A recent federal court decision in Illinois serves as a reminder that employers who fail to promptly and properly preserve potentially relevant documents and electronically stored information (ESI) run the risk of significant court-imposed sanctions.

In Jones v. Bremen High School District 228 (N.D. Ill. May 25, 2010), the court sanctioned the defendant employer for its failure to preserve e-mails after receiving notice of potential litigation.  Victoria Jones, a former employee, filed an EEOC Charge in October 2007, and then a lawsuit in June 2008.  While the School District promptly told involved managers to cull out documents and e-mails that they believed were relevant to the claims, it never provided guidance as to what might be “relevant” and waited until October 2008 to issue a legal hold notice halting the destruction of e-mails that employees otherwise were permitted to permanently delete.  Jones moved for sanctions after learning that relevant e-mails were likely destroyed before the hold notice was issued in October 2008.

In deciding to impose sanctions against the School District, the court considered when the employer’s duty to preserve arose, whether that duty was breached, how the plaintiff was harmed and if the breach was caused by willfulness, bad faith or fault.  The court found as follows:

• Duty to Preserve:  The duty to preserve documents and ESI arises when the employer reasonably anticipates litigation—such as when an EEOC Charge is received—and requires the employer to preserve evidence that is within its control and that it reasonably knows to be or can foresee might be material to the claims.
   
• Breach of Duty:  While an employer’s failure to issue a legal hold notice is not per se evidence of a breach, the employer must take some affirmative steps to preserve potentially relevant materials when the duty to do so arises.
   
• Harm:  The court found that employees—particularly those with an interest in the litigation (such as the manager of the plaintiff)—were not qualified to judge which documents were relevant to the suit on their own, and, because there was a “distinct possibility” that e-mails relevant to the case were destroyed by employees, the plaintiff was harmed.
   
• Level of Fault:  The court found that the School District’s conduct was grossly negligent, and therefore reckless, because it relied on the employees implicated in the Charge and the suit to select the documents they felt were relevant.

 Jones serves as a reminder that electronic discovery presents a number of pitfalls for employers who take lightly their obligations to identify and preserve relevant documents and ESI.  To protect their interests, employers should develop a preservation procedure, which should be activated promptly after notice of potential litigation is received.  That procedure must involve: (i) identifying all managerial employees who might have information or documents relevant to potential litigation; (ii) providing written guidance to those individuals, with the assistance of counsel, concerning what might be relevant and should be preserved; and (iii) taking steps to suspend the automatic deletion of (and to preserve) e-mails sent or received by those individuals.  Smaller employers are not exempt from preservation obligations because of their size.  This is particularly true where well-drafted and promptly distributed hold notices—which can be easily implemented and followed up on by the employer—provide the basic means to preserve documents and e-mails and to protect relevant information.  This truly is an area where an ounce of prevention can be well worth a pound of cure.