Reasonable Anticipation of Litigation Under FRCP 37(e): Triggers

SAMANTHA V. ETTARI

E-DISCOVERY COUNSEL

KRAMER LEVIN NAFTALIS & FRANKEL LLP

Samantha focuses her practice on general

commercial litigation, with an emphasis on regulatory

defense, complex contract and licensing disputes, and

false advertising litigation. She advises clients on all

aspects of electronic discovery, including cost-efﬁcient

data collection and retention, and is a member of the

ﬁrm’s Electronic Discovery Practice and co-editor of its

Electronic Discovery Update.

ederal common law requires potential litigants to begin

preserving relevant documents and other tangible

evidence when they reasonably anticipate litigation

(Crown Battery Mfg. Co. v. Club Car, Inc., 185 F. Supp.

3d 987, 998 (N.D. Ohio 2016)). This standard also applies to

ESI under amended FRCP 37(e), which expressly incorporates

reasonable anticipation of litigation as a trigger for a party’s

duty to preserve relevant ESI under the rule’s sanctions

framework. Although FRCP 37(e) offers little guidance on how

to apply the reasonable anticipation of litigation standard, and

case law under FRCP 37(e) is still developing, the rule does not

attempt to create a new duty to preserve. Courts and counsel

therefore may continue to rely on existing case law interpreting

the reasonable anticipation of litigation standard. (See 2015

Advisory Committee’s Note to FRCP 37(e); see also Ala. Aircraft

Indus., Inc. v. Boeing Co., 2017 WL 930597, at *8 (N.D. Ala.

Reasonable Anticipation of Litigation

Under FRCP 37(e): Triggers and Limits

Under common law and as expressly referenced in amended Federal Rule of Civil Procedure

(FRCP) 37(e), a party must preserve documents and electronically stored information (ESI) when

it reasonably anticipates litigation. Although applying this standard typically is straightforward

once litigation has begun, determining when the duty to preserve has been triggered and the

scope of that duty often involves a multi-factor analysis that can be difﬁcult for courts and

counsel to apply consistently.

small_frog/E+/Getty Images

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Mar. 9, 2017); Gonzalez-Bermudez v. Abbott Labs. PR Inc., 2016

WL 5940199, at *23 n.10 (D.P.R. Oct. 9, 2016).)

However, even under existing case law, determining when

the duty to preserve has been triggered under FRCP 37(e)

and the scope of that duty often remains difficult. This

determination requires counsel to carefully analyze the specific

facts and circumstances, particularly where a party alleges

that an adversary’s duty to preserve arose before litigation

commenced (see Jenkins v. Woody, 2017 WL 362475, at *14-15

(E.D. Va. Jan. 21, 2017) (citing Rimkus Consulting Group, Inc. v.

Cammarata, 688 F. Supp. 2d 598, 613 (S.D. Tex. 2010))).

To protect a client from sanctions under FRCP 37(e), counsel

charged with handling preservation efforts should:

 Help the client identify when it should reasonably anticipate

litigation and ensure the client begins preserving relevant ESI

at that point.

 Adequately define the scope of preservation at the time a

party’s preservation duty is triggered, and reassess the scope

throughout the course of the litigation in case the universe of

potentially relevant information expands.

 Determine when to lift a litigation hold (or reinstate the

routine, automatic destruction of ESI pursuant to a document

retention program) in situations where litigation was once

reasonably anticipated but ultimately never materialized.

Search Litigation Hold Toolkit for a collection of resources to help

counsel preserve documents and implement a litigation hold.

IDENTIFYING WHEN LITIGATION IS REASONABLY

ANTICIPATED

The standard for reasonable anticipation of litigation is an

objective one. If a reasonable person would have expected

litigation, a party’s duty to preserve generally is triggered

(see Ala. Aircraft, 2017 WL 930597, at *10).

The service of a summons or complaint clearly triggers a

defendant’s preservation obligations (McIntosh v. United States,

2016 WL 1274585, at *32 (S.D.N.Y. Mar. 31, 2016) (finding a

party’s obligation to preserve evidence “arises when the party

has notice that the evidence is relevant to litigation,” which

is “most commonly when suit has already been filed”) (citing

Kronisch v. United States, 150 F.3d 112, 126 (2d Cir. 1998)); see

also Jenkins, 2017 WL 362475, at *14 (stating that a defendant’s

duty to preserve evidence is triggered, at the latest, on service of

the complaint)).

