Courts have held for more than a decade that the content of a legal hold sent by a party is subject to the attorney-client privilege. And with good reason. A legal hold includes, at a minimum, legal analysis of what document categories counsel have identified as being relevant to the matter, as well as language directing recipients to preserve and not delete any potentially relevant data regardless of the data source on which it lives. But where a party alleges spoliation of evidence that should have been covered by the legal hold and preserved, that privilege may evaporate.
The latest decision in Radiation Oncology Serv. et al. v Our Lady of Lourdes Mem. Hosp. et al., demonstrates the potential catastrophic effect that missteps in early preservation of ESI can have in litigation. Plaintiff was the exclusive provider of radiation oncology services to the defendant hospital for 15 years before the hospital terminated the contract. Litigation ensued immediately following the termination with the hospital receiving notice of litigation from plaintiffs’ counsel via letter. Following five years and likely hundreds of thousands of dollars in discovery, plaintiffs filed a motion to compel the production of defendants’ legal hold and identified seven specific alleged instances of spoliation as a basis for requiring production. Following review of just two of the incidents, the Court ordered defendants to produce the all ESI related to the legal hold including all copies of the hold issued to allow a “full and fair opportunity to litigate the issue of spoliation sanctions.”
The first incident involved an email exchange between Chair of the Investigative Committee reviewing the plaintiff’s actions and the CEO of the hospital sent from the Chair’s personal gmail account to the CEO’s personal gmail account. The email was sent within days of receipt of the notice to sue sent by plaintiffs’ counsel. Defendants produced the email with attachments in hard copy, but failed to produce them electronically as the President acknowledged deleting it shortly after receipt. The opinion does not discuss the availability of the ESI from the Chair’s gmail account.
The second incident involved a memo sent from a doctor on the medical staff at the hospital to the Investigative Committee Chair via email that expressed concerns “with the ongoing process of reviewing” the plaintiff. Defendants again produced only a hard copy both of the memo and the accompanying email. But the hard copy included handwritten notes suggesting that both documents had been forwarded. Without the ESI, there was no way to know who may have received the documents.
In both cases, the ESI was exchanged after the date the legal hold would have been in effect.
The Court dismissed defendants’ argument that no spoliation had occurred due to the production in hard copy and found that “printing paper copies of the emails and permanently deleting the associated ESI potentially deprived the emails of significant evidentiary value.” The Court did give the defendants a potential out by allowing them to establish, as a matter of law, one of the following three elements:
- that they had no obligation to preserve the evidence at the time of its destruction;
- that the evidence was destroyed through no fault or wrongdoing whatsoever, even negligence, or
- that the missing evidence was not relevant to plaintiffs’ claims.
But at the hearing on the motion, defense counsel couldn’t establish any of the three. Counsel had to acknowledge that 1) the ESI was destroyed after the duty to preserve had arisen, 2) that the evidence was destroyed affirmatively and 3) that the destroyed evidence could “provide evidence relevant to plaintiffs’ claims.”
The facts in Radiation Oncology Services are not unique, but they do highlight a very important point: Early identification and collection of ALL potential sources of ESI is crucial. The legal hold is a process of which the written notice is just one piece, and the follow up conversations with the recipients have to occur expeditiously so that ESI is not lost. In this case, while the CEO had likely received the legal hold, she didn’t follow it. Any speculation on the facts is here precisely that, but Gmail’s default is to retain deleted items in the trash for 30 days. That is more than enough time to identify and collect an account. Failure to do so opened up the hospital to a full scale investigation for sanctions that may include additional depositions. These types of issues can turn meritorious claims into a blackhole of legal expenses and obfuscate the claims by allowing spoliation to rule the day. In this case, the best offense was a good defense, and the defense appears to have broken down. Let’s hope it’s not the winning shot that goes in when it all shakes out.