Questions.jpgThis past week at Michigan’s 36th Annual Labor and Employment Law Symposium, I attended a break-out session where Peggy Mastroianni, Associate Legal Counsel for the the U.S. Equal Employment Opportunity Commission (EEOC) answered questions and discussed the final regulations to implement the ADA Amendments Act. The ADA Amendments go into effect on May 24, 2011. 

These Amendments were the result of the ADA Amendments Act of 2008 signed into law by President Bush and became effective on January 1, 2009. The final regulations apply to all private and state and local government employers with 15 or more employees, employment agencies, labor organizations (unions), and joint labor-management committees. 

A few highlights from Ms. Mastroianni’s informative presentation:

  • An area the EEOC will especially be focusing on is pursuing the inflexible application of organizational policies in lieu of engaging in an individualized assessments of an employee with a disability. She gave the recent example of Supervalue, Inc. American Drug Stores LLC, and Jewel Food Stores, Inc. agreeing to resolve the EEOC’s disability discrimination lawsuit arising out of the employer’s policy of terminating employees with disabilities at the end of medical leaves of absence without consideration of bringing them back to work with reasonable accommodations. Under the settlement the employer agreed to pay $3.2 million and engage in extensive remedial relief. A similar suit is pending in District Court in Grand Rapids (EEOC v. IPC Print Services, Inc., Case No. 10-cv-886) where the EEOC alleges that an employee sought to continue working part-time while he completed treatment for cancer, but was discharged when he exceeded the maximum hours of leave allowed under the employer’s policy.
  • The ADA Amendments without question make it easier for individuals to establish coverage. Congress overturned several U.S. Supreme Court decisions that had narrowly interpreted the definition of “disability,”  resulting in a denial of protection for many individuals with impairments such as cancer, diabetes, and epilepsy.   
  • As to impairments that are episodic or in remission, the ADA Amendments specifically provide that such an impairment would meet the definition of disability if it would substantially limit a major life activity when active. An example would be cancer that is in remission or a chronic impairment with symptoms or effects that are episodic such as epilepsy. Further, the relevant focus as to whether an episodic impairment is a disability is what that condition would be during a flare-up.  
  • With the single exception of eyeglasses or contacts, the determination of whether an impairment substantially limits a major life activity must be made without regard to the ameliorative effects of mitigating measures, such as medication or hearing aids (also overturning a prior U.S. Supreme Court Opinion). 

Free ADA Amendment Resources

The ADA Amendments will certainly bring new challenges and opportunities for employers and individuals. The following links to free ADA Amendment Act resources are a good starting point for responding to both:  

In addition to these resources, feel free to contact Jason Shinn of E-Business Counsel for additional insight from Ms. Mastroianni’s presentation or about the the ADA Amendments in general.  

Weak Link.jpgA recent Michigan Court of Appeals Opinion dealt a serious blow to the enforcement of noncompete agreements. The Opinion invalidated a common provision found in such agreements and it illustrates that courts will closely scrutinize noncompete agreements for any weak links that may limit or otherwise invalidate these agreements.  

Overview of Non-compete Agreements

Employers commonly require employees to enter into an agreement referred to as a covenant-not-to-compete, restrictive covenant, or simply a non-compete agreement as a means to protect the employer’s reasonable competitive interests.

In the employment setting, these agreements generally require an employee to agree not to pursue a similar profession or line of work in competition against the employer. It is also common for a restrictive covenant to contain provisions that kick in when an employee leaves employment. Examples include restrictions on soliciting customers, hiring current employees, and to not use or disclose certain information of the former employer. 

Michigan has a specific statute that covers the enforceability of non-compete agreements between employers and employees. (MCL §445.774a). Under this statute, one requirement for a non-compete agreement to be enforceable is that it must be “reasonable as to its duration, geographical area, and the type of employment or line of business.” 