However, if no complaint has been filed, identifying the trigger

for when a party should have reasonably anticipated litigation

is more challenging, as it varies based on the facts and

circumstances. Considerations when determining whether a

party might be charged with reasonably anticipating litigation

include:

 A plaintiff’s own contemplation of litigation.

 A defendant’s own contemplation of litigation.

 Receipt of written or verbal notice of potential claims against

a party, either from counsel or a potential adversary.

CONTEMPLATION OF LITIGATION BY A PLAINTIFF

A plaintiff’s duty to preserve might be triggered as soon as the

plaintiff believes that a basis for a viable claim has arisen and

seriously contemplates pursuing litigation, such as by taking

steps to consult or retain counsel or experts (Silvestri v. Gen.

Motors Corp., 271 F.3d 583, 591-92 (4th Cir. 2001) (finding the

plaintiff was on notice of his need to preserve a vehicle shortly

after his accident, particularly after he concluded that the

failure of the airbag to deploy contributed to his injuries); Cohn

v. Guaranteed Rate, Inc., 318 F.R.D. 350, 354 (N.D. Ill. 2016) (on

a motion for sanctions in part under FRCP 37(e), finding the

plaintiff’s consultation with counsel and explicit references to

her intention to pursue litigation against the defendant were

sufficient to trigger her preservation obligations)).

Additional factors counsel should consider in determining

whether a plaintiff’s contemplation of or preparation for

litigation might have triggered preservation obligations include

whether the plaintiff has:

 Conducted legal or factual research to assess the strength of

potential claims or defenses.

 Held any meetings or presentations during which the

potential litigation was discussed.

 Drafted a summons, a complaint, or any documents to

support a summons or complaint.

 Discussed the potential litigation with key witnesses or likely

information custodians.

(See, for example, Virtual Studios, Inc. v. Stanton Carpet Corp.,

2016 WL 5339601, at *5-10 (N.D. Ga. June 23, 2016) (finding the

plaintiff’s duty to preserve was triggered years before litigation,

when the plaintiff’s representative first became aware of the

defendant’s impermissible use of the plaintiff’s copyrighted

images while looking at the defendant’s in-store displays and

website).)

CONTEMPLATION OF LITIGATION BY A DEFENDANT

As with a plaintiff, courts are likely to find that a defendant

who consults or retains counsel or experts before litigation

commences has triggered the duty to preserve (see, for

example, Ala. Aircraft, 2017 WL 930597, at *9-10 (finding the

defendant’s consultation with in-house litigation counsel about

its potential liability for breach of contract before any action

was filed indicated that it reasonably anticipated litigation and

therefore should have preserved related ESI under FRCP 37(e))).

Absent this type of evidence, however, determining when a

defendant might have reasonably anticipated litigation before a

case started may be difficult.

The types of evidence counsel should consider when analyzing

whether a defendant reasonably anticipated or should have

reasonably anticipated litigation before litigation began might

include:

 The nature and viability of the plaintiff’s claims and the

likelihood that the plaintiff would seek formal redress. For

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example, courts have found that a defendant should have

reasonably anticipated litigation before litigation commenced

in the following circumstances:

z

right after an inmate’s death, where the jail had a policy of

starting an investigation immediately after an inmate dies,

the defendant was involved in a high number of lawsuits

involving inmate deaths in his custody, and the defendant

testified that it was common for lawsuits to follow inmate

deaths (Jenkins, 2017 WL 362475, at *15 (imposing

spoliation sanctions under FRCP 37(e)));

z

when a physical altercation was captured on videotape

(Alston v. Bellerose, 2016 WL 4098726, at *2 (D. Conn.

July 28, 2016)); and

z

on the day a customer suffered an in-store injury, reported

the incident immediately, and simultaneously stated

her intention to seek medical attention for her injuries

(Stedeford v. Wal-Mart Stores, Inc., 2016 WL 3462132, at

*1, *9 (D. Nev. June 24, 2016)).

 The relationship, any existing history, or the course of dealing

between the potential parties (see, for example, Tohono

O’odham Nation v. Ducey, 2016 WL 7338341, at *7 (D. Ariz.

