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Recent Amendments to Federal Rules of Civil Procedure are a Reminder that Electronically Stored Information Must be Preserved in Connection with Pending or Anticipated Litigation

On December 1, 2006, several amendments to the Federal Rules of Civil Procedure took effect which update discovery practice in litigation for the 21st century.  The amendments all relate to the discovery of electronically stored information or ESI, and they serve as a good reminder that the failure to preserve ESI in connection with litigation may result in harsh sanctions.

The amendments to the Federal Rules do not specifically address a company's duty to preserve ESI when litigation is pending or is reasonably anticipated.  That duty continues to be defined by the courts.  However, new Rule 37(f) of the Federal Rules of Civil Procedure does provide that "[a]bsent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system."  A timely attempt to preserve relevant information by putting in place a "litigation hold" attempting to preserve all relevant ESI in connection with pending or reasonably anticipated litigation can be evidence of good faith.

When a litigation hold is required, it should be kept in mind that ESI includes e-mails, word processing documents, voicemails, text messages, pictures and other electronic data -- and it may come from a variety of sources, including office and home computers, cell phones, Blackberries, laptops, and thumb drives.

While Wisconsin has yet to follow the federal courts in providing guidance with respect to the discovery of ESI, it is likely that the Wisconsin courts will be influenced by the precedents set in the federal courts on this subject.  Electronic discovery in litigation is here to stay, and a business that fails to immediately protect and preserve its paper and electronic information when litigation is pending or reasonably anticipated runs the risk of potentially severe sanctions, including monetary penalties and even an adverse judgment.

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