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Don't Delete That!

Why Your Company Should Have A Records Retention Policy

By Matthew Bierlein

The recent amendments to the Federal Rules of Civil Procedure addressing electronic discovery highlight the need for companies to establish sound document and data retention policies. As many states, including Ohio, move toward amending their own rules of civil procedure in similar fashion, it is important that companies understand their obligations regarding the preservation, collection and production of electronically stored information.

Why does this issue matter to your company? Courts have shown a willingness to impose monetary sanctions, draw adverse inferences, or even grant default judgment against parties based on the spoliation of electronic evidence; and these rulings can prove costly. A federal court in Washington, D.C. levied a $2.75 million sanction against eleven corporate officials who did not abide by a court preservation order relating to internal document retention. In a New York federal employment discrimination lawsuit, the court granted the plaintiff employee an adverse inference – meaning jurors were to infer a negative impact – for the company’s failure to preserve e-mail backup tapes, leading to a jury verdict of over $29 million. A Washington state court granted a products liability plaintiff a default judgment based upon a failure of the defendant to produce electronic backup tapes, resulting in a damages award of over $8 million.

As the federal rules now more formally address, a party to litigation or a prospective dispute has a duty to preserve all potentially relevant information, including electronic information, regarding the dispute. Electronically stored information encompasses all information stored in electronic medium, such as word-processing documents, e-mail, photographs and spreadsheets. Under the federal rules, parties must discuss document preservation and determine a discovery plan soon after the inception of a lawsuit. They must further disclose all potential sources of relevant information, including inaccessible information or information not intended to be searched or produced.

To ensure compliance and mitigate risk, your company should consider a records retention policy with a litigation suspension plan.

A records retention policy should clearly apply to both physical and electronic information. It should limit how long particular information is kept and set forth procedures for destruction of both paper and electronic documents. A records retention policy should include a litigation suspension plan to ensure that document destruction ceases once a duty to preserve comes into effect. A company should make all employees aware of their obligations under the records retention policy and should periodically perform audits to ensure the records retention policy is being followed.

We write and review records retention policies, in addition to offering an array of business and employer services to our corporate clients. Contact Luper Neidenthal & Logan at (614) 221-7663 or inquiries@lnlattorneys.com.