Does A Company Have To Have A Document Retention Policy? Apple Doesn’t Have One.

Slashdot led me to this erroneous article at The Industry Standard:

According to a recent legal filing (see page 7) in the Psystar vs Apple antitrust case, Apple employees are responsible for maintaining their own documents such as emails, memos, and voicemails. In other words, there is no company-wide policy for archiving, saving, or deleting these documents.

An e-discovery lawyer, who asked not to be named because his employer (a firm you probably have heard of) doesn’t want him speaking to the press, explained the basic legal requirements surrounding email and document retention to The Standard. "If litigation is anticipated, the party has a duty to preserve potentially relevant documents," he said.

"An employee retention program with no organization or coordination is effectively incapable of compliance," he continued, "barring an act of God, or luck akin to picking every game right in an NCAA pool. Apple’s retention policy is negligent."

(Emphasis added). I dissent. Apple did have a policy once the litigation was anticipated:

… Apple claims in the Psystar document that its policy is fine because once the company anticipated litigation:

[Apple] identified a group of employees who could potentially have documents relevant to the issues reasonably evident in this action. Apple then provided those individuals with a document retention notice which included a request for the retention of any relevant documents.

I think the problem here is that the lawyer and/or reporter presumed that, in the absence of a company-enforced "litigation hold" on documents, the employees would not or could not comply fully with that hold.

But that’s because they presume Apple works like most companies, destroying documents and files as quickly as they can so as not to leave evidence of anything, thereby (they hope) frustrating plaintiffs’ cases.

Yet, as noted by the article itself, Apple also had no deletion policy. As such, relevant documents are likely scattered all over their systems in multiple places, many easily accessible, and, "As a general rule, then, a party need not preserve all backup tapes even when it reasonably anticipates litigation." Zubulake, see below.

Apple would likely be able to preserve most of the relevant and unique information by duplicating their internal servers and instructing the key officers and employees to duplicate and produce any documents that could be relevant.

If carried out honestly, such an ad hoc policy would probably work better than most corporate litigation hold "policies," in which the company deliberately retains a pile of useless garbage to dump on the plaintiff’s lawyers while also failing to instruct those unaware of the litigation to take reasonable preservation steps.

The duty to preserve is for most companies not that complicated: once a company is aware of litigation, the company should put automatic destruction policies on hold and instruct relevant employees not to destroy anything until the company can find a way to preserve everything that might be relevant to the litigation. Here’s how Zubulake, the Tale of Genji for electronic discovery, described it:

anyone who anticipates being a party or is a party to a lawsuit must not destroy unique, relevant evidence that might be useful to an adversary. While a litigant is under no duty to keep or retain every document in its possession . . . it is under a duty to preserve what it knows, or reasonably should know, is relevant in the action, is reasonably calculated to lead to the discovery of admissible evidence, is reasonably likely to be requested during discovery and/or is the subject of a pending discovery request.

Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 217 (S.D.N.Y. 2003).

Aside from case law, there’s no explicit rule or statute on preservation; one could do worse than following this modified Federal criminal obstruction of justice statute, 18 U.S.C. § 1519:

Whoever knowingly, reckless or negligently alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object with the intent to, or which has the effect to, impede, obstruct, or influence [civil litigation of which they are aware] shall be subject to sanctions, fines, adverse inference, and humiliation by trial lawyers.

That’s a good rule unless, of course, the company was doing something wrong and intends to hide it, in which case they will start coming up with sneaky ways to pretend to comply with the rules while destroying everything detrimental to their defense.

But beware: even without evidence of intentional destruction, if a plaintiff’s lawyer catches a company fooling around with document retention and failing to keep important documents, the plaintiff’s lawyer will use it as an excuse to argue the missing documents say whatever the plaintiff’s lawyer wants them to say.

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  • http://www.litigationandtrial.com/2008/12/articles/series/most-popular-posts/most-popular-posts-as-of-december-6-2008/index.html Litigation and Trial – Max Kennerly

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