Policies Governing an Employer’s Electronic Documents Can Be Critical
We’re all aware of the massive and growing volume of electronically stored documents and electronic communications (email, texts, voice mails, etc.). We know that keeping all of those files organized within our own computers, let alone the entire system of our company, can be very time consuming. As a result, the files tend to become disorganized over time. This can lead to inefficiency in retrieving information, but otherwise, you might be inclined to think “So what?”
The “So what” is this: Employers have a legal obligation to preserve and produce the electronic files. That obligation arises when employees or former employees request documents and when an employment dispute exists or can be anticipated. In both cases, an employer’s failure to produce the electronic files can result in hefty fines or worse.
If your electronic files are less than perfectly organized and if you are not confident that your policies governing electronic files are effective, don’t feel bad. The largest technology companies in the world can get it wrong. In a recent patent dispute between Apple and Samsung, Apple claimed that Samsung failed to preserve electronic files that were important in the litigation. See Apple, Inc. v. Samsung Elecs. Co., Case No. 11-CV-01846-LHK, United States District Court, Northern District of California (2012). Apple asked the judge to punish Samsung with monetary sanctions and an instruction to the jury that it should assume the destroyed files were damaging to Samsung’s case. The judge ruled that Samsung’s litigation hold notices were good. A litigation hold notice is an internal notice that advises employees to refrain from deleting or changing electronic files that are relevant to litigation or anticipated litigation. Samsung failed, however, to distribute the notices in a fashion sufficient to ensure that the litigation would be effective at preserving the files. According to the judge, Samsung also failed to effectively monitor the employees and electronic files after distributing the notices to ensure that the information was protected. As a result, the judge ruled that Samsung had violated it legal obligation and should be punished.
Samsung’s failures and the judge’s ruling could have been devastating to the case. Fortunately for Samsung, Apple also made a mistake. Apple issued a litigation hold notice, but failed to do it in a timely fashion. The judge ultimately decided to hold both companies to the same standard and to give the members of the jury an instruction that they should assume that the electronic files deleted by each company were adverse to that company. Because of the damage that such an instruction would have, Apple and Samsung came to an agreement that neither party would use the “adverse inference” instruction during the trial.
At first blush it would appear that it turned out to be a “So what.” It was not. The failed preservation policies most certainly cost Apple and Samsung tens of thousands of dollars (if not much more) in attorney fees and hundreds of hours of employee time (if not much more). Moreover, had only one company failed, the punishment in sanctions by the judge and the adverse decision by the jury would have been devastating.
Avoiding that kind of result is not overly difficult or time consuming. It does, however, require (1) an understanding of the legal obligations; (2) thoughtful initial planning to match operational efficiency and business needs to those obligations; (3) the drafting of clear policies; (4) employee education; and (5) effective monitoring.