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Document Retention and Storage Policies: Necessary Evils for Any Business in the Digital World

By: Shawna D. Dalrymple

The general principle behind litigation discovery rules are quite simple – put “all cards on the table” thereby allowing an equal opportunity to all parties to obtain full knowledge of the issues and facts of the lawsuit prior to trial.[1]  The overall objective of the Texas discovery rules is to prevent a “trial by ambush.”[2]  While the scope of discovery is actually quite broad, discovery is confined to (1) the subject matter of the case and (2) the reasonable expectation the obtained information will help resolve the dispute.[3]  While technology has added amazing efficiencies to everyday business dealings, technology has created unforeseen “needles” (i.e. responsive documents, communications, physical items, etc.) in a massive data “haystack” – including websites visited, calendar entries entered (and deleted), and e-mail correspondences written and received during times relevant to the dispute – all of which are now discoverable items which must be produced if requested.  Unfortunately, properly responding to discovery can be exceptionally time consuming and frustrating, especially considering the explosion of electronically stored data.  Regardless, discovery is a process, and requires a client’s active, continuing participation, as failing to produce these “needles,” whether the failure was intentional or not, can have catastrophic results, including the court ordering a client pay costly sanctions, restrict a party from presenting evidence at trial, or worse – excluding a party’s entire defense (known as “death penalty sanctions”).  Additionally, as with most aspects of litigation, a lawyer is only able to prepare for what he or she is aware of; therefore, a defense is only as good as the information provided by the client.  Many times a client incorrectly believes withholding a “bad” document, item, fact or other relevant information is best for the case, because a client believes the production would hurt the case.  Unfortunately, in most circumstances, withholding information, for whatever reason, from your lawyer will only hurt your case, as normally, no information is so damaging it will destroy a defense, and more importantly, if such damaging information exists, your lawyer needs to address it as soon as possible and not be surprised.

Of all the discovery avenues available, Requests for Production (“RFP”) (requiring the production of “documents and tangible things” related to the claim(s), including “papers, books, accounts, drawings, graphs, charts, photographs, electronic and videotape recordings, data and data compilations,”[4]) can be the most difficult.  Due to technology’s current role in everyday life, “documents and tangible things” also includes, but is not limited to e-mails, text messages, social media posts, billing, receipts, payment confirmations, medical records, diaries, journals, message books, internal messaging systems, etc.  To properly respond to a RFP and assist in the defense of any case, a client’s best bet is to collect anything and everything which does or in any way could relate to the allegations, and forward to review by counsel as soon as possible.  If there is a question as to the relevance or confidential/proprietary nature of the document, notate the document(s), but include in production to counsel for further review.

To place a business in the best position possible to respond to RFPs or any other discovery during litigation due to the infiltration of technology into everyday life, it is imperative for a business to create, implement and enforce a Document Retention and Storage Policy (“DRSP”).  A DRSP is specifically document tailored to the specifics of the business, addressing filing procedures, data storage, data scrubbing and other aspects of record keeping related to the business.  Further, in many instances, a DRSP should address a business procedure for naming electronic documents and where documents are stored, both on the internal systems and any off-site storage facilities.  As a party has a common law duty to preserve evidence when a party knows or reasonably should know that (1) there is a substantial chance that a claim will be filed and (2) evidence in its possession or control will be material and relevant to that claim,[5]  a well-written and enforced DRSP helps a business show compliance with the preservation of possible evidence.  Further, a number of statutes, regulations and canons of ethics require the preservation of records for certain periods of time.[6]  Preservation of documentation should include all “unprivileged information relevant to the subject of the lawsuit, including inadmissible evidence, as long as it is reasonably calculated to lead to the discovery of admissible evidence”[7] which is in the party’s “possession, custody or control.”[8]  “Possession, custody or control” means the person either has physical possession of the item or has a right to possession that is equal or superior to that of the person who has actual physical possession.[9]   A party must protect anything it believes is or could be relevant to any claim – as improperly losing or destroying relevant evidence (“spoliation”) can result in imposition of financial sanctions[10] or a jury instruction to presume the missing evidence is relevant and harmful, regardless of the evidences actual relevance or harm.[11]  As the consequences for failing to protect possible evidence is so drastic, a well written and enforced DRSP, including specific timelines for which documents are retained, for all documents (hard copies and electronic) can create protection should documents inadvertently be destroyed or deleted.  A DRSP can rebut a claim of spoliation if the evidence was destroyed or discarded pursuant to the DRSP in the ordinary course of business, as long as the business was not aware of the potential claim at the time the destruction occurred.[12]  However, a DRSP, even if exactly followed, will only limit the number of misplaced documents, as things can inadvertently be misplaced, improperly named or identified, so it is important someone with relevant knowledge and access perform a search of all possible locations of information to ensure production of any and all relevant documents.

While RFPs, and really all discovery, can be difficult to respond to, it is imperative to the success of the case that clients take the time to review their records, and provide everything which could be responsive to the requests.  A well drafted, implemented and enforced DRSP can help streamline the process of identifying, locating and providing the necessary information to your lawyers.  While not perfect, a DRSP is a great way to get a business organized in a systematic way and allow a business to be prepared in the event litigation arises.  Should you have any questions about a Document Retention and Storage Policy or wish to have a consultation regarding implementing a policy, please contact Ms. Dalrymple or any of the lawyers at Chamblee Ryan, P.C.

[1]            West v. Solito, 563 S.W.2d 240, 243 (Tex.1978).
[2]              Gutierrez v. Dallas ISD, 729 S.W.2d 691, 693 (Tex.1987).
[3]              TEX. R. CIV. PRO. 192, cmt. 1; In re CSX Corp., 124 S.W.3d at 152.
[4]              TEX. R. CIV. PRO. 192.3(b).
[5]              Brookshire Bros. v. Aldridge, 438 S.W.3d 9, 20 (Tex.2014).
[6]              See Trevino v. Ortega, 969 S.W.2d 950, 955 (Tex.1998); e.g. Bus. & Com. Code §72.002 (three year retention of business records required to be kept by state law unless another law provides otherwise).
[7]              TEX. R. CIV. PRO. 192.3(a); In re CSX Corp., 124 S.W.3d 149, 152 (Tex.2003).
[8]              TEX. R. CIV. PRO. 192.7(b);
[9]              In re Kuntz, 124 S.W.3d 179, 181 (Tex.2003).
[10]            See Brookshire Bros. v. Aldridge, 438 S.W.3d 9, 21 (Tex.2014).
[11]            See Brookshire Bros. v. Aldridge, 438 S.W.3d 9, 22 (Tex.2014).
[12]            See Trevino v. Ortega, 969 S.W.2d 950, 957 (Tex.1998).