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Electronically Stored Information (ESI): A Shot Across the Virtual Bow

October 23, 2007

Bracewell & Giuliani LLP represented a company who had a one day document retention/destruction policy of deleting electronically stored information ("ESI") documents, namely e-mails.  At a recent pretrial hearing before a well-respected and experienced Harris County judge, the defendants convinced the Court that, even though the company did not anticipate litigation until several months after certain e-mails had been deleted, the defendants should be allowed to argue to the jury that the company destroyed relevant evidence and the Court should instruct the jury that it could infer that the company destroyed documents that were hurtful to the company's case (a "spoliation instruction").  The defendants' arguments were completely at odds with the Texas Supreme Court's holding on a company's duty to preserve evidence:

Before any failure to produce material evidence may be viewed as discovery abuse, the opposing party must establish that the non-producing party had a duty to preserve the evidence in question...  Such a duty arises only when a party knows or reasonably should know that there is a substantial chance that a claim will be filed and that evidence in its possession or control will be material and relevant to that claim…the destruction of records in the regular course of business and without notice of their relevance to future litigation does not raise a presumption of discovery abuse

Wal-Mart Stores, Inc. v. Johnson, 106 S.W.3d 718, 722 (Tex. 2003). 

Disregarding the applicable case law, this judge nevertheless found that a one-day destruction policy was unreasonable and agreed to allow defendants to argue that the company had destroyed relevant evidence.  The Court's decision was neither on the record nor published.  This alert advises that this judge's reaction may not be an isolated event and that companies should be further on guard in connection with their ESI retention/destruction policies.