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Court: Records Retention Policy, Litigation Can Coexist
Information Management Journal, Nov/Dec 2006 by Swartz, Nikki
It's never too late for an organization to implement a records retention policy even when that company is in litigation according to a recent ruling by the U.S. District Court for the Eastern District of Virginia in a patent infringement case.
The federal court's opinion in Samsung Elecs. Co. Ltd. v. Rambus Inc., issued in July, effectively said that implementing a document retention policy at the same time a company is involved in actual or pending litigation will not necessarily result in a charge of spoliation.
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In the case, Samsung accused technology firm Rambus of spoliation of evidence in the underlying suit and requested that the court award Samsung attorney's fees because of Rambus' misconduct in litigation. Samsung argued that Rambus simultaneously developed and implemented a records retention policy while litigation took place and that these actions indicated an intent to design a records retention policy as a litigation strategy.
The court held that Rambus had indeed engaged in spoliation of evidence, but declined to award attorney's fees to Samsung because it said Samsung's claims did not meet the criteria for doing so.
Judge J. Payne wrote in the decision that companies and individuals are not at risk of a finding of spoliation just because they have adopted a records retention policy. "[T]he law recognizes that document retention policies and actual or anticipated litigation can coexist," he wrote. "For example, a company can modify its policy to preserve documents reasonably thought relevant to the actual or anticipated litigation. To accomplish that, however, the company must inform its officers and employees of the actual or anticipated litigation, and identify for them the kinds of documents that are thought to be relevant to it. Other mechanisms, such as collecting the relevant documents and segregating them, may accomplish the same result."
Payne also noted that corporate America has little to fear from the court's decision, which held Rambus accountable for spoliation of evidence, because a finding of spoliation is generally measured by reviewing all of the circumstances surrounding the implementation of the retention policy. "A legitimately adopted and implemented policy will pass muster," he concluded. However, die court concluded that a company that implements a document retention policy during or in anticipation of litigation and destroys documents relevant to the actual or anticipated litigation, will face and lose a spoliation charge.
Payne said Rambus had implemented a "pervasive document destruction plan" as part of a litigation strategy against other technology firms, specifically Samsung. And because Rambus' plan called for destroying discoverable documents, it cannot be called "content neutral or innocent," Payne wrote, even though Rambus argued that the document destruction took place prior to any lawsuits being filed.
This isn't the first time Rambus has been accused of using its records retention policies to thwart discovery. In a similar patent infringement case, Rambus Inc. v. Infineon Tech. AG, currently being argued in the same court, Infineon Tech accused Rambus of developing a document retention program as a part of its litigation strategy.
While developing a retention policy, Rambus also held a company-wide "Shred Day," during which it destroyed nearly two million documents relevant to the litigation. The court ordered Rambus to produce evidence about the development and implementation of the records retention policy.
In yet another patent infringement case involving the company, Hynix Semiconductor Inc. v. Rambus Inc., the court ruled that Rambus' adoption and implementation of a document retention policy was a "permissible business decision" and Rambus' hosting company "Shred Days" did not constitute unlawful spoliation.
Copyright ARMA International Nov/Dec 2006
Provided by ProQuest Information and Learning Company. All rights Reserved
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