Businesses periodically clean house and destroy documents, delete e-mail, and clear hard drives. But you may ask, “When is it safe to destroy business documents?” The answer is: It is permissible to shred documents and delete computer files, unless when the destruction took place you had a duty to preserve that property.
The duty to preserve can arise from a contractual obligation or a regulatory requirement, as well as when property is or could be evidence in a current, pending, or reasonably foreseeable lawsuit. Failure to preserve documents in this latter category may result in ‘spoliation’ – the destruction of, or failure to preserve, evidence. The spoliation standard, however, is unsettled.
Some courts do not consider destruction of potential evidence before a lawsuit is filed as spoliation, while others find a duty to preserve arises when a party should reasonably know that litigation is imminent. Some courts presume document destruction under a company policy is innocent, while others question whether a duty to preserve was triggered regardless of such a policy.
Of course, you should never destroy any document – whether a paper or electronic record – with the intent of preventing its discovery by a potential litigant. If you are concerned that a document could expose a party to liability, it is too late. Destroying a document after a duty to preserve arises may result in severe court-imposed sanctions, imposition of a ‘spoliation inference’, or the court excluding evidence (which may tip the scales in favor of the injured party). For example, the court may instruct a jury to assume a destroyed document would have proven that which your adversary claims.
It is good practice for a business to adopted records retention policies that demonstrate regular document destruction. Reasonable routine document destruction policies would lend support to the position that the destruction was not an attempt to purge files of incriminating documents. Some key points to keep in mind when creating and maintaining a records retention policy include:
- Records retention policies have limits. Courts may rule that a document destroyed in accordance with company policy does not escape the duty to preserve when litigation was foreseeable.
- Policies should be applied uniformly. Do not destroy records randomly or in violation of the company records retention policy.
- Policies should be reasonably tailored. There must be legitimate reasons for the policy and a rationale for the way documents are slated for destruction.
- Policies should consider administrative or regulatory record-keeping requirements. A single preservation period for all documents is not practical. Various government agencies mandate various periods of time, regardless of whether litigation is reasonably foreseeable.
- Policies should not be adopted with a purpose of eliminating potential evidence. A company cannot adopt a seemingly neutral document retention policy that has the effect of quickly disposing of potentially incriminating documents.
- Policies must be flexible enough to adapt when a duty to preserve arises. Adequate safeguards must be in place so that an executive or counsel can quickly notify the individual overseeing the records retention policy of the need to preserve records that may otherwise be slated for the shredder.
If you do not have a record retention policy and you destroy records that later on become relevant to litigation, you may find it hard to justify your action. Have a records retention policy and then, like with any policy, follow it – except when there is a document preservation notice or reason to believe litigation on a subject is likely. If you are interested in developing a document retention policy, feel free to call for a consultation.
