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Court of Chancery Issues Guidelines for Preservation of Electronically Stored Information

By Francis G.X. Pileggi

Today the Court of Chancery issued a 'Guideline' dealing with the issue of preservation of electronically stored information ('ESI') which is a 'must read' for any practitioner appearing before the Court. The Guideline is short in nature (two pages) and is limited to preservation of ESI (it does not discuss collection or production) but it speaks volumes on the issue of ESI and the role this topic is playing and will play in litigation before the Court. Read the Guideline verbatim here.

It is important to note that the Guideline is not a rule of the Court of Chancery. Indeed, there are no federal or state rules dealing directly with a party's preservation obligation. The reason for that is that the court does not have jurisdiction to regulate pre-litigation behavior. Court rules address, for the most part, behavior that starts with the filing of the case. The duty to preserve relevant information is a common law obligation which can be stated simply -- a party to litigation must take reasonable steps to preserve potentially relevant information (and that includes ESI), that is within the party's possession, custody or control.

While the Guideline is short enough that it does not need much of a summary, a few points are worth keeping in mind. The Guideline is meant to be a reminder to clients and their counsel (including Delaware counsel) of their obligations to preserve ESI. Counsel (inside and outside) have an oversight role in the identification and preservation of ESI. The Court has used some very familiar phrases in the Guideline such as reasonableness and good faith and while the Guideline notes that 'reasonableness' in the handling of ESI will be addressed on a case-by-case basis, the Guideline does identify some suggested behavior for parties and their counsel to use such as using a collaborative team approach to preservation as well as the issuance of written legal holds.

Finally, a couple of points made in the last paragraph of the Guideline should not be overlooked. The topic of preservation of ESI needs to be a point of discussion between the parties and their counsel and it is very important that this discussion occur early in the case. While not directly referenced in the Guideline, the underlying problem of ESI spoliation claims being raised toward the end of discovery which will either derail the resolution of the substantive issues in the case or cause serious delays in the progress of the case is a complaint that is being raised by federal and state court judges around the country.

This summary was prepared by Kevin F. Brady of Connolly Bove Lodge & Hutz LLP.
 

Full post as published by Delaware Corporate and Commercial Litigation Blog on January 19, 2011 (boomark / email).