As an attorney with extensive experience representing businesses, one of the most critical pieces of advice I can offer is this: if litigation seems likely, the first and most important step is to ensure the preservation of relevant evidence. Failing to do so can result in severe legal and financial consequences, including sanctions and adverse jury instructions. Beyond that, preserving all relevant information is essential to being able to successfully prove a case. Below, I outline the steps businesses should take to preserve evidence and review the legal framework governing this duty under both federal and Texas law.

Understanding the Duty to Preserve Evidence

Federal Law

The duty to preserve evidence under federal law is governed by case law interpreting Rule 37 of the Federal Rules of Civil Procedure (FRCP). This duty arises when a party reasonably anticipates litigation. The seminal case Zubulake v. UBS Warburg LLC (Zubulake IV), 220 F.R.D. 212 (S.D.N.Y. 2003), provides a foundational analysis of this duty. The court in Zubulake held that:

• The obligation to preserve evidence is triggered when litigation is pending or reasonably foreseeable.
• Parties must take affirmative steps to identify and preserve all relevant evidence, including electronically stored information (ESI).
• Failure to preserve evidence can result in sanctions, including monetary penalties, adverse inference instructions, or dismissal of claims.

Texas State Law

Under Texas law, the duty to preserve evidence similarly arises when litigation is reasonably anticipated. Texas courts have recognized this obligation in cases such as Brookshire Brothers, Ltd. v. Aldridge, 438 S.W.3d 9 (Tex. 2014). In Brookshire Brothers, the Texas Supreme Court emphasized:

• Spoliation occurs when evidence is destroyed or altered.
• Courts will impose remedies, including sanctions, if the spoliation prejudices the opposing party.
• A party must act in good faith to preserve evidence once the duty is triggered, even if litigation has not yet formally commenced.

Steps to Preserve Evidence

1. Recognize When the Duty Arises
   • The duty to preserve evidence is triggered when a business knows or should know that litigation is reasonably likely. This includes both the business anticipating filing suit and the business anticipating being sued. This could be based on the receipt of a demand letter, a formal complaint, or even informal communications suggesting a dispute.
2. Involve an Attorney Early On
   • It is a best practice to engage an attorney (whether in-house or outside counsel) to assist with the preservation process. That attorney can provide important guidance on the scope of what needs to be preserved.
3. Issue a Litigation Hold
   • A litigation hold is a formal directive instructing employees to preserve all relevant documents and information. The hold should:
     • Explain what evidence and subject matters are potentially relevant to the dispute.
     • Identify the types of evidence to be preserved, including emails, text messages, physical documents, and ESI, regardless of whether the information is stored on work or personal devices.
     • Specify key custodians responsible for preserving evidence.
     • Provide clear instructions on how to retain evidence and suspend routine data deletion policies.
   • Case Example: In Zubulake, the court criticized the defendant for failing to properly implement a litigation hold, resulting in spoliation sanctions.
4. Identify Relevant Evidence
   • Conduct an early assessment to determine what types of evidence are likely to be relevant. This may include:
     • Contracts and agreements.
     • Communications (emails, texts, memos).
     • Financial records.
     • Metadata and logs from IT systems.
   • Ask key players to identify who and what is relevant, and where that information is located.
   • Work with legal counsel and IT experts to ensure comprehensive identification.
5. Suspend Routine Deletion Policies
   • Many businesses have automated systems that delete emails, overwrite data, or discard documents after a certain period. These policies must be suspended for relevant materials.
   • Case Example: In Brookshire Brothers, the destruction of a video recording led to an adverse inference instruction because the evidence was central to the plaintiff’s claim.
6. Document Preservation Efforts
   • Keep detailed records of the steps taken to preserve evidence. This documentation can serve as evidence of good faith if the adequacy of preservation efforts is later challenged.
7. Work with Legal and Technical Experts
   • Collaborate with outside counsel and forensic specialists to ensure compliance with preservation obligations. They can assist in:
     • Creating a defensible process for identifying and preserving evidence.
     • Recovering data that might otherwise be lost.
8. Monitor Compliance
   • Follow up with employees and custodians to ensure they are complying with the litigation hold. Regularly update the hold as new information becomes available or the scope of the dispute evolves.

Consequences of Failing to Preserve Evidence

Failure to preserve evidence can lead to severe consequences, as illustrated by the following cases:

• Adverse Inference Instructions: In Zubulake IV, the court allowed an adverse inference instruction due to the defendant’s failure to preserve relevant emails. This allowed the jury to infer that the lost evidence was unfavorable to the defendant.
• Dismissal of Claims: In Brookshire Brothers, the court discussed that intentional destruction of key evidence could justify dismissal or judgment against the spoliating party.
• Monetary Sanctions: Courts may also impose fines to deter future misconduct and compensate the opposing party for the prejudice caused by spoliation.

Practical Tips for Businesses

• Train Employees: Educate employees on the importance of evidence preservation and the potential consequences of noncompliance.
• Establish a Response Plan: Develop a clear, written policy for handling litigation holds and evidence preservation.
• Act Quickly: Delays in implementing a litigation hold or identifying relevant evidence can increase the risk of spoliation.

Conclusion

Preserving evidence is a critical step for businesses that anticipate litigation. By understanding the legal obligations under federal and Texas law, and by taking proactive steps to implement a comprehensive preservation plan, businesses can protect themselves from sanctions and ensure a strong defense. Working closely with legal counsel from the outset is essential to navigating this complex area effectively and minimizing risk.