Determining the Scope of Legal Holds: Waypoints for Navigating the Road Ahead: When Preparing for Anticipated Litigation, a Company's Primary Obligation Is to Determine a Scope of What to Hold-And So Decide What Documents and Information It Must Preserve

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Since the December 2006 revised U.S. Federal Rules of Civil Procedure went into effect, organizations have been struggling more than ever to understand litigation, or legal, holds, and, in particular, the scope of what to put on hold. Under the revised rules, they must hold from destruction all relevant electronically stored information (ESI).

Case law has shown that the consequences for untimely destruction of ESI can be dire for any organization, irrespective of size. Unfortunately, neither case law nor legal scholars have provided much guidance on what could be considered relevant, so organizations are left to make that critical determination themselves. Regrettably, the question of scope boils down to a case-by-case determination. An overview of general principles to determine scope, followed by examples of cases dealing with the degree of scope, may provide organizations some guidance on how to proceed.

General Principles Determining Scope of Legal Holds

Once the duty to preserve documents for a litigation hold is triggered, an organization's primary obligation is to determine the scope of what to hold and so decide what documents and information it must preserve. Generally speaking, courts--such as in Mosaid v. Samsung, citing Scott v. IBM Corp--have held that the duty to preserve extends to what the organization "knows, or reasonably should know, will likely be requested in reasonably foreseeable litigation." Samsung v. Rambus said that simply instructing employees to "look for things to keep" or not to destroy relevant documents is insufficient. In other words, once a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy to ensure that relevant documents are preserved, as in In Re NTL, Inc. Securities Litigation, et al., citing Zubulake vs. UBS Warburg. In practice, determining the appropriate scope of the duty to preserve can be difficult, particularly with respect to electronic data.

Two main sources that outline principles for determining the scope of legal holds are Sedona Principles 2007: Best Practices Recommendations & Principles for Addressing Electronic Document Production and the U.S. Federal Rules of Civil Procedure.

The Sedona Principles

The Sedona Principles and related guidelines are the result of a think tank of attorneys, legal academicians, and judges looking for solutions to electronic discovery issues. Until the adoption of the 2006 revised rules, the Sedona Principles, along with the Zubulake case, were the most cited authorities on the issue.

Sedona Principle No. 8 attempts to address the types of electronic documents that must be preserved. It states:

The primary source of electronic data and documents for production should be active data and information purposely stored in a manner that anticipates future business use and permits efficient searching and retrieval. Resort to disaster recovery backup tapes and other sources of data and documents require the requesting party to demonstrate need and relevance that outweigh the cost, burden, and disruption of retrieving and processing the data from such sources.

Furthermore, under Sedona Principle No. 9, the panel states that "absent a showing of special need and relevance, a responding party should not be required to preserve, review, or produce deleted, shadowed, fragmented, or residual data or documents."

Finally, Sedona Principle No. 12 gives guidance regarding metadata, stating that "[u]nless it is material to resolving the dispute, there is no obligation to preserve and produce metadata absent agreement of the parties or order of the court." This principle may fly in the face of some case law, but at least it sets an approach for metadata. Even so, there is still ambiguity regarding the so-called materiality discussed in Principle No. 12.

At present, The Sedona Conference is circulating for public comment a document entitled The Sedona Conference Commentary on Legal Holds, August 2007, available at www. …