Michigan Court Invalidates Non-compete Agreement Provision 

A common provision in non-compete agreements, however, was invalidated by a Michigan Court of Appeals panel. Specifically, in Teachout Sec Servs v Thomas (2010), the Court addressed the following provision: “Employee acknowledges that the covenants and agreements … are reasonable and required for the reasonable protection of Teachout and its respective relationships to customers …”

The Court concluded that this contractual stipulation as to the “reasonableness” of the contract terms between the employee and employer was not binding. The Court reached this decision despite acknowledging that under Michigan law it is presumed that contracts voluntarily entered into are legal, valid, and enforceable as written. Instead, the Court noted that non-compete agreements “are disfavored as restraints of commerce and are only enforceable to the extent they are reasonable.” (p. 6). The Court reasoned that it was, therefore, appropriate to bypass the presumption that contracts are enforceable as written and look behind the curtain to determine for itself if the agreement was actually reasonable. The Court concluded that it was not, and invalidated the non-compete agreement.  

The Take Away

The Teachout Court, however, concluded that this contractual acknowledgement of reasonableness did not prevent the Court from playing “Monday morning quarterback” to determine for itself if the agreement was actually reasonable. In so doing, the Court agreed with the trial court’s granting the defendant employees summary disposition, i.e., judgment in their favor.  

The Teachout decision addressed a number of important issues involving Michigan non-compete law, including the importance of strategy in pursuing these claims (I don’t think the former employer helped its cause by suing the individuals under the circumstances, but give me a call and I’ll share my two-cents on this point). But one key take-way for employers is that it should be assumed a non-compete agreement will be subject to “Monday morning quarterbacking” by a court to determine for itself if the agreement was actually reasonable.

It is, therefore, critical for employers to carefully review their non-compete agreements to make sure there are no weak links. In this regard, Michigan Courts will generally evaluate four aspects of the parties agreement to determine its enforceability:

  1. The employer’s reasonable competitive business interests;
  2. The duration of the limitation on competition;
  3. The geographic area in which the employee is restricted from competing; and
  4. The type of employment or line of business in which the employee is restricted from competing.

For employees, it is equally critical to understand what restrictions you are agreeing to by signing a non-compete agreement. Certainly in the current economic environment employees may have little choice but to accept a job with whatever conditions are attached to the position. But it is still important to understand the full-scope of those conditions and how they apply to your future career plans. 

Changes Ahead.jpgA panel of the Sixth Circuit Court of Appeals (the federal circuit that includes Michigan, Ohio, Kentucky, and Tennessee) recently gave employers the heads up that The Times They are a Changin,‘ or at least should be, when it comes to the standard for successfully making a claim under the Americans with Disabilities Act (ADA).

Specifically, in a recent case, plaintiff Susan Lewis lost her ADA claim at the trial level. On appeal, she argued that the trial court should have instructed the jury that her disability need only be a “motivating factor” for her termination rather than the “sole” factor for the adverse employment action.   

In support of her position, the ADA plainly prohibits discrimination “on the basis of” disability. 42 USC §12112(a). But the Sixth Circuit has previously determined this provision to mean that a plaintiff must prove that the plaintiff’s disability was the “sole reason” for the adverse employment action under a 1996 court opinion (Monette v. Elec. Data Sys. Corp). And based on Sixth Circuit procedure, this prior opinion must be followed, unless a certain rehearing (referred to as an “en banc” hearing) takes place.   

The Court of Appeals panel in Lewis, however,  questioned in multiple instances whether the “sole reason” standard should continue to be “good law” because that standard conflicts with the plain language of the statute. Further, eight other circuits (there are 13 circuits in total) apply a “motivating factor” test rather than the “sole reason” standard. Under the “motivating factor” standard a plaintiff is only required to prove his or her disability was a motivating factor of the adverse employment action rather than the “sole reason” in order to make a successful ADA claim.

A concurring opinion by Judge Griffin summed up the Court’s obvious disdain of the “sole reason” standard and signaled what should happen next:   

I write separately because our precedent on this issue of exceptional importance is misguided and contrary to the overwhelming authority of our sister circuits. Accordingly, the question appears appropriate for rehearing en banc. 

An en banc hearing would give the Sixth Circuit Court of Appeals the procedural opportunity to overrule the “sole reason” standard and follow the “super majority” of the remaining federal circuits.

