New Federal Rules Address “Electronically-Stored Information”

On December 1, 2006, several changes to the Federal Rules of Civil Procedure went into effect which will impact litigation pending in federal court. Most significantly, several of the changes to the Rules address the preservation and production of “electronically stored information,” or “e-discovery,” which includes employee e-mails, individual computer hard drives, network drives, backup tapes, optical disks, and other electronic data; and the amendments penalize parties who delete—in compliance with company policy or otherwise—electronic data when a lawsuit can be reasonably anticipated.

Once a party reasonably anticipates litigation, under the new Rules and several recent federal court opinions, any routine document retention or destruction policy should be immediately suspended and steps should be taken to preserve relevant electronic documents. Together with legal counsel, parties must work to identify individual computers, servers, network drives, and backup tapes, among other things, that may contain relevant information. In an employment context, it will be important to search for personnel, payroll, and benefit records for the employee and any similarly-situated employees on the employee’s computer, on human resources computers, and on the computers of the employees’ supervisors and co-workers. The employee’s electronic work product, as well as electronic versions of employer handbooks and written workplace policies in effect during the employee’s time with the company, should also be preserved.

Further, in employment discrimination lawsuits, e-mail is frequently used to establish the existence of a hostile work environment. Therefore, e-mails sent to and from the employee, as well as e-mails sent between supervisors, human resources, and other employees will need to be maintained and searched for relevant information. In addition to searching company computers, employers will need to determine whether relevant information exists on their employees’ home computers, floppy disks, zip or thumbnail drives, handheld devices (including Palm Pilots/PDAs, Blackberries, and iPods), cell phones (including text messages), and digital cameras. Once relevant information is located, it should be copied or imaged for preservation and production if a lawsuit results. Computer files should not be accessed or opened except by an appropriate expert, so that important metadata relating to the creation and alteration of the file is not changed. Also under the amended Rules, parties are no longer able to print and then delete electronic data, as the metadata associated with the information would be lost.

In addition, under the amended Federal Rules, a party is only allowed to withhold the production of electronically stored information from sources that are not reasonably accessible due to undue burden or cost, subject to the court’s determination of whether the case justifies the production of the data.

Parties who dispose of electronically stored information out of “routine good faith operation” may be protected by the new Rule changes, but only where they put litigation holds in place when the litigation begins. Where steps are not taken to preserve electronically stored information, and especially where documents are intentionally deleted, federal courts have in the past allowed evidence of such destruction to be presented to the jury. The intentional destruction of evidence is known as “spoliation,” and where spoliation is established, the requesting party is typically entitled to an adverse inference instruction to the jury that the material would have been detrimental to the company. Less severe sanctions for negligent or unintentional destruction could include requiring the party at fault to bear the cost of restoring the electronic evidence, if possible, which could be costly.

In sum, it is important to begin preserving electronically stored information when there is any indication that a lawsuit may result, and consulting with legal counsel with questions about how best to accomplish this.