By Richard Hu
Sep. 5, 2016
It’s among a human resources professional’s worst nightmare: being asked to open your HR management system in response to a discovery request for relevant documents in a lawsuit involving your company.
It’s not uncommon. On Oct. 19, 2015, a New Jersey federal magistrate judge in a $250 million class-action gender bias lawsuit ordered Merck & Co. to produce all employment and compensation data for all sales representatives the company employed from mid-2009, when it switched to its present HRMS, through Dec. 1, 2010. As an HR professional, what should you do and what should you be aware of?
1. Leveraging Analytics Module for the Litigation Hold.
You will initially receive a litigation hold from the party intending to file the lawsuit. A litigation hold requires your company to preserve all data that may be related to the lawsuit, including electronically stored information.
When it comes to an HRMS, you must disable automated removal, extension or verification of documents nearing the time for deletion based on governmental employment policies that were put into place to enhance privacy and decrease the risk of unauthorized access and the operational expenses of storing information. However, since all automated measures are not system-wide, that often raises the question of “Must I preserve the entire system or can I preserve only portions of the system?”
If the automated measures are not system-wide, you can use an analytics module that is run concurrent with your HRMS to help define the scope of what needs to be preserved. These analytics modules provide a litany of information, such as information on custodians, where the data or application is located in the system, which employees have access to that data or application, and the last time the data or application was accessed. In the past, these modules have been useful in identifying legacy information that should be integrated into a new HRMS but can also be applied toward helping narrow the scope of what needs to be preserved for a litigation hold.
Narrowing the Scope of the Litigation Hold and Discovery.
Narrowing the scope to the litigation hold may jumpstart what would ultimately be narrowed anyway later in the litigation when the parties determine the scope of discovery. Equally applicable to narrowing the scope of the litigation hold, the narrowing of discovery during litigation requires you to provide information to your attorney on the layout of your HRMS, the nature of the data contained in the HRMS and the best methods to extract the data. If the lawsuit is in federal court, Federal Rule of Civil Procedure Rule 26(b)(1), which was amended Nov. 30, 2015, applies. Rule 26(b)(1) has streamlined the scope of information that can be sought to be “relevant to any party’s claims or defense and proportional to the needs of the case,” adding a new proportionality requirement that previously did not exist.
The factors involved in proportionality are the importance of the issues in the lawsuit, the amount at issue in the lawsuit, the parties’ relative access to relevant information, the parties’ resources, the importance of the particular discovery in resolving the issues, and whether the burden of the particular discovery outweighs its likely benefit. Finally, if the scope of the litigation hold was not narrowed initially due to the lack of an analytics module, you can restart the suspended automated measures for portions of the system determined to be irrelevant when the scope of discovery is narrowed.
2. Failure to Preserve Relevant Information.
Failure to preserve relevant information can result in repercussions in court. If the case is in federal court, Federal Rule of Civil Procedure Rule 37(e), which also was amended Nov. 30, 2015, applies. The amended Rule 37(e) has removed prior judicial discretion and is now much more directed and procedural in application. In essence, no sanctions would be imposed unless the electronically stored information has been lost, you failed to take “reasonable steps” to preserve that information, there was prejudice to the other party, the information cannot be replaced by another source or restored and there was an intention on your part to deprive the other side of the information.
If all of these factors are met, then the court will presume the lost information was unfavorable to you and instruct the jury as such and can even dismiss the case (if you were the plaintiff in the lawsuit) or enter a default judgment against you (if you are the defendant). In Zubulake v. UBS Warburg, LLC, a New York federal judge sanctioned UBS by giving adverse inference instructions to the jury with respect to the emails that were deleted after a litigation hold was issued and requiring UBS to pay attorneys’ fees that the other party incurred in trying to get deleted emails and attorneys’ fees for new depositions of certain employees.
3. Producing Electronically Stored Information.
Finally, the biggest question that comes up at this point is how to produce the information. The original or “native” format of the information is normally the requested format, but when it comes to HRMS, the data can only be exported to the same HRMS, which the attorneys for the other party would not likely have. Instead, spreadsheets of the data are the most common format that data from HRMS is produced.
Richard Hu is an associate attorney at Taft, Stettinius & Hollister LLP. Comment below or email firstname.lastname@example.org.
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