The Take Away

Similar to Mr. Dylan’s famous observation that “You don’t need a weatherman to know which way the wind blows” (Subterranean Homesick Blues, on Bringing It All Back Home), you don’t need to be a legal scholar to know that the Sixth Circuit’s current “sole reason” standard will likely be overruled as soon as the procedural opportunity is presented. While employers may not like this change, Judge Griffin is absolutely correct in noting that the “sole reason” standard is contrary to the plain language of the statute and as further evidenced by the overwhelming majority of federal circuits to reject it in favor of the “motivating factor” standard. Under the “motivating factor” standard, ADA discrimination need not be the sole reason for the adverse employment decision. It must, however, actually play a role in the employer’s decision making process and have a determinative influence on the outcome.   

 

Virus Code.jpgA disgruntled former Gucci employee is reported to have caused in excess of $200,000 in damages to his former employer (as reported by Computer World) and now faces criminal charges.

Specifically, the New York District Attorney’s indictment alleges that Sam Chihlung Yin fraudulently obtained IT access after he was fired. From there, the indictment alleges that Mr. Yin used his inside-knowledge of the Gucci IT infrastructure to cause damage that included deleting data, shutting down servers and leaving Gucci with an estimated $200,000 cleanup bill.

What Employers Should Take Away from this Incident

For Gucci, this incident is an expensive reminder of why it is critical to have a termination checklist that should be followed once a decision has been made to terminate an employee, especially an IT employee. For employers looking to avoid Gucci’s mistake, a non-exhaustive checklist to consider includes the following:   

  1. Do not communicate the termination until the employer is prepared to escort the employee off the premises. It is generally better to pay the employee severance benefits with no expectation of receiving anything in return than to pay the price of a vindictive employee trashing or misappropriating company information.
  2. Coordinate with IT personnel to remove all access to the IT systems, e-mail, remote access, or any other means to access the employer’s network. Ideally this will be done while the employee is being terminated. Or, if the terminated employee is a member of IT, eliminate access after working hours and then complete the termination process the next working day. Companies could also consider covertly transferring the IT employee into an IT “sandbox” until all normal IT access can be severed.    
  3. Obtain custody of all employer owned PCs or laptops as well as all company owned external hard drives or other portable media before the employee is terminated. 
  4. Remove any rights the employee may have as administrator of the organization’s Web site and extranets. While you are at it, remove the employee’s page or profile, if any, from the organization’s Web site.
  5. Take an inventory of all of the files or projects on which the employee was working, and make sure that all such materials have been returned. This is particularly important for employees who work remotely.
  6. Even after going though a termination checklist, an employer should monitor its network to ensure that the former employee has not regained access and to make sure that company information has not been compromised. 
  7. Employers should also remind employees that assisting former employees to access the company’s IT systems is prohibited. It is important that current employees are aware of this policy, especially at or around the time of a termination.
  8. If there is concern that the former employee has taken steps to destroy or steal data, careful consideration should be given for retaining a forensic computer examiner to take necessary steps to properly preserve evidence of wrongdoing.

The Gucci incident illustrates that it only takes one lapse in security to severely destroy or cause significant damage. It is better to be vigilant than a statistic.

Police Line.jpgEmployers trying to reduce workplace violence involving guns are running into opposition from gun rights activists and state legislatures as noted in the April 4-10 Bloomberg Businessweek, A Bring Your Gun to Work Movement Builds.

Such legislation essentially forces employers to make a calculated choice between bad and worse: Violate gun laws or allow employees to have convenient gun access while at work. And such access may turn the routine day-to-day workplace dispute or an emotionally cataclysmic event like a termination into the next tragic headline.

In addition to an employer’s concern about threats to employee safety, increased access to firearms could also increase litigation risks and liability for failing to maintain a safe work place.     