Dec. 19, 2016) (finding the defendants should have reasonably

anticipated litigation when they held a meeting to discuss

ways to block the development of the plaintiff’s tribal lands,

where the defendants had a history of litigation over the

plaintiff’s desire to develop a resort on the same lands); Crown

Battery, 185 F. Supp. 3d at 998-99 (finding the defendant

golf cart manufacturer’s duty to preserve arose months

before litigation started when its business relationship with

the plaintiff battery maker soured and the defendant took

$2.3 million worth of batteries without paying for them)).

 The defendant’s knowledge of a similar or related dispute

between similarly situated parties (see Phillip M. Adams &

Assocs., L.L.C. v. Dell, Inc., 621 F. Supp. 2d 1173, 1190-91 (D.

Utah 2009) (finding the defendants’ duty to preserve was

triggered five to six years before the complaint was filed

because they were aware of disputes between similarly

situated industry actors over the same floppy disk

controller errors)).

Courts are likely to ﬁnd that a defendant who

consults or retains counsel or experts before litigation

commences has triggered the duty to preserve.

 The impact of any documents that govern the relationship

between the potential parties, including contractually

required methods of resolving disputes or settlement

agreements governing future conduct (see, for example, Ala.

Aircraft, 2017 WL 930597, at *9-10 (finding the defendant’s

termination of a contract, coupled with the plaintiff’s

statements that the termination was a clear violation of the

contract, triggered the defendant’s duty to preserve before

litigation had commenced)).

 Internal oral or written communications that show the

defendant was on notice of potential litigation (see, for

example, First Fin. Sec., Inc. v. Freedom Equity Grp., LLC,

2016 WL 5870218, at *3 (N.D. Cal. Oct. 7, 2016) (finding

the defendants’ duty to preserve text messages was

triggered when they had an internal meeting in which they

acknowledged that there would be a lawsuit);Zubulake v. UBS

Warburg LLC, 220 F.R.D. 212, 216-17 (S.D.N.Y. 2003) (finding

the defendant should have reasonably anticipated litigation

four months before the plaintiff filed a formal complaint with

the Equal Employment Opportunity Commission (EEOC),

based on corporate personnel’s use of a privilege header on

emails about the plaintiff’s termination sent months before

the EEOC charge and deposition testimony from employees

that they feared litigation around the same time)).

FORMAL AND INFORMAL NOTICE OF CLAIMS

A formal, written letter threatening litigation might also trigger

the receiving party’s obligation to preserve evidence (see, for

example, Gonzalez-Bermudez, 2016 WL 5940199, at *24 (finding

a letter from the plaintiff’s attorneys warning of potential

litigation triggered the defendants’ duty to preserve ESI under

FRCP 37(e)); see also Marten Transp., Ltd. v. Plattform Advert.,

Inc., 2016 WL 492743, at *6 (D. Kan. Feb. 8, 2016) (finding the

plaintiff’s cease-and-desist letter clearly triggered its own duty

to preserve)). In some cases, even an informal warning might

be sufficient to trigger the recipient’s preservation obligations,

such as:

 Verbal notice that an adversary considers certain conduct to

violate a contract and, if the conduct occurs, the adversary

will follow with certain action (Ala. Aircraft, 2017 WL 930597,

at *10 (finding the plaintiff’s verbal notice to the defendant

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that the plaintiff considered their contract to be breached

and was “likely going to do something about it” triggered the

defendant’s preservation obligations)).

 Text messages from a plaintiff to a defendant threatening a

lawsuit two years before litigation started, even where the

plaintiff subsequently apologized for the text messages and

appeared friendly, but did not expressly retract the threat

(Clear-View Tech., Inc. v. Rasnick, 2015 WL 2251005, at *2, *7

(N.D. Cal. May 13, 2015)).

On the other hand, courts have held that written demand letters

that do not adequately warn of litigation might be insufficient to

trigger the duty to preserve (see, for example, Cache La Poudre

Feeds, LLC v. Land O’Lakes, Inc., 244 F.R.D. 614, 623 (D. Colo.

2007) (finding a plaintiff’s demand letters that described the

defendant’s potential trademark infringement were insufficient

to trigger the defendant’s duty to preserve because the letters

did not threaten litigation outright and even suggested the

possibility of a non-litigious resolution); Ind. Mills & Mfg., Inc.

v. Dorel Indus., Inc., 2006 WL 1749410, at *4 (S.D. Ind. Feb. 16,

2006) (similar); but see Goodman v. Praxair Servs., Inc., 632 F.

