In Nacco Materials Handling Group v. Lilly Company, the United States District Court for the Western District of Tennessee issued an opinion that serves as helpful guidance on when the duty to preserve evidence arises as it relates to preservation of electronically stored information (“ESI”). 278 F.R.D. 396 (W.D. Tenn. 2011). This “trigger date” is the date from which a court will evaluate a party’s duty to preserve ESI and other evidence.
Nacco, a lift truck manufacturer, did business as Yale Materials. Lilly was a former Yale dealer that improperly accessed Yale’s secure website over 40,000 times. Yale discovered this activity and took steps to prevent reoccurrence of these unwanted intrusions. Lilly learned about its employees’ involvement in improperly accessing Yale’s secure website in December 2010 when another company that Yale had contacted about the intrusions advised Lilly of Yale’s investigation. Yale learned from this third party that Lilly was that source of the intrusions.
Yale filed suit on February 25, 2011. Lilly’s counsel sent Lilly a litigation hold letter on March 9, 2011. The broad litigation hold letter instructed Lilly to: (1) issue an internal litigation hold; (2) identify key players and preserve their electronic and other documents; (3) cease deletion of email; (4) preserve records of former employees; and (5) preserve back-up tapes where the tapes are the sole source of relevant information. Yale also issued a litigation hold letter to Lilly in March 2011.
As the litigation progressed, Yale challenged Lilly’s efforts to preserve evidence as inadequate and moved for sanctions. The Court stated that “a duty to preserve evidence is a prerequisite to imposing spoliation sanctions.” Id. at 402. (citations omitted.) In evaluating a party’s efforts to preserve evidence, it is important to know when it first became subject to a duty to preserve. The duty first arises on the “trigger date.” “The trigger date is the date a party is put on notice that it has a duty to preserve evidence.” Id. (citing Clark Constr. Group, Inc. v. City of Memphis, 229 F.R.D. 131, 136 (W.D.Tenn 2005)).
The Court found that Lilly’s duty to preserve evidence was triggered when it was served the complaint on February 25, 2011. Yale argued that Lilly should have anticipated litigation when it first learned of the problem in December 2010. The Court disagreed stating that:
Merely because Lilly knew of its employees’ access does not necessarily mean that Lilly had reason to anticipate litigation. Yale did not contact Lilly or send a cease-and-desist letter. Based on these facts, the court cannot conclude that Lilly had reason to anticipate litigation prior to being served with the lawsuit. Therefore, at the earliest, on February 25, 2011, when Lilly was served the complaint, Lilly knew or should have known that electronic evidence residing in its computers would be relevant to the litigation.
Id. at 403.
Through this holding, the Court set a helpful standard for counsel to calculate the trigger date when the duty to preserve arises.
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