Employer’s Notice of EEOC Charge Triggers Litigation Hold Obligations

What steps do employers need to take to be sure they don’t get strangled by a litigation hold?
Courts have proclaimed that an employer’s obligation to preserve potentially relevant evidence
extends to eletronically-stored information. This includes an employee’s e-mail communications
made on a work e-mail account.  When is the obligation to preserve this evidence triggered?
Courts now say it begins as soon as an employer receives notice of  EEOC or IDHR charge of
discrimination.

Employers must know that litigation holds have assumed a level of importance in civil litigation. This reality warrants very careful attention from the employer and their counsel involved in defending employment discrimination claims.  A litigation hold requires the employer to take steps to ensure the preservation of  potentially relevant documents and electronically-stored information  (“ESI”)  evidence in anticipation of future litigation. The type of evidence which may be relevant depends on the specific facts of the case. However, the rules of evidence in both Illinois and federal courts broadly define relevant evidence as “evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence.”  Illinois and Federal Rules of Evidence 401.   Claims of spoliation of evidence and motions against employers seeking discovery sanctions are occurring with more regularity in employment discrimination cases in state and federal courts.

Recently,  in  Knickerbocker v. Corinthian Colleges, Inc., (2014 WL 1356205) a case from the U.S. District Court for the Western District of Washington, an employer and its attorneys were sanctioned for spoliation of evidence caused by the employer’s failure to issue a litigation hold and later deletion of employee e-mails pursuant to the employer’s document retention policy.  In Knickerbocker, several former employees of Corinthian, a company that runs for-profit colleges throughout the United States and Canada, sued the company alleging racial discrimination, harassment and retaliation in violation of Title VII of the Civil Rights Act of 1964.  Plaintiffs alleged the racial discrimination resulted in the termination of their employment.  During the civil case, discovery  revealed that plaintiffs’ work e-mail accounts were deleted by the employer following their termination, but after the employer had received the EEOC notice of the charges of discrimination filed by the employees.

The key issue before the court was when is the duty  to preserve triggered for the employer?  The court held that the duty to preserve was triggered after the employer received notice of the plaintiffs’ charges of discrimination filed with the Equal Employment Opportunity Commission (EEOC).  This notice was sufficient to put the employer on notice of possible future litigation.  The employer’s failure to take all necessary steps to ensure that potential relevant evidence including the employees’ e-mail accounts were not destroyed was held against the employer resulting in sanctions.  Specifically, the court was highly critical of the employer’s failure to ensure that the company management responsible for retrieving and retaining relevant documents after receiving notice of the charges had actually complied with the request to preserve evidence.  In the end,   the  Court  imposed sanctions which included an award of attorney’s fees and a $25,000 fine against the employer.

The Knickerbocker case underscores the importance of litigation holds.  It reminds employers of the risks associated with failing to preserve electronic information related to actual or threatened litigation.  The case also teaches employers and their counsel that once an employer receives notice of an EEOC Charge, it should immediately institute an effective litigation hold to prevent the loss or destruction of relevant electronically stored information among other potentially relevant evidence.  In addition, the employer should take all necessary steps to ensure the hold procedures are actually followed.  An employer’s failure to take these steps may result in sanctions or worse including a jury instruction which permits a jury to assume that the destroyed evidence was harmful to the employer’s defense of the case.