the network.  Many employees understood this to be a request for them to purge such materials before the hold was put in place, and they did so.  These facts then formed the basis of the obstruction of justice charge against the company.

Litigation Holds & Spoliation

“What You’re Doing Is the Opposite of Help”

Beyond the dramatic, recent example provided by the Volkswagen case, holds remain a common source of issues for litigants, particularly with regard to the spoliation that can follow an ineffective or nonexistent hold and the question of whether reasonable efforts to preserve were taken.  Other recent examples include:

  • In Alarm Fin. Enters., L.P. v. Alarm Protection Tech., LLC (D. Alaska, Dec. 6, 2016), a party failed to cover relevant recordings in its litigation hold, which factored negatively into the FRCP 37(e) spoliation analysis of whether reasonable steps were taken
  • In McQueen v. Aramark Corp. (D. Utah, Nov. 29, 2016), a party failed to notify all necessary individuals of the relevant preservation instructions, which factored negatively into the FRCP 37(e) spoliation analysis of whether reasonable steps were taken
  • In Matthew Enterprise, Inc. v. Chrysler Group, LLC (N.D. Cal., May 23, 2016), a party failed to notify an email vendor about a hold requiring suspension of auto-deletion, which factored negatively into the FRCP 37(e) spoliation analysis of whether reasonable steps were taken
  • In Bruner v. Am. Honda Motor Co. (S.D. Ala., May 12, 2016), a party failed to implement a litigation hold at all, claiming there were no relevant materials, which led the court to grant a motion to compel the implementation of a hold and other remedial discovery steps

From not covering the right materials, to not covering the right people, to not notifying the right third-party service providers, to not rolling the hold out properly – or at all, it’s clear that holds remain a minefield for litigants.

Legal Data Preservation

“Hold On, I’m Coming”

It’s true that “legal holds do not preserve data” themselves, but they are the critical first step in the preservation process, ensuring that materials survive in situ long enough for you and your team to go get them.  You are literally saying to everyone – just as Sam & Dave sang in 1966: “Hold On, I’m Coming.”

But, as the examples above make clear, this is easier sung than done effectively.  Today’s challenges include diversifying sources and source types (e.g., mobile devices, social media), evolving custodian behavior (e.g., personal cloud storage, messaging apps), and ever-increasing expectations (e.g., duties of competence extended to technology, new sources treated like old ones by judges).

This multi-Part series will provide you with information to help you meet those challenges and achieve effective, consistent, and well-documented litigation holds for your organization.  We will review the duty of preservation and its triggers, key case law on holds, required elements of an effective hold, processes and tools for hold issuance and tracking, and other issues.

Upcoming in this Series

In the next Part of this series, What Must You Preserve, and When?, we will review the duty to preserve and the triggers to that duty.

About the Author

Matthew Verga

Director of Education

Matthew Verga is an electronic discovery expert proficient at leveraging his legal experience as an attorney, his technical knowledge as a practitioner, and his skills as a communicator to make complex eDiscovery topics accessible to diverse audiences. A fourteen-year industry veteran, Matthew has worked across every phase of the EDRM and at every level from the project trenches to enterprise program design. He leverages this background to produce engaging educational content to empower practitioners at all levels with knowledge they can use to improve their projects, their careers, and their organizations.

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