In today’s interconnected global economy, businesses operating internationally, including those based in the UK or Europe, face broader data risks than ever before. While the General Data Protection Regulation (GDPR) remains a primary regulation governing data management, international standards, particularly those related to the discovery process in civil litigation in the United States, also warrant attention.
International companies may come under the jurisdiction of US civil courts if they:
- Operate independently in the US.
- Have ownership, partnerships, or affiliations with US-based companies.
- Enter into contracts with US firms.
Pre-trial discovery is a pivotal aspect of civil litigation in the US and to some extent in other jurisdictions following Anglo-American legal procedures. This process involves both parties exchanging information relevant to the dispute under court supervision. While this discussion does not delve deeply into the Federal Rules of Civil Procedure (FRCP), these rules prohibit parties from concealing relevant data, destroying incriminating data, or altering electronic metadata, which could be probative.
While GDPR regulations may complicate these obligations regarding the retention or transfer of personal data, compliance with US court standards is expected, failure of which may lead to adverse consequences. Furthermore, beyond legal considerations, retaining data for purposes such as internal investigations or compliance with the EU General Directorate of Competition can be prudent business practice.
What is a Legal Hold?
A legal hold, also known as a litigation hold, is a directive from an organisation’s legal team to employees, instructing them not to delete electronically stored information (ESI) or discard paper documents relevant to an ongoing or impending legal case.
The Role of Legal Holds in US Civil Litigation
Legal holds gained prominence in the US following Judge Shira Scheindlin’s landmark rulings in Zubulake vs. UBS Warburg in 2003. Judge Scheindlin emphasised that upon anticipating litigation, organisations must suspend routine document retention/destruction policies and implement a litigation hold to preserve relevant documents. Since then, legal holds have become standard practice, and failure to comply often results in e-discovery sanctions, given the vast amount of data maintained by enterprise-level organisations.
What Triggers the Need for a Legal Hold?
The US court system holds litigants responsible for preserving relevant data upon a “reasonable anticipation of litigation.” Organisations typically initiate preservation upon events indicating potential litigation rather than waiting for formal notice of a lawsuit. Triggers can include disputes arising from employee separations, product liability issues, intellectual property disputes, notice of a pending civil suit, or threatening communications from employees or partners.
Why Issue a Legal Hold?
Failure to preserve data can have severe consequences, including impaired claim assertion or defence and unfavourable court perceptions. While severe sanctions are reserved for wilful evidence destruction, negligence can result in litigation delays, increased costs, and potentially having to cover the opposing party’s legal fees.
For organisations facing potential civil litigation in the US, establishing a legal hold process and utilising legal hold technology is crucial. An effective legal hold lays the groundwork for the e-discovery process and ultimately impacts litigation outcomes. Internal legal teams must consider whether sending a legal hold alone is defensible, as courts may expect stronger preservation measures, especially for key custodians.
Is sending just a legal hold defensible?
In most instances, courts will deem a strong legal hold process reasonable. However, should a key custodian ignore the hold and delete responsive data, a judge could very easily determine that stronger preservation measures – such as data collection – should have been taken. For highly relevant custodians, it may be best to collect right away since you know you’ll need the data at some point no matter what.
Stuart Davidson
Vice President International Marketing at Exterro