Gun Legislation and Workplace Violence: The Numbers

According to the Bloomberg article, 37 bills restricting an employer’s ability to limit gun access on company property were introduced in 16 state legislatures in 2011. Some of these bills go so far as to allow employees to sue employers for even asking about possessing a firearm in a vehicle parked on company property. These restrictions are being proposed despite the following data:     

Workplaces that allowed guns were about five times more likely to experience a homicide as those where all guns were banned … The Bureau of Labor Statistics says workplace shooting caused 420 deaths in 2009 and 421 in 2008.  

Felix Nater CSC, of Nater Associates, Security Consulting, a seasoned workplace violence prevention expert, offers this observation: “The increased accessibility of firearms in any work environment creates potential liabilities and unmanageable risks that even the most conscientious business owner cannot protect against without a concerted management investment and commitment to workplace violence prevention education and accountability.” He further notes that “while guns don’t kill, access to guns in a potentially hostile work setting will place additional burdens on employers who value employee safety.”

Programs, however, do not guarantee success. Consider Boeing’s program for monitoring and predicting jet maintenance issues – an industry gold standard for decades – mistakenly assumed a certain model could make 60,000 flights before needing to undergo inspections to assess fuselage cracking. That was before the April 1, 2011 rupture mid-flight of the fuselage of Boeing’s jet, which had made about 40,000 flights. Boeing revised its 60,000 recommendation down to 30,000 because “engineering assumptions were not nearly as accurate ” as originally thought.

Michigan Gun Legislation

Michigan, like many other states, allows for the carrying of a concealed weapon (CCW). But under the current CCW law, employers are expressly permitted to regulate and prohibit employees from carrying a concealed firearm in the course of his or her employment. And many Michigan employers implement written policies prohibiting their employees from carrying a concealed weapon while in the workplace. Ideally, such policies are a part of a larger comprehensive program to prevent workplace violence. 

But in 2009, Michigan state legislation was introduced that would have undercut such policies by restricting or outright eliminating an employer’s ability to regulate the bringing of fire arms onto workplace parking lots. The proposed legislation was Senate Bill 792 (Republican Sponsored) Senate Bill 793 (Democratic Sponsored), House Bill 5302 (Republican Sponsored) and House Bill 5303 (Democratic Sponsored). The problem to be solved by this legislation, as identified in the legislative analysis accompanying SB 792: 

Workplace rules prohibiting guns should not trump the rights of individuals … [employers] should not be allowed to discriminate against law abiding workers exercising their constitutionally protected right to self defense.

Among the restrictions and obligations imposed by the preceding legislation:

  • Businesses, commercial enterprises, and places of employment would be required to allow individuals to transport or store a legally possessed firearm or ammunition in a locked, privately owned vehicle in those entities’ parking areas;
  • Employers would be prohibited from enacting policies to the contrary. And if an employer fired or disciplined an employee for transporting or storing a firearm as authorized in the proposed legislation, the employee could demand reinstatement and bring legal action if not reinstated; and
  • Employers, except in cases of gross negligence, would not be liable in a civil action for damages stemming from another person’s action involving firearms or ammunition stored in accordance with the legislation.

Points to Consider Regarding the Regulation of Gun Access in the Workplace 

The proposed legislation referenced above did not make it to a vote in the Michigan legislature. But the potential passing of this legislation and similar legislation that has already passed raises numerous issues for employers and employees. Regardless of your stance on gun rights and gun restrictions, three such issues to consider: 

  • First, the statutory limitations set forth in the proposed Michigan legislation for employer liability, i.e., requiring a showing of “gross negligence,” does not insulate employers from liability. Instead, it merely raises the bar for employer liability. And while that sounds great in theory, employers will still generally be required to expend resources in terms of time and legal expense to successfully show that the requisite showing of gross negligence to impose liability does not exist. And, such a showing will often come down to a fact intensive analysis by a judge and potentially a jury. Take for example under Michigan law, “gross negligence” generally requires a showing that conduct was so reckless as to demonstrate a substantial lack of concern for whether an injury results. Whether this issue can be resolved by way of a motion or require a trial will depend upon the facts. 
  • Second, consider an employee who references possessing a firearm in the middle of a workplace dispute, makes threats, veiled or overt, expresses approval for using violence to solve disputes, or experiences a major life change such as a divorce or financial problems. The restrictive langauge concerning employer inquiries as to gun possession and restrictions against taking adverse action for such possession add a layer of complexity for investigating workplace conduct that could lead to violence.    
  • Third, author Dan Roam said “Whoever best describes the problem is the one most likely to solve it.” The proposed Michigan legislation to limit restrictions on gun access at the workplace was introduced when Michigan, like most states, was bleeding jobs and as a country we were approaching double-digit unemployment (Michigan was already just over 14%). Certainly guns are not the real problem when it comes to violence – no amount of regulation will prevent someone determined to endanger life. But equally certain is that the dire economic conditions our state and country faced was a real problem businesses and individuals faced that needed to be fixed. So while having the opportunity for gainful employment is not a “constitutional right,” it is still worth asking whether purportedly protecting the constitutional right to bear arms over job creation was the “problem” legislators should have focused on. 

