Craig Ball, a top-shelf e-discovery thought leader, recently wrote a blog post asking “Should a Legal Hold ‘Waiver’ Be Secured from Departing Employees?” As explained below, the answer is no.
But first for background purposes, a party – an individual or business entity – has an obligation to preserve information, in any format, e.g., documents, emails, and other digital information, that relate to anticipated or ongoing litigation. The “legal hold” is usually the first tool for meeting this obligation.
Against this backdrop, Mr. Ball proposed the following as a proposed “legal hold” waiver:
I do not contemplate making a claim or bringing a lawsuit against XYZ Corporation arising from my termination or other matters relating to my employment. Accordingly, I have no expectation that XYZ Corporation will preserve information in anticipation of a claim or litigation by me.
The genesis for Mr. Ball’s legal hold waiver was a recent case, NVE v. Palmeroni, in which a New Jersey District court awarded monetary sanctions and an adverse jury instruction against a former employer who had sued its former employee for claims involving breach of fiduciary duty. For a great analysis of this e-discovery case see Mark Sidoti’s blog post discussing the case.
Why a Litigation Hold Waiver is not the Right Tool for Employers
While I agree that employers should and can do more with respect to limiting their risks when it comes to e-discovery spoliation claims, I respectfully disagree with Mr. Ball’s proposal that employers should obtain litigation hold waivers from departing employees. A few reasons to consider:
- First, NVE was not a typical employment discrimination claim because the employer initiated the litigation. It is reasonable to expect that a party – whether an individual or business – initiating litigation should have their preservation house in order and this preservation obligation is going to arise long before the complaint is filed.
- Second, in concluding that sanctions were appropriate, the court framed the company’s e-discovery preservation obligations essentially as a rudderless wreck. From here, it was easy for the court to sift through the wreckage to come up with the following points in support of its decision to sanction the employer: (i) NVE failed to institute the required litigation holds; (ii) Legal counsel failed to properly oversee the discovery process (a non-lawyer made critical litigation decisions); and (iii) NVE was unable to clearly articulate the steps it took to preserve, search and produce the requested discovery. Under these circumstances, a litigation hold waiver is unlikely to insulate any party against e-discovery sanctions.
- Third, employment terminations are often emotionally charged events. Also, discharged employees often do not appreciate the difference between a termination – even an “unfair” termination – and a termination arising out of unlawful discrimination. The two simply are not the same. So mixing the emotion involved in a firing and a lack of experience or understanding of the legal nuances inherent in employment discrimination and then asking for written confirmation that the person won’t sue is often going to be a recipe for disaster.
Alternative to a Legal Hold Waiver – Controlling Your Destiny
Jack Welch once said, “Control your own destiny or someone else will.” Incorporating a litigation hold waiver into the termination process, however, allows a terminated employee to control – at least in part – the employer’s e-discovery preservation response. But this risk is unnecessary if an employer proactively manages the situation by investigating the circumstances and making informed decisions from the outset. In this regard, a few points to focus on are as follows:
- Implement and adequately oversee a preservation program;
- The preservation program should include informed individuals, including information technology professionals, along with managers and employees likely to have first hand knowledge about the terminated employee;
- Experienced legal counsel will also need to be a part of the preservation program in order to make material decisions regarding preservation issues. As the NVE Court demonstrated, failing to use legal counsel to make such decisions is a major consideration in awarding sanctions;
- If it is a “close call,” employers should err on the side of caution and take appropriate steps to preserve information likely to relate to future litigation. This may include making a forensic copy of the discharged employee’s hard drive, preserving the terminated employee’s email mailbox, and saving server logs, or any other “digital fingerprints” that may relate to prospective litigation.
The NVE case certainly underscores the need for properly addressing e-discovery preservation obligations and the severe, adverse consequences for failing to do so. But this case should motivate employers to refocus on their e-discovery obligations rather than doubling down on a litigation hold waiver.