In Solo v. United Parcel Services Co., No. 14-12719, 2017 U.S. Dist. LEXIS ______ (E.D. Mich. January 10, 2017) UPS successfully argued that a discovery request was excessively burdensome, using as support the fact that the company had established internal policies to archive information on to back up tapes after six months, with the business rationale being that the volume of information was so large that it was only maintained in a “live” format for that limited time period. UPS then outlined that collecting usable data from the back up tapes would require custom software, take six months, and cost around $120,000, and offered an alternative less costly mechanism for providing their opponents with information that would suit their needs.

The important message to businesses of all sizes is that having sound and rational data retention policies that are strictly and consistently followed can provide powerful evidence to support motions objecting to burdensome requests for collection and preservation of documents, under the new proportionality principles embedded in the late 2015 changes to the Federal rules. Without such internal policies and procedures, defenses are difficult to maintain against fishing expeditions that impose a cost burden on companies, resulting in warped case evaluations and early unwanted resolutions of what are often otherwise meritorious cases.

There are many factors to consider in establishing such policies, including costs and forms of archiving data, downsides of reducing immediate access to some data versus savings from archiving it, compliance with relevant regulations and laws, compliance with existing litigation holds, and much more. For more on the importance of litigation holds, click HERE.

However, given the potential runaway costs of complying with onerous discovery obligations, companies would be wise to spend the time and money necessary on the front end to put reasonable data management policies in place that will arm litigation counsel with evidence needed to support proportionality objections, potentially resulting in untold future savings.

The Importance of Establishing a Litigation Hold Release Policy

Any e-discovery counsel can mindlessly rattle off the standard criteria for when a litigation hold should be initiated – upon reasonable anticipation of litigation. Many articles and blogs have covered what that means, and the significant risks for not timely issuing a litigation hold.

However, the question of when a litigation hold should properly be released is not as well established. Litigants are eager to release litigation holds for all the same reasons they would prefer never to have to issue one – litigation holds are costly, burdensome to manage and maintain, and create unwelcome tension due to fears of violating the legal hold. (It is equally important to release a litigation hold when appropriate, as delaying releasing a hold can lead to future complications, but that could be the topic of a whole separate post.) The common sense initial thought is once a case that is the source for the litigation hold is “over” (settled, dismissed, tried to verdict, appeals exhausted, etc.) the hold can be released. While that may be true in many circumstances, the issue is more complex.

In order to handle the release of a litigation hold in a good faith way that will provide a reasonable position in Court, should the release ever be challenged, a company’s position on when to release a litigation hold should be clearly set forth as one part of a company’s overall written e-discovery policies. Having pre-established set criteria for the release of a hold, as with the initiation of a hold, shows good faith consistent application and helps avoid being susceptible to an accusation of arbitrary case by case manipulation.

This policy should be strictly adhered to in every case. While it is all too easy to disregard the policy as attention turns quickly away from a lawsuit as soon as it is resolved, inconsistent application puts the company at the same risk of being accused of making post-hoc decisions on whether and when to release a hold. The policy that is written should probably strike the balance between what can technically be justified (releasing a litigation hold the moment it is possible to do so) and being overly cautious and leaving a litigation hold in place beyond what is practical. However, erring on the side of caution and leaving some wiggle room so it can be argued to a Court, if ever necessary, that the company took a conservative approach arms litigation counsel with a powerful and persuasive starting position if the release of a hold is ever at issue.

The policy setting the criteria should take into account multiple factors to be considered as part of a decision matrix for each individual case, including:

  • Whether other similar claims have been or could be made (Under what circumstances can you truly feel justified in the position that another similar lawsuit is not likely to be filed? Does reasonable anticipation of litigation persist for some time period just because of the simple reality that one case was already filed?);
  • Whether dissimilar claims have been made but would implicate some of the same data;
  • Whether the issue could conceivably be litigated again (is the product still on the market, e.g.);
  • What the burden and cost is of maintaining the hold;
  • Whether the case has been completely resolved; and
  • What optics the company wants to create — if a hold is released immediately after a case is perceived as final, and then the worst case scenario occurs and a new case is filed, no doubt opposing counsel in that new case will accuse the releasing party of bad faith for having not maintained the hold for some reasonable minimum period of time.

Finally, it is just as important to audit the proper release of a litigation hold as it is to audit compliance with a litigation hold. If some custodians hold onto data that should be discarded, it can compromise the position that the data was no longer necessary to be retained.

As with all things in e-discovery, having a plan and staying true to it is critical to avoiding having a Court sense, rightly or wrongly, that something untoward has happened and having that color their view of the client or negatively impact an otherwise meritorious case.