 

Fog & Uncertainty.jpgPart I of this post discussed the background of a party’s obligation to preserve email information in response to an employment litigation claim and when that obligation may arise. As explained in Part I, this discussion took place in the context of an employment discrimination claim against a prominent Detroit law firm Honigman Miller Schwartz and Cohn and one of its named attorneys. 

Cutting through the Fog in Determining Email Preservation Obligations 

With the background in Part I, there are a number of take-aways for employers when responding to employment discrimination claims.

  • First, it is important to understand what courts will and will not accept as excuses for deleting email. Courts routinely refuse to allow parties to avoid their obligations to preserve emails and related digital information simply by resorting to an argument to the effect of “it’s not our fault, our network automatically deletes email.” In fact, a 2005 case (DaimlerChrysler Motors v. Bill Davis Racing, Inc.) sanctions were ordered against the defendant because email was deleted due to an automatic deletion program. Further, while a court may be forgiving if the party failing to suspend its email deletion policy lacked the IT resources to address email preservation, it is a gamble that I would not want to take. This is especially true where, as is the case in the  Fitzhenry Litigation, the Defendant law firm actually represents having expertise in preserving email and conducting e-discovery. 
  • Second, it is critical to identify the trigger date for when your preservation obligations arise. In assessing this date, it is common for companies and their attorneys to overlook that the trigger may arise long before litigation is actually filed. For example, in the Fitzhenry litigation, as is true for most employment discrimination claims, there is often a pre-litigation trigger date due to charges being filed with the EEOC or Michigan Department of Civil Rights that predate the filing of a lawsuit.   
  • Third, once the trigger date arises, it is essential to take appropriate steps to communicate with key stakeholders and likely document custodians about their obligations to preserve information pertaining to the suit. Taking appropriate preservation obligations may allow your company to take advantage of certain “safe harbor” rules under both Federal and Michigan Court Rules that excuse a party’s failure to preserve relevant information under certain circumstances. Further, properly handling preservation efforts often avoid expensive retrieval efforts downstream. In this regard, the “ballpark” estimate for the Defendant law firm and attorney to retrieve deleted information was identified as “$20,000.”  
  • Fourth, it is important to have a process in place to monitor and confirm your litigation hold is effective and properly managed. Such a process is critical if attorneys choose to delegate preservation and production of discoverable information to the clients’ employees and document custodians. To illustrate why a process is critical, consider the testimony of the defendant attorney concerning what steps he took to preserve and produce information relevant to the Plaintiff’s employment discrimination claim:   

Q. Have you provided any documents yourself in response to our request for discovery? 

A.  Not that I remember.

Q.  Has anybody that you are aware of looked through your computer that you use for information or documents? Anything you’re personally aware of? 

A. Not that I remember. 

* * * 

Q. Has anybody asked you to go look for documents? 

A. I don’t believe so. 

Q. Okay. Have you asked anybody to look for documents? I presume the answer is no. 

A. Not that I recall.

  • Fifth, you do not want a key manager, decision-maker or, in this case, an established attorney to testify that they did nothing to look for responsive information and emails or that they were not told to make such a review. Such testimony creates the perception, which can quickly become reality to a judge or jury, that a party has failed to meet its discovery obligations. This failure also commonly results in judicial intervention in the form of an outside computer forensic specialist to review Defendants’ computer systems/email archives, which was requested by counsel for Ms. Fitzhenry. Having been on both sides of this situation, the prospect of an outsider rummaging through the digital drawers of your business organization is not a possibility you want to be facing.  

