Avoiding Document Destruction Claims

June 2, 2003

Question: I'm the human resources manager for a local company. Shortly after we fired an employee, the employee's first-line supervisor received a letter from the employee's attorney advising the supervisor to save any documents regarding the terminated employee. Why would an attorney send this kind of letter and what, if anything, do we need to do in response?

Answer:  Be afraid. Be very afraid. The employee's lawyer is laying the groundwork for a document destruction case. How and why are they doing this? Read on.

Document destruction-not exactly the most earth shattering topic but one, thanks to the Enron document destruction debacle, that has risen to the forefront for employers nationwide. Many business people, having read or watched the countless news stories detailing Enron's massive document destruction campaign, wonder what their companies can and should do to avoid befalling a similar fate, especially in view of the fact that document shredding has become an ordinary and customary business practice in today's paper intensive world. Plaintiffs’ lawyers, on the other hand, wonder how they can use a company's document destruction to their clients' advantage.

For Plaintiffs’ lawyers, the answer lies in an evidentiary doctrine known as "spoliation," which requires jurors draw an adverse inference from a party's destruction of relevant documents. One of the key requirements a plaintiff must prove to establish spoliation is to show the employer knew, or should have known, litigation was forthcoming at the time the employer destroyed the documents in question. This knowledge element has traditionally been difficult for employees to prove. Consequently, this is why plaintiff attorneys now send letters such as the one you have inquired about.

This letter establishes the knowledge element by putting the employer on notice of: (1) the lawyer's representation of the terminated employee; (2) the potential for future litigation; and (3) the company's obligation to safeguard relevant documents concerning the terminated employee. If the employer fails to do so, the employee's attorney will be able to use this letter to obtain a spoliation instruction from the Court. The Court will, in this instruction, inform the jury that they should conclude the employer knew a lawsuit was likely at the time they destroyed or discarded missing documents and that the company intentionally destroyed the evidence in question because it was damaging to the employer's case.

Letters such as the one you inquired about are increasingly being used by plaintiffs' attorneys to lay the groundwork for document destruction arguments and corresponding spoliation instructions. This is, in all likelihood, the reason why your supervisor received the letter he/she did. In this regard, you should assume this letter was deliberately sent to the first-line supervisor rather than the Human Resources Department in the hope the supervisor would not understand the purpose or significance of the letter and, consequently, fail to appropriately respond. Because of the potential for intentionally misdirected communications such as this, employers must properly train all supervisors and managers to immediately notify Human Resources of any communications received from an employee's attorney.

The last portion of your inquiry asks whether you should do anything in response to the attorney's letter. The answer is an unequivocal yes. First, you should immediately provide your attorney with a copy of the letter. Second, you should, with your lawyer's assistance, immediately instruct all company personnel to safeguard documents, as well as electronic communications, regarding the employee in question. You should also personally take custody of any documents that may, through inadvertent means, be subject to loss or destruction because of office moves, personnel changes, etc. Finally, you should, again, in conjunction with your lawyer, request that the employee's attorney specifically identify any documents or electronic communications they are especially concerned about. While the employee's attorney is not required to disclose this information, their failure or refusal to do so will go a long way in preventing the employee from obtaining a spoliation instruction if documents are inadvertently destroyed or discarded.

While the foregoing suggestions concern responses to employee-specific inquiries, there are additional preventive steps you can take to minimize your company's exposure for improper document destruction. First and foremost, you should ensure your company has a formal, written record retention policy. This policy can, in many cases, insulate an employer from liability for improper document destruction if the company can show it had a standard retention and destruction policy and that the requested documents were destroyed in conformance with that policy. Absent such a policy, however, your company can readily be found guilty of improperly or unlawfully discarding evidence under the evidentiary doctrine of spoliation, discussed above.

What is a record retention policy? This policy identifies the custodian authorized to approve and perform the destruction and defines the type of records or files to be maintained, as well as the maintenance period, and destruction methods and procedures. It, likewise, provides an internal complaint procedure by which employees can report threatened or actual violations of the company's document destruction policy. Your company should, in conjunction with its policy, maintain a centralized log or schedule showing the types or categories of documents destroyed, the basis for destruction, destruction dates, and the destruction custodian. It is imperative that someone at a fairly high level within your organization be designated to monitor and enforce compliance with the company's record retention policy. It is equally important that this custodian work closely with in-house or outside counsel to ensure documents, as well as electronic media such as e-mail, relevant to a potential event or incident are not inadvertently destroyed in the normal course of business.

Document destruction is a serious matter laden with dangerous traps for the unwary businessperson. Training is the key to avoiding those traps. All company personnel, regardless of their position, should receive annual training on the company's record retention policy and procedure and be instructed they may only discard or destroy data or documents in compliance with those directives. Policy training can go a long way in minimizing your company's potential exposure for document destruction.

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