Supp. 2d 494, 510-11 (D. Md. 2009) (distinguishing Cache and

holding the defendant’s duty to preserve relevant evidence

began when the defendant received the plaintiff’s letter stating

that the plaintiff had consulted two attorneys and, if forced

to litigate, the plaintiff could receive damages in excess of the

disputed contract amount)).

Sending preservation demand letters to an adversary

requesting that certain evidence be preserved before bringing

formal claims has become an increasingly popular practice in

recent years. These demand letters are likely to trigger a party’s

duty to preserve once the party receives the letter (see Stedeford,

2016 WL 3462132, at *9-10). However, where a request to

preserve evidence does not sufficiently warn the receiving

party of potential litigation and does not clearly indicate that

the evidence described in the letter might be relevant to

potential litigation, some courts have found that the notice

was insufficient to trigger the recipient’s duty to preserve (see,

for example, McIntosh, 2016 WL 1274585, at *33 (finding there

was no duty to preserve where the “tone, informality, and other

characteristics” of a letter might not have forecasted litigation to

a reasonable observer, and the letter did not clearly convey that

videotape evidence might be relevant to future litigation)).

DETERMINING THE SCOPE OF PRESERVATION

BEFORE LITIGATION

A potential litigant is not expected or required to “preserve

every shred of paper, every e-mail or electronic document, [or]

every backup tape.” Instead, parties that reasonably anticipate

litigation should preserve “unique, relevant evidence that

might be useful to an adversary” or “is reasonably likely to be

requested during discovery.” (Zubulake, 220 F.R.D. at 217; see

also Marten Transp. Ltd., 2016 WL 492743, at *5, *10 (denying

the defendant’s motion for sanctions under FRCP 37(e) in

part because the lost ESI was outside the scope of the duty to

preserve).) In the context of FRCP 37(e), this analysis requires a

potential litigant to assess:

 Which individuals are potential custodians of ESI that must

be retained.

 The categories of ESI that the party must preserve.

Noting the expense that preservation can impose on parties,

the 2015 advisory committee note to FRCP 37(e) suggests that

proportionality might be relevant to a party’s determination

of the scope of preservation (see 2015 Advisory Committee’s

Note to FRCP 37(e)). Although no court has yet addressed

this issue, the recently proposed Third Edition of the Sedona

Principles expressly direct parties to consider proportionality

when determining preservation scope (The Sedona Principles,

Third Edition: Best Practices, Recommendations & Principles for

Addressing Electronic Document Production, Principle 5 & cmt.

5.a. (Mar. 2017) (Public Comment Version)).

IDENTIFYING CUSTODIANS OF ESI

The “duty to preserve extends to those employees likely to

have relevant information – the ‘key players’ in the case”

(Zubulake, 220 F.R.D. at 218). Identifying these key players is

a fact-specific inquiry that might require counsel to interview

potential custodians to determine who might have discoverable

information about potential claims.

Counsel should keep in mind that potential custodians are not

limited to a party’s employees and officers. A party’s duty to

preserve can also extend to ESI it owns or controls but is in the

possession of a third party (see GenOn Mid-Atl., LLC v. Stone &

Webster, Inc., 282 F.R.D. 346, 353-56 (S.D.N.Y. 2012); In re NTL,

Inc. Sec. Litig., 244 F.R.D. 179, 195-97 (S.D.N.Y. 2007) (finding

the defendant had a duty to preserve documents and ESI even

though the majority of these materials were in a non-party’s

possession), aff’d sub nom., Gordon Partners v. Blumenthal, 2007

WL 1518632 (S.D.N.Y. May 17, 2007)).

Search Possession, Custody, and Control of ESI for information on the

applicable federal rules on the possession, custody, and control of ESI,

the traditional tests courts use to determine control over documents

that non-parties possess, and emerging jurisdictional issues about

cloud-based ESI.

Identifying the appropriate custodians and third parties

with relevant information is a dynamic process. As litigation

proceeds, or if pleadings are amended, counsel might need

to identify and consult with other custodians of ESI that might

become relevant as discovery reveals new facts or as claims or

allegations are added or modified in a case.

