Litigation Hold Notice
March 24, 2023
A litigation hold notice is essential to prevent spoliation of evidence. Spoliation refers to the destruction or significant alteration of evidence, and it can result in severe consequences, including sanctions, adverse inference instructions, and monetary awards to the prevailing party. By issuing a litigation hold notice, the client or other party is put on notice that litigation is forthcoming or has been commenced, and destruction of documents thereafter could result in sanctions. Corporate entities should ensure compliance by issuing litigation hold alerts to all staff and IT departments involved and follow up regularly. Failure to implement a litigation hold or to preserve data could result in severe consequences
Litigants in New Jersey state court should be aware that they have a duty to preserve evidence when litigation is reasonably anticipated, and failure to do so can result in sanctions under the New Jersey Rules of Court. In federal court, Federal Rule of Civil Procedure 37(e) governs spoliation prevention and litigation hold notices in federal court. It provides that a court may impose sanctions on a party who fails to preserve electronically stored information (ESI) when that party had an obligation to do so, and the failure resulted in prejudice to another party. The rule also provides a safe harbor for parties who fail to preserve ESI because of routine, good-faith operation of an electronic information system.
A litigation hold notice is a key tool in preventing spoliation, and it typically includes a description of the scope of the hold, instructions for compliance, and consequences for noncompliance. The notice should be issued as soon as litigation is anticipated, and it should be updated and reissued as necessary.
When data has been lost, particularly where the loss appears deliberate, the court can draw adverse inferences against a party. This can have a significant impact on the outcome of the case, as the adverse inference may suggest to the court that the lost evidence would have been damaging to the party that failed to produce it. In other words, the court may infer that the party that lost the evidence did so because it was unfavorable to their case. Adverse inferences can also arise when a key witness who would normally be expected to testify does not, which may lead the court to infer that the witness's testimony would have been unfavorable to the party that failed to produce them.
It is advisable to consult with a licensed attorney in New Jersey to determine the specific requirements and best practices for implementing a litigation hold in the state.