Document Retention Policies and Sanctions
The Modesto Business Law blog has a post up about the importance of well-drafted document retention policies for businesses. This issue is going to become even more prevalent and critical after the December 2006 revisions to the Federal Rules of Civil Procedure go into effect. Under new Rule 37, there is a type of "safe harbor" against spoliation sanctions for the routine, good faith loss of electronic evidence. Pending Rule 37(f) reads:
Electronically stored information. Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system.
The Advisory Committee Note clarifies that Rule 37(f) refers to evidence lost because of the operation of a computer system - files that are automatically overwritten without operator input, not necessarily files manually deleted once a month. The Committee Note also makes clear that, if a duty to preserve has arisen, sanctions still may be appropriate if the party does not put on a "litigation hold."
There is a lot of room for a trial court's discretion in pending Rule 37(f), but one principle that businesses should take note of is in the Committee Note:
The steps the party takes to design and implement an effective and appropriate litigation hold are important to determining whether the routine operation of the information system was in good faith.
Clearly, if a business wants to rely on the "safe harbor" aspects of the new Rule, some advanced planning is warranted.