IDENTIFYING WHAT ESI MUST BE RETAINED

A party must take reasonable steps to preserve all relevant ESI

under FRCP 37(e), including emails, shared files, social media,

and data sources (Marten Transp., Ltd., 2016 WL 492743, at *5;

see also, for example, Congregation Rabbinical Coll. of Tartikov,

Inc. v. Vill. of Pomona, 138 F. Supp. 3d 352, 387-88 (S.D.N.Y.

2015) (holding the duty to preserve applied to social media

posts and text messages)). The preservation duty includes an

obligation to identify, locate, and maintain “information that

The Journal | Litigation | June/July 2017

is relevant to specific, predictable and identifiable litigation”

(Stedeford, 2016 WL 3462132, at *5).

A party’s understanding of relevance can change as the nature

and claims of a case crystalize, requiring counsel throughout

the litigation to evaluate the facts and assess whether the

scope of the client’s preservation obligations has changed.

When defining and reevaluating the scope of preservation to

determine whether to reduce or expand it, items for counsel to

consider might include:

 If litigation has not yet commenced:

z

the contents of any demand letter or notice threatening

litigation from an adversary;

z

the contents of any preservation notice from an adversary;

z

other oral or written communications with opposing

counsel that provide greater detail into the scope, breadth,

or nature of potential claims; and

z

interviews with or information provided by already identified

potential custodians or key witnesses.

 If litigation is ongoing:

z

the complaint’s allegations and claims;

z

information provided in initial disclosures under FRCP 26;

z

information provided in response to written discovery

requests, such as interrogatories, requests for admission,

and requests for production;

z

statutes and administrative regulations which might require

retention (or allow destruction) of certain relevant ESI; and

z

the court’s scheduling order, the parties’ discovery plan,

an order in another case, or a party’s own information-

retention protocols, which might dictate or clarify a party’s

preservation obligations (see 2015 Advisory Committee’s

Note to FRCP 37(e)).

Counsel should ensure the client implements a litigation hold

that adequately addresses the scope of the duty to preserve.

The decision to implement a litigation hold with a narrowly

defined scope or, more drastically, to forgo a litigation hold

altogether should not be undertaken lightly, even if counsel

for a potential defendant anticipates weak claims from the

potential plaintiff. On the other hand, a costly or expansive

litigation hold might not be appropriate if the allegations are

impossible, misdirected, or not viable (for example, if the claims

are unequivocally outside the applicable statute of limitations or

the potential plaintiff lacks standing to assert the claims).

Search Implementing a Litigation Hold for more on key issues

companies should consider when instituting a litigation hold and the

consequences of failing to implement one appropriately.

LIFTING THE PRESERVATION OBLIGATION

In addition to periodically reassessing whether to expand or limit

the scope of a litigation hold, counsel should also determine

when circumstances permit the hold to be lifted entirely. For

example, a party might be able to safely relax, reduce the

scope of, or end its preservation obligations (and, if appropriate,

reinstate any routine document destruction program) when:

 The relevant statute of limitations for previously threatened

claims has unequivocally expired.

 The dispute is resolved through, for example:

z

the renegotiation of an agreement;

z

a mediation between the potential parties;

z

a final judgment;

z

the expiration of the time to appeal to the highest court; or

z

payment on a claim.

(See, for example, Cacace v. Meyer Mktg. (MACAU Commercial

Offshore) Co., 2011 WL 1833338, at *2 (S.D.N.Y. May 12, 2011)

(finding a preservation obligation that had been triggered

years before a lawsuit was filed was lifted temporarily when the

parties began negotiating a licensing agreement).)

However, counsel should thoroughly document all reasons

for lifting an existing litigation hold. If litigation unexpectedly

begins or renews and relevant ESI has already been lost as

a result of lifting a litigation hold, counsel might be able to

rely on these notes or consult the documentation in order to

successfully defend the reasonableness of the client’s conduct.

Search Litigation Hold Lift Notice for a sample legal hold lift notice

counsel can use to notify employees of an organization that a

litigation hold is no longer in effect, with explanatory notes and

drafting tips.

A party’s understanding of

relevance can change as

the nature and claims of a

case crystalize, requiring

counsel throughout the

litigation to evaluate the

facts and assess whether

the scope of the client’s

preservation obligations

has changed.

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