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January 2, 2019

Generally, a company or individual has the right to dispose of its own property, including documents, electronically stored information, or tangible things, without any liability or untoward consequences.  This is why most companies, and some individuals, are free to establish formal document retention and destruction policies, allowing the destruction of documents in the normal course at the conclusion of set time periods.  However, whether documents are purged under an established destruction policy or on an ad hoc basis, special attention must be given when there is any prospect of litigation as to which the document(s) to be destroyed might be relevant.

The situation can arise, for example, if an individual or an organization plans to initiate litigation, a potential defendant receives a demand letter, a company learns that a former employee is seriously contemplating a lawsuit, or if an event or other circumstance would reasonably put an organization or an individual on notice that a lawsuit is likely to be filed.  A litigant’s duty to preserve evidence arises at the moment that litigation, as a plaintiff or a defendant, is reasonably anticipated.

The failure to preserve relevant evidence can have disastrous consequences in any subsequent litigation.  Courts generally presume that the destroyed evidence would have been helpful to the other party and therefore impose sanctions in an effort to level the playing field.  Those sanctions can range from instructing the jury to draw an adverse inference against the party who destroyed the documents to suppressing evidence or imposing fines, attorneys’ fees and costs.  In egregious cases, courts have gone so far as to dismiss claims and defenses in their entirety. 

In one recent case, a company was sued for trademark infringement.  In producing documents during discovery, the company determined that personal, financial and other protected information had been printed on the reverse sides of documents containing otherwise responsive, non-privileged information.  Rather than redacting the information that was not discoverable, the company destroyed the documents entirely.  Once the other side found out, it asked the Court to impose sanctions, which the Court granted in the form of a default judgment.  This and other cases like it underscore how important it is for prospective litigants to insure that all potentially relevant information is preserved until the litigation is concluded.

What, then, must an individual or company do when litigation is reasonably foreseeable.  First and foremost, a party must suspend its routine document retention/destruction policy and put in place a “litigation hold” to ensure the preservation of relevant documents.  This applies to hard copy documents as well as electronically stored information.  The “litigation hold” should be disseminated to all persons who might have potentially relevant information and follow up monitoring should be conducted to insure continued compliance.  Determining when a preservation duty arises and the scope of what must be preserved are often grey issues with no clear answers.  A party facing these issues should consult with counsel, as early in the process as possible, for guidance through the process.

For additional information, contact Anthony R. Twardowski, Chairman of Zarwin, Baum’s Commercial Litigation Department, at 215-569-2800 or

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