Small and mid sized businesses BEWARE, starting this year (January 1st) if you are involved in Connecticut State Court litigation new Electronic Discovery Rules (e-Discovery) apply. Unlike larger multi-state businesses, which are more likely to land in Federal Court (or in one of the 30+ other state courts) where e-Discovery obligations have existed for many years, local businesses in Connecticut are generally ill prepared to protect themselves from electronic discovery requests. BASIC QUESTIONS: Do you know what "electronically stored information" ("ESI") consists of? Have you identified all the different data in your company (emails, documents, spreadsheets, databases, websites, social media, including all their different versions)? Have you consulted your legal counsel, computer systems provider, management and HR professional to write a "document retention policy"? Do you spell out to employees what folders to store certain data in, how long to store it, what data to archive, and when to routinely archive or delete data? Do you know when and how to establish a "litigation hold" so that your employees preserve relevant data from destruction in the usual course of their dealings? A good business attorney, knowledgeable about your company and who regularly represents clients in litigation, will be prepared to advise and collaborate with your management (and IT professionals) concerning; 1) what ESI will be important to retain so you can prosecute and defend your business transactions, and 2) what likely ESI an adversary's counsel may generally seek during a lawsuit. NEW RULES: State rule (Sec. 13-1) defines "electronically stored information" (or ESI) as "information that is stored in an electronic medium and is retrievable in perceivable form" with "electronic" encompassing "relating to technology having electronic, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities". This new definition is effectively broad and while covering emails, computer data, electronic documents, PDAs, text messages, Facebook, Twitter, back up tapes, and other devices we use today it also envisions future developments of computer technology and electronic based information. While an obligation exists to produce all ESI, including archived data, if that ESI is not "reasonably accessible" the new rules do permit judges (on a case by case basis) to shield production if they find the quality, importance and relevancy of that ESI (including its availability in other more accessible forms) is outweighed by the burden and expense of its production. Where a Court orders production of non-accessible ESI it has discretion to shift all or a portion of the cost to the requesting party. SAFE HARBOR: New State rule (Sec. 13-14) can shield a business from sanctions and default where no evidence exists that it intentionally destroyed ESI to avoid known preservation obligations. A critical factor considered by the Court is that the business cannot comply with the request because it engaged in a systematically applied "routine and good faith" process that resulted in ESI being deleted or destroyed. Having a comprehensive ESI retention policy will be key evidence in demonstrating such destruction was in the businesses' normal business operations. BE PROACTIVE: Failing to have a proactive approach to the retention and deletion of electronic data can be a costly mistake. For example, determining what data is important to your business (or required to be retained by regulation / industry standards), and archiving / purging the rest, will reduce the universe of potential ESI that is "accessible" and subject to production. As volume of ESI increases so does the time and expense of the IT consultant, legal counsel, and employees involved in retrieving and reviewing that ESI. In addition, having a clearly articulated data retention policy, that also includes a "litigation hold" mechanism, will aid your company in demonstrating to the Court that your ESI was purged in the normal course of business before safeguards were enacted to preserve data once an incident, demand or lawsuit became known. Failing to preserve data, especially after knowledge of an incident probable to result in litigation, can place your business at risk of costly court sanctions (fines), defaults being issued against you for non-compliance, and possible monetary damages derived solely by the Court finding ESI was intentionally destroyed. While retention of email, documents and other electronic data are probably not high priorities of Connecticut's small and mid sized businesses, they should at least: become aware of these new Court rules and understand what type of future litigation the company may face; evaluate how their systems store and delete data; establish an appropriate data retention policy; and execute and train employees on that policy. Brian J. Ladouceur, Jr., is an associate with the firm of Clayman, Tapper & Baram, LLC located at Three Regency Drive, Bloomfield Connecticut. He concentrates his practice in the area of corporate litigation, corporate counseling, business and commercial transactions and employment law. The above article is provided for informational and educational purposes only for persons interested in the subject matter, and is not legal advice or legal opinion.
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