Document retention, including electronically stored records is a significant area of concern for the courts.
By Erik Dullea
Any lawsuit involvement can trigger document retention and production duties that management should understand. For example, if you receive an MSHA citation that you want to challenge,be aware that document retention can become very important. You may receive a memorandum from the attorneys – a “Litigation Hold” memo – instructing company employees to retain all related documents, e-mails and other electronically stored information (“ESI”), and to disable any auto-destruction programs until further advised.
The Litigation Hold memo generally instructs operators to identify all company files and e-mail accounts that might have information related to the citation. Complying with Litigation Hold memos can be expensive and time consuming, but it is . is a significant area of concern for the courts which can impose significant sanctions on parties for failures to identify, protect and retain documents.
Procedural Rules for Discovery
Discovery is one of the preliminary phases in any litigation where the parties seek information related to the dispute.
During discovery, the parties can obtain non-privileged information that is relevant to a party’s claim or defense, or is reasonably calculated to lead to admissible evidence so that both sides of the dispute can have a complete understanding of the facts and issues prior to trial. During discovery, a party may request the other party produce documents or ESI maintained “in the usual course of business,” including electronic backups and previously deleted files.
Further, at the point when litigation is reasonably anticipated, the litigant must suspend any and all routine document destruction policies. This requirement is the reason behind a Litigation Hold memo, and it is not the end of the process, but only the beginning of an interactive process between the client and the attorney.
Attorneys are required to make a reasonable inquiry into client’s production efforts. Attorneys must ensure that all sources of “potentially relevant information are identified” and preserved. These steps are necessary to verify all relevant information is discovered and retained on a continuing basis, and relevant non-privileged ESI is produced to the opposing party. Several courts have penalized companies for not following these rules.
Litigation Hold memos instruct clients to take proactive steps to preserve electronic data when litigation is reasonably likely to occur. The cost and complexity of these proactive steps are a function of a client’s volume of ESI. In addition to adding to a company’s costs, a larger volume of data raises the odds that privileged information will inadvertently be disclosed, which can lead to a waiver of an evidentiary privilege.
Because a company must preserve ESI, it is useful for company management to be familiar with the types of communications that could be excluded from discovery, and the actions that can cause a company to waive those protections.
Attorney-Client Communications Privilege and the Work Product Doctrine Information normally considered to be protected from discovery includes attorney-client communications and documents created by (or for) the attorney in preparation for litigation.
The attorney-client communication privilege is intended to facilitate candid, unrestrained exchanges of information between the client and the attorney.
It protects communications or correspondence consisting of confidential communications between a client and an attorney for the purpose of obtaining and receiving legal advice. It applies to an attorney’s conversations with current clients, former clients and prospective clients.
The attorney-client privilege will be waived however, if the confidential communications are divulged either to third parties. Traditionally, attorney-client communications are directly between the client and the attorney and without any intermediary. This direct exchange is more complex when the client is a business; employees may need to discuss information with each another in order to provide the attorney with a full picture of the situation.
These inter-employee discussions create the potential for a business entity to inadvertently waive the privilege by disclosing attorney-client communications to outsiders. If these discussions result in confidential communications being disclosed to employees beyond those providing information to the attorneys, then the privilege might be waived.
E-mails are one of the primary culprits that result in waivers of the attorney-client privilege. A company’s confidential communications with its attorney are forwarded to employees who have no role in the legal advice – this waives the privilege. Another example involves the unintended “Reply All” e-mail that results in confidential information being shared with persons who have no business receiving such information.
The work-product doctrine is a qualified immunity that prevents documents and tangible things prepared by a party or the attorney for trail from being produced during discovery. Work product includes factual material gathered in anticipation of litigation that would reveal the theories, opinions or mental impressions of the attorney.
As with the attorney-client privilege, the work product immunity can also be waived. Work product can be waived by producing the material during discovery, or by making the materials available to third parties or the public.
Here again the waiver potential for ESI and e-mails illustrates a litigant’s competing objectives during discovery. On one hand, a party must retain and produce all of the relevant ESI in its possession. On the other hand, a party must remain vigilant as to who is participating in attorney-client communications or receives trial preparation materials, so as to not waive the privilege or immunity.
What steps can an operator take to comply with its duty to retain and produce ESI, while preserving its evidentiary rights? Basic guidelines and recommendations include:
- Review existing document retention/ policies and determine whether you are complying with them. Determine whether the policies need to be updated.
- If you receive a citation that you are considering contesting, ensure that you suspend all document destruction policies for anything that could be related to the citation.
- Ask your attorneys for assistance in identifying potential sources of relevant information for discovery.
- Identify key personnel to communicate with your attorneys. Provide these individuals with periodic reminders on e-mail protocols for communications with your attorneys.
- When sharing attorney-client communications by e-mail, use message headers (e.g. CONFIDENTIAL - DO NOT FORWARD) to reduce the probability of inadvertent waiver.
- Comply with Litigation Hold memos. The penalties for failing to comply with these instructions can be severe.
Ohio Workers’ Comp Alert
Many of the new out-of-state employers entering Ohio as a result of developments in the oil and gas and frac sand industries are unsuspectingly operating without proper workers’ compensation coverage, according to law firm Steptoe and Johnson. Without the proper workers’ compensation coverage from the Ohio State Insurance Fund, these out-of-state employers are at risk of being non-complying employers and subject to significant liability for any non-complying claims.
The first thing out-of-state employers need to know is that Ohio’s workers’ compensation system is different. Ohio is one of a few remaining monopolistic workers’ compensation systems in the country. Every employer in the state must obtain workers’ compensation coverage from the Ohio Bureau of Workers’ Compensation (BWC) or obtain permission to be self-insured.
Steptoe & Johnson was contacted by Kevin R. Abrams, chief of employer services for the BWC to discuss their concern for workers’ compensation coverage for out-of-state employers. We have experienced some of the same concerns as the BWC in meeting with out-of-state employers. Many out-of-state employers are not aware of the significant differences between Ohio workers’ compensation coverage requirements and that provided by the out-of-state employer’s private workers’ compensation coverage.
The common misconception is that the “All States Endorsement” provided through an out-of-state employer’s insurance policy will provide coverage for their employees while temporarily in Ohio. Unfortunately, Ohio R.C. 4123.54 significantly limits the workers’ compensation coverage for out-of-state employees temporarily in Ohio. Basically, out-of-state employers must obtain Ohio workers’ compensation coverage for their employees working temporarily in Ohio, unless their state extends the same reciprocal exemption for Ohio employers. If they do not, and most do not, extend the same reciprocal coverage for Ohio employees, Ohio will not exempt that state’s employers from requiring Ohio coverage for that state’s employees temporarily in Ohio.
Another area of concern is the potential liability of general contractors for the workers’ compensation liability of their sub-contractors. A number of out-of-state employers are mistakenly relying on language in a subcontracting agreement to shield them from workers’ compensation liability of the subcontractor’s employees. In Ohio, Ohio R.C. 4123.01 transfers liability of a non-complying subcontractor to the general contractor. While a properly drafted subcontracting agreement is possible to protect the general contractor from this type of liability, the general contractor must make certain the subcontractor has valid Ohio workers’ compensation coverage.