A duty to preserve evidence is triggered when a company knows or reasonably should know that the evidence may be relevant to pending or future litigation. As all employers should be aware, a duty to preserve potentially relevant documents is triggered upon receipt--or even earlier notice of--an administrative charge of discrimination, such as a Notice of Charge of Discrimination from the Equal Employment Opportunity Commission (EEOC) or similar notice from a state agency such as Oregon's Bureau of Labor and Industries (BOLI). Note that the courts view such administrative claims as "litigation" when dealing with discovery and the duty to preserve evidence.

As one Washington employer recently discovered, a failure to issue a litigation hold and to preserve evidence can lead to severe consequences, including monetary sanctions. In Knickerbocker v. Corinthian Colleges, 2014 WL 1356205, __ F.R.D. __ (W.D. Wash. April 7, 2014), the Western District of Washington sanctioned an employer $25,000 plus attorney fees (and, separately, sanctioned its attorneys $10,000) for failing to issue a litigation hold after receipt of two EEOC Notices of Charge of Discrimination involving two terminated employees, as well as subsequent discovery misconduct.

In that case, the employer allowed the former employees' work email accounts to be deleted shortly after their termination, despite the fact that the employer received the EEOC notices, followed by a demand letter from the plaintiffs' attorney, and service of a complaint. The employer should have issued a litigation hold to suspend its routine destruction of records upon receipt of the EEOC notices because, at that point, it knew or reasonably should have known that its former employees' emails would be potentially relevant to future litigation. In another recent case, the same district court found that a duty to preserve evidence was triggered when a former employee responded to his suspension notice with reference to the EEOC--in other words, even a simple mention of the EEOC in this context put the employer on notice that a charge might be filed. See EEOC v. Fry's Electronics, Inc., 874 F. Supp.2d 1042, 1044 (W.D. Wash. 2012).

Once the duty is triggered, its scope is broad. It extends to any documents (whether paper or electronic) or tangible items that the company knows or should know are relevant or potentially relevant to the litigation, as well as to documents in the possession of employees who are key players in the case. If a company has a document retention policy, the company is obligated to suspend that policy and implement a litigation hold to ensure that relevant documents are preserved. Failing to preserve evidence is considered willful spoliation if the company has some notice that the documents were potentially relevant to the litigation before they were destroyed. For courts in the Ninth Circuit (including the federal courts in Oregon and Washington), spoliation of evidence raises a presumption that the destroyed evidence goes to the merits of the case, and that the evidence was adverse to the party who destroyed it.

Employers should consult with counsel to ensure compliance with their duty to preserve evidence upon notice of any potential administrative action or litigation.

Questions?  Contact Kelly Tilden, Kim McGair, Trish Walsh, or Melissa Beyer. 

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