Don't Lose a Lawsuit Before it's Filed: Preserve Evidence

Posted By: Guardian HR Staff Posted On: March 22, 2016 Share:

Lawsuits are hard. Don't make them harder for yourself or your employer by failing to preserve relevant evidence. You need to know that employers have a duty to preserve relevant evidence in employment cases—whether it's pictures, products, documents, or electronically stored information—and there can be serious repercussions when you "spoliate," or fail to preserve, such evidence. This article is intended to help you understand the duty to preserve evidence in the employment context and, more important, what you can do in that regard to ensure your company doesn't lose a lawsuit before it's even filed.

Duty to Preserve Evidence

When an employer reasonably anticipates a lawsuit, it has an affirmative duty to preserve relevant evidence. Determining when the duty to preserve evidence arises is, of course, a fact-intensive inquiry that depends on the circumstances of the individual case. But you should reasonably anticipate a lawsuit in a number of situations. Here are just a few examples:

  • When there is a workplace accident;
  • When an employee disputes the grounds for a suspension, demotion, or termination;
  • When you receive a demand letter from an attorney outlining a claim against your company; and
  • When an administrative complaint is filed against your company—regardless of whether the reviewing agency is a state or federal agency.

Once the duty to preserve evidence kicks in, you must retain and preserve all relevant evidence (i.e., any evidence that could tend to prove or disprove facts in the anticipated lawsuit). Relevant evidence would include things such as pictures, video surveillance, equipment, physical documents, and electronically stored information (ESI), or data that can be created, altered, communicated, or stored in digital form.

The most elusive—and increasingly more important—form of relevant evidence employers must preserve is ESI. Many employers have automatic destruction policies that delete ESI every so often. Although such a policy keeps ESI from overwhelming your system, it must be put on hold when a lawsuit is probable. Your attorney can use an electronic litigation hold to ensure that the relevant ESI isn't destroyed in the normal course of the automatic destruction policy.

Repercussions For Not Preserving Evidence

Employers that fail to preserve evidence may face serious repercussions. But the repercussions depend on whether you purposely failed to preserve the relevant evidence and whether you're a party or a third party who had a duty to preserve relevant evidence in the anticipated lawsuit because of a contract, a statute, an administrative rule, or a voluntary assumption of duty.

For purposes of this article, our focus will be the repercussions employers may face if they negligently fail to preserve evidence as a party in a lawsuit. But it's worth mentioning that you should never intentionally destroy evidence. Doing so can expose your company to punitive damages, among other things. As always, honesty is the best policy.

If an employer negligently fails to preserve relevant evidence as a party to a lawsuit, it may face an adverse jury instruction and other sanctions. However, the employee who filed the lawsuit bears the burden of proof. The employee must show each of the following elements:

  • The employer's degree of control, ownership, possession, or authority over the destroyed evidence;
  • The amount of prejudice (harm) he suffered as a result of the missing or destroyed evidence and whether it was substantial;
  • The reasonableness of anticipating that the evidence would be needed for litigation; and
  • If the employer controlled, owned, possessed, or had authority over the evidence, its degree of fault in causing the destruction of the evidence.
  • The consequences of an employee proving those elements are substantial. As mentioned, it allows a court to give the jury one or more adverse inference instructions in which the court will tell jurors that they may assume the lost or destroyed evidence was unfavorable to the employer. On top of that, the court may impose sanctions on the company, which could range from the exclusion of its countervailing evidence at trial to the outright dismissal of its arguments and defenses.

 What You Should Do

There are several things you should be doing to ensure you are preserving evidence that may be relevant to anticipated lawsuits. First, make sure you have uniform policies and procedures that require managers to investigate workplace incidents. It would be a mistake to wait until an employee has initiated a lawsuit to begin an investigation. Much or all of the evidence may be lost, and the evidence that you may find is likely of little use.

Second, train employees who will be investigating workplace incidents. Stress the importance of complete investigations, even when it seems that an incident wasn't the company's fault. Also, stress the importance of an honest investigation of the facts. Some employee-investigators may not record unfavorable facts for fear of being disciplined or worse, terminated. But it's in the company's best interest for investigators to record all the facts—only then will you and your attorneys be able to craft an appropriate strategy for defending a probable lawsuit.

Third, it's equally important that you preserve the relevant evidence after gathering it. That's an easier task when you're dealing with tangible evidence—set it aside in an appropriate location that won't affect its condition. But the task is more difficult for intangible evidence such as ESI because you have to be more proactive.

As soon as you become aware of a probable lawsuit, you must inform the employees tasked with managing ESI of your need to retain relevant evidence. If your company has an automatic destruction policy, you have to institute an electronic litigation hold for the relevant information. You should also consider developing a discovery response plan for both actual and probable lawsuits that outlines the steps you will take to preserve relevant evidence and what that evidence may be in each case. ("Discovery" refers to the process of exchanging relevant information during a lawsuit.)

Fourth, don't just create hard copies of electronic documents as an alternative to saving the ESI itself. ESI may contain information, or "metadata," that will disappear when you convert the file to a hard copy. And the failure to retain the documents in their electronic form, with the associated metadata, may constitute a failure to preserve evidence.

Bottom Line

Employers have a duty to preserve evidence that may be relevant to an anticipated lawsuit. Don't be caught unaware. Put appropriate policies and procedures in place to ensure that all relevant evidence is gathered and preserved. If you already have such policies and procedures, refine them. You'll be helping your company defend lawsuits with accurate information while also avoiding the heavy sanctions associated with the failure to preserve evidence.

We hope this information is valuable to you. If you have any questions regarding this alert, please do not hesitate to contact Holman HR. 

Guardian HR Staff

Guardian HR Staff

In-House Writing Team

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