Conclusion

The bottom line is that properly addressing e-discovery is easier said than done. This is evidenced by a respected and sophisticated law firms with apparent e-discovery expertise having to respond to motions alleging that it failed to properly address e-mail preservation and manage its e-discovery obligations. Substantive knowledge and e-discovery experience is critical to properly, efficiently, and cost-effectively manage e-discovery challenges and opportunities. 

Employee Screening.jpgEmployers commonly ask if it is legally permissible to use a job applicant’s prior bankruptcy filing in making hiring decisions. A recent court opinion out of the Third Circuit (the federal circuit that covers Pennsylvania, Delaware, New Jersey) answers this question in favor of employers. But for employers in Michigan and outside of the jurisdiction of the Third Circuit, the answer is not so clear cut and there are also important limitations to using bankruptcy in hiring and firing decisions.

First for background purposes, under the Bankruptcy Code, 11 USC § 525(b), a private employer cannot “terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under … the Bankruptcy Act …”

The Third Circuit Court of Appeals, however, determined that despite the preceding statute, private employers may refuse to hire an applicant based upon a prior bankruptcy filing. Specifically, in Rea v. Federated Investors (3d Cir. Pa. 2010), the plaintiff, Dean Rea, appeared to have a job offer contingent upon a third-party background check. Rea, however, was later informed that the company refused to hire him because of his 2002 bankruptcy.

Takeaway for Employers

With respect to using an applicant’s prior bankruptcy filing, there are a number of legal and business decisions employers should consider:

  • First, under 11 U.S.C. § 525(b), employers cannot discharge a current employee “solely” because that employee filed for bankruptcy.
  • Second, the Rea decision is not binding on courts outside of the Third Circuit. Michigan employers are within the jurisdiction of the Sixth Circuit Court of Appeals and a review of the case law did not reveal any decisions addressing the issue of whether private employers may refuse to hire a job applicant who has previously filed for bankruptcy.
  • Third, it is important to consider that filing bankruptcy or related credit problems may be completely unrelated to an applicant’s decision making or integrity. For example, Katherine Shinn, a bankruptcy attorney explained that it is not uncommon for an individual to file for bankruptcy due to a catastrophic medical event, long term unemployment following a mass layoff, or other reasons unrelated to whether an individual is employable. In this regard, consider individual bankruptcy filings in the United States (both Chapter 7 and Chapter 13) increased from 797,783 in 2007 to 1,383,644 in 2009. This staggering increase certainly correlates to the equally significant job losses the U.S. experienced for that time-period.  
  • Fourth, and building upon the preceding, a default rule to exclude consideration of job applicants based solely upon a prior bankruptcy filing may not make business sense in the long run. Take for example that Abraham Lincoln, Walt Disney, and (the original Detroit import) Mr. Henry Ford all declared bankruptcy before achieving well-known success. No company would want to see in their rear-view mirror job applicants of this calibre passed up simply because of a rigidly applied bankruptcy exclusion rule.     

Certainly these are exceptional examples. But it can also be said that the increased bankruptcy filings have – in large part – occurred under exceptional circumstances. For these reasons, a more strategic course for employers is to continue to permissibly screen applicants to identify the best qualified candidates. As Steve Williams of Ecto HR explains “in conducting background checks for our clients we make it a point to give as a complete picture of a candidate as possible, including the circumstances of the bankruptcy filing.” With this information, Mr. Williams notes that “employers are then able to make informed decisions as to a prospective hire.” 

An important note about using third-party service providers to conduct background checks: Bankruptcy filings are often uncovered when an employer conducts a background check on a job applicant. For any employer using a third party service provider to obtain background reports on a job applicant, the Federal Fair Credit Reporting Act will come into play. This statute imposes a number of obligations on employers obtaining background reports (referred to as “consumer reports” under the statute). Such obligations include obtaining advance authorization from an applicant to conduct a background check and mailing an “adverse action” notice if a job applicant is rejected due, in whole or in part, to derogatory information contained in the background report. 

