Electronic Discovery Puts General Counsel On Front Lines

The increasing pressure to produce electronic data and documents in native formats puts in-house counsel on the front lines during, and even prior to, the electronic discovery phase of litigation. The basic obligations in-house counsel have prior to potential litigation include developing a corporate strategy for electronic data preservation and retrieval, implementing the plan, documenting policies and procedures in writing, and disseminating the policies and procedures to appropriate internal parties. Missteps in any of these areas can and has led to various sanctions ranging from fines to default judgments.

Even with a data preservation program in place, the courts are reluctant to allow companies to hide behind the procedures when it is clear the destruction of evidence was intentional. General Nutrition Corporation (GNC) continued its standard document destruction policy despite the existence of a protective order requiring the retention and preservation of relevant documents. GNC did not instruct its employees to preserve relevant records or make any efforts that the records would be preserved. To make matters worse, GNC's president issued a memo to all employees advising them that the preservation order 'should not require us to change our standard document retention or destruction policies or practices.' The court ruled in Wm. T. Thompson Co. v. General Nutrition Corporation Inc., 593 F. Supp. 1443 (C.D. Cal. 1984), that the defendant's destruction of records, both paper and electronic, which it had reason to know were relevant to the case, warranted both monetary sanctions and a default judgment.