Chicago Business Litigation Lawyer Blog
The letter arrives on a Tuesday. A former partner, a customer, or a competitor says you owe money, and near the end there is a paragraph telling you to preserve all documents. Meanwhile your email system purges old messages every 90 days, a departing employee’s laptop is about to be wiped for the next hire, and someone in the office is wondering whether a few of those text messages should stay around.
The safe answer is simple. Once a dispute is on the horizon, stop the routine destruction, keep what relates to the dispute, and do it in a way you can later prove. The law behind that answer has more nuance than the demand letter admits, but a business owner should not be looking for the edge of the rule with his own evidence at stake.
Does Illinois require a business to preserve evidence before a lawsuit is filed?
The answer depends on the theory, and two lines of authority matter. One is a claim for negligent spoliation. The Illinois Supreme Court recognized it under ordinary negligence law in Boyd v. Travelers Insurance Co., 166 Ill. 2d 188 (1995). The stated general rule is that “there is no duty to preserve evidence,” but a duty may arise through an agreement, a contract, a statute, another special circumstance, or a voluntary undertaking, if a reasonable person in the defendant’s position should have foreseen that the evidence was material to a potential civil action. Id. at 195. The court applied the same test in Martin v. Keeley & Sons, Inc., 2012 IL 113270, ¶ 27.
The other line concerns sanctions in the lawsuit itself, and it is the one that should get an owner’s attention. In Shimanovsky v. General Motors Corp., 181 Ill. 2d 112 (1998), the court addressed evidence altered before suit was filed. It described the appellate court’s determination that “a potential litigant owes a duty to take reasonable measures to preserve the integrity of relevant and material evidence,” based on concern that a party could otherwise “circumvent discovery rules or escape liability simply by destroying the proof prior to the filing of a complaint.” Id. at 121-22. So the absence of a general tort duty is no comfort to a party who destroys what later proves to matter. The sanctions power under Illinois Supreme Court Rule 219(c) can reach that conduct.
Does a preservation letter change anything?
It can. In Martin, the court held that possession and control of evidence alone is not enough to create a duty in tort, and that something more is required, “such as a request by the plaintiff to preserve the evidence and/or the defendant’s segregation of the evidence for the plaintiff’s benefit.” 2012 IL 113270, ¶ 45. A written request is one of the examples the court gave. It also fixes the date on which no one can claim surprise. A business that receives one should treat the paragraph as a working instruction, whatever it thinks of the merits of the claim. And a business with a claim of its own should send one early and specifically, because the other side’s evidence is at risk too.
What happens if evidence is lost anyway?
Outcomes vary widely, and the court looks at the actual situation. Shimanovsky rejected the idea of an automatic penalty: “a party is not automatically entitled to a specific sanction just because evidence is destroyed or altered.” Rather, the court must consider “the unique factual situation that each case presents” and decide what sanction, if any, is appropriate. 181 Ill. 2d at 127. There the trial court’s dismissal of the plaintiffs’ case was not sustained on the record it had made. Id. But that same flexibility means the risk has no fixed ceiling. A separate negligence claim is also possible where the elements are met. In either setting, a company that lost evidence ends up explaining itself to a judge, and that is a poor way to begin defending a case, even a good one.
What should actually be preserved?
Think about where the facts of this dispute live now, not where they lived in 2010. That usually means email, including the accounts of departed employees; text messages and messaging apps on company and personal phones if used for business; accounting and point of sale data, along with any logs the system keeps; shared drives and cloud storage; calendars; contracts and drafts; and physical items such as equipment or product samples. Data held by outside vendors, such as a bookkeeper or a software provider, deserves a request of its own, since a subscription that lapses can take the records with it.
How do you put a hold in place?
Write it down, and keep it short enough that people will read it. A good hold notice identifies the dispute in plain terms, names the categories of material, tells recipients to stop deleting and to suspend anything automatic, and gives them someone to call with questions. Send it to the people who actually have the information, including the office manager and whoever administers the systems. Then follow up, and keep a record of who received the notice, when, and what was done to suspend automatic deletion. A hold that exists only as an instruction in the owner’s head will not help in a later dispute over what happened.
Three steps belong in the first 48 hours. First, call whoever runs your email, phones, and software, and suspend automatic deletion, device wiping, and account closures. Second, send a written hold to the people likely to have relevant material, including yourself. Third, do not clean up. Do not delete the embarrassing text, tidy the file, or revise a document to reflect what you meant at the time. A bad document can often be explained. A deleted one tends to explain itself, and not in your favor.
A preservation problem is one of the few litigation problems that a business can avoid entirely with a single afternoon of attention. It is also one of the few that can overshadow the merits if it is left alone.
If you have received a demand letter, or you are about to send one, we can help you put a preservation plan in place before it becomes an issue in the case. Call DiTommaso Lubin, P.C. at 630-333-0333 for a free consultation, or contact us online.
Big-firm firepower, with the partners on your case
Peter S. Lubin and James V. DiTommaso are Chicago business litigation lawyers who try cases throughout Illinois. Peter is a graduate of the University of Chicago Law School, where he has taught trial practice for decades, and he has been recognized as an Illinois Super Lawyer. He has served as lead counsel in more than one hundred class actions and has handled more than one hundred shareholder, LLC, derivative, breach of fiduciary duty, and fraud matters, on both the plaintiff and the defense side. Crain’s Chicago Business credited him with the largest class action settlement of the year for a $40 million recovery in Erikson v. Ameritech, and the firm has been named DuPage County Law Firm of the Year. The firm and its lawyers have represented clients such as McDonald’s, Motorola, and Experian, and have litigated against companies including AT&T and General Motors. James DiTommaso, a graduate of Chicago-Kent College of Law with a certificate in business law, has served with the Illinois Appellate Court and has argued a case before the Illinois Supreme Court. He litigates these disputes in the Illinois trial and appellate courts and in the federal courts. When you hire this firm, the lawyers whose names are on the door are the ones who handle your case.
This post is for general information and is not legal advice.