DO YOU KNOW WHERE YOUR “ESI” DATA IS TODAY
BY RANDALL A. PENTIUK, ESQ.

Perhaps you recall that radio commercial which ask "Do you know where your children are tonight?" Well now something else has come along that takes that question to the next level for cooperative housing and management agents. The question now being asked is: "Do you know where your email and electronic data are today?" If you don't, you could be in for a rough legal time when litigation comes knocking on your door. What brought about this concern for e-data anyway and why ought you be concerned?

Recent changes to many state and the Federal Court rules make clear that discovery of electronically stored information stands on equal footing with discovery of paper documents. The principal focus of these new rules is to preserve electronically discoverable records, documents and e-mail. Courts have characterized these records as electronically stored information ("ESI"). Thus databases, Web content, voice messaging, emails and even spreadsheets are open to discovery in their electronic form. The upshot of the new Federal Rules of Civil Procedure is that:

1. ESI is discoverable;
2. Litigants must preserve and produce ESI:
3. Lawyers must understand how to request, protect, review and produce ESI:
4. The courts can address abuses to electronic discovery.

Now you may be saying, "That's all well and good, but we aren't in litigation and if we are, our lawyers will handle that issue." Well maybe. You see, the new Rules put the burden on each party to preserve ESI, even before a lawsuit is filed. A major part of the new Rules requires that when a Cooperative, its Board or management agent for instance, "knows or should have known" that litigation is either likely or imminent, then it has a duty to place its employees, agents and related third parties on notice to preserve possible evidence relating to the nature or scope of the likely litigation. This notice also extends to persons who have custody and control of potentially relevant evidence.

For example, if a member or employee has a dispute and says: "I am going to get a lawyer" or "I am going to sue you", than the cooperative is probably going to be considered on notice that litigation is likely. That knowledge triggers an ongoing duty to recognize and implement a search process for documents or evidence that are relevant to the issues to be litigated. A log of the search for those documents must also be made. Where did you look? What did you look for? What did you find? This log is especially useful if litigation actually commences. The search must also be authentic, meaning, it must actually be carried out by someone who can later testify that it was conducted.

You must also preserve those documents, even if they would have otherwise been destroyed in the normal course of your business operation. Thus, once you are on notice that litigation is likely, the new rules require three things. First, they require a litigation hold on the elimination or discarding of relevant documents. Second, they require an authentic search of its records for such documents. Third, they require production of documents in their original format. Destruction of e-mail is perhaps the biggest problem in complying. Make sure you have documentation directing persons with relevant e-mail to preserve same. The duty to preserve usually falls on the sender.

For example, in typical employment related litigation, the employer would have a duty to preserve the employees' file(s), personnel and/or medical file(s), and request its IT department of custodians or other employees to preserve c-mails, the employees' computer and/or other electronically stored information that may be relevant to the scope of the employment dispute.

We encourage you to contact your legal advisor to get more information concerning the new Rules in your state and how they may specifically affect the way you preserve and eliminate documents.