Failing to comply with this statute may expose the employer to civil and criminal liability in addition to punitive damages. It is, therefore, critical for employers to understand the requirements of this statute as well as their their third-party service providers actually conducting applicant background checks.  

Shooting Self in Foot.jpgA prominent Detroit law firm, Honigman Miller Schwartz and Cohn, was recently sued by a former executive assistant after she was discharged following an on-the-job injury and related employment discrimination claims.

For any employer, dealing with such a garden variety employment discrimination claim has risks and costs. But the suit against Honigman also provides a cautionary road map for employers about how these risks and costs may spiral out of control by failing to properly preserve emails. And as this two-part series explains, failing to properly implement a litigation hold can equate to shooting yourself in the foot and making any employer – even prominent law firms – look silly.  

Properly Implementing a Litigation Hold is the First Step in Properly Defending against Any Employment Discrimination Claim

Brian Baxter of Law.com provides a thorough explanation of the factual background of the employment discrimination lawsuit against the Honigman law firm (including the sordid details comparing the law firm environment to that of Mad Men).

But for purposes of this post, it is important to note that after the suit was filed the Detroit-based law firm and its firm’s vice-chair and attorney, Alan Schwartz, were accused of withholding or failing to preserve important discovery materials, including e-mails. This failure was highlighted in Plaintiff’s Motion to Compel Discovery (PDF). In sum, Plaintiff alleged that Defendants made a “unilateral, undisclosed decision not to provide electronic information dating back more than 90 days from the date of the written request was made because all emails are automatically deleted after 90 days” under the law firm’s retention policy. Spoiler alert: Failing to “turn off” any automatic email deletion programs in response to employment litigation is generally not going to turn out well for your company.   

Parties to litigation have obligations to preserve information

It is important to understand two important points before discussing why automatic deletion of email conflicts with the proper defense of an employment discrimination claim:

  • First, a party to litigation has an an obligation to preserve information relating to the litigation. This obligation includes documents, emails and related digital information;
  • The duty to preserve the preceding types of information arises not only when litigation is filed but it also arises when a party reasonably should know that the evidence may be relevant to anticipated litigation.

A litigation hold, therefore, simply refers to preserving information, regardless of the format (e.g., documents, emails, databases, paper etc.) in the context of litigation.Against this backdrop, it is critical for any party anticipating or involved in litigation to determine the “trigger date” for when its obligation to preserve information begins.

Defendants appear to shoot themselves in the foot when it comes to pulling the preservation trigger

There are multiple instances of “when” the Defendants should have implemented a litigation hold, i.e., preserved relevant information in the litigation. For example:  

  • In 2006 and 2009, Plaintiff’s Motion notes that Defendants’ privilege log identified documents being withheld from production based on the attorney-client privilege and attorney work product doctrine (a review of the log, however, shows that the earliest work product dates back to 2009). Attorney work product describes content that is generally created in anticipation of litigation and anticipation of litigation should equal preservation.
  • On September 29, 2010, according to the Complaint, Plaintiff received from the Equal Employment Opportunity Commission (EEOC) a right to sue letter. It is not clear when Plaintiff first filed her complaint with the EEOC. But again, the EEOC charge should have triggered a preservation response. 
  • The case was filed on October 12, 2010, which unquestionably triggers a party’s obligation to preserve emails/information relating to the filed litigation.
  • On November 9, 2010, Plaintiff served her written request to Defendants for production of documents and information – electronic or otherwise. 

Despite this time line, the defendant law firm and attorney failed to suspend an automatic email deletion program in relation to any of these trigger dates. This failure is especially difficult to reconcile when Defendants were supposedly preparing for litigation in 2008/2009 or, at the latest, upon the EEOC filing.

The second part of this post will discuss the consequences for failing to properly manage preservation obligations in response to an employment discrimination claim and steps to avoid that scenario.