I always advocate for civility and cooperation in e-discovery. But, it may be prudent to expressly threaten a lawsuit in a preservation notice. It may also be cautious to avoid offering to settle a claim in that notice. If you want to make an offer to settle, a separate demand or settlement letter may be a preferable approach.
Some cases hold that the duty to preserve is not triggered by a preservation notice that is too conciliatory. Those decisions indicate that, in order to trigger the duty to preserve, there must be an explicit threat that suit will be filed. A mere statement of dispute coupled with an offer to settle may not trigger the duty because it is not unequivocal and may not make litigation reasonably anticipated.
Other decisions – better reasoned in my view – peg the triggering event at some point between the recipient’s mere knowledge of a dispute, on the one hand, and a “direct, specific threat of litigation,” on the other. In other words, under that line of decisions, something less than an explicit threat of litigation, but raising more than a mere dispute, can be sufficient to trigger the duty to preserve.
There are at least five principles applicable to the common law of using a preservation notice to trigger the duty:
THE TRIGGER DATE IS IMPORTANT
The date that the duty is triggered is critical under both common law and Fed.R.Civ.P. 37(e).
It is the trigger date that renders destruction impermissible. “It is not wrongful for a manager or company to instruct its employees to comply with a valid document retention [and destruction] policy under normal circumstances.” Broccoli, 229 F.R.D. at 510, citing Arthur Andersen, LLP v. U.S., 544 U.S. 696, 704 (2005). The Supreme Court wrote that those policies “are created in part to keep certain information from getting into the hands of others….” 544 U.S. at 704.
The Advisory Committee Note to the December 2015 amendments to Fed.R.Civ.P. 37(e) also emphasizes the need for a careful analysis of when the duty is triggered:
The new [sanctions] rule applies only if the lost information should have been preserved in the anticipation or conduct of litigation and the party failed to take reasonable steps to preserve it. Many court decisions hold that potential litigants have a duty to preserve relevant information when litigation is reasonably foreseeable. Rule 37(e) is based on this common-law duty; it does not attempt to create a new duty to preserve. The rule does not apply when information is lost before a duty to preserve arises.
In applying the rule, a court may need to decide whether and when a duty to preserve arose. Courts should consider the extent to which a party was on notice that litigation was likely and that the information would be relevant. A variety of events may alert a party to the prospect of litigation…. [emphasis added].
Rule 37(e) does not attempt to define what must, or may not, be in the notice. Courts have looked at a variety of events, including the contents of a preservation notice and the impact of settlement offers that are contained in a preservation notice, in resolving that question.
THE PRINCIPLE THAT,
IN ORDER TO TRIGGER THE DUTY TO PRESERVE,
A PRESERVATION NOTICE MUST UNEQUIVOCALLY THREATEN LITIGATION
Perhaps the “poster child” of the “don’t-be-too-nice” doctrine is Cache La Poudre Feeds, LLC v. Land O’Lakes, Inc., 244 F.R.D. 614, 623 (D. Colo. 2007)(Shaffer, J.). In that decision, the court held that, to trigger the duty to preserve, a preservation notice cannot be equivocal; it must be explicit. In the Cache La Poudre Feeds court’s words: “Rather than threatening impending litigation, [the potential plaintiff’s] June 5th letter implied that her client preferred and was willing to explore a negotiated resolution.” [emphasis added]. Defendant then offered to negotiate.
The Cache La Poudre Feeds court explained “[a]lthough [potential plaintiff’s first letter] noted the potential for customer confusion and alluded to [the potential defendant’s] possible ‘exposure,’ her [first] letter did not threaten litigation and did not demand that Land O’Lakes preserve potentially relevant materials. Rather, Cache La Poudre hinted at the possibility of a non-litigious resolution.” Id. at 623. That first letter stated that the defendant was in a “very active marketing campaign [which could] present a situation that [might] become a very serious problem.” 244 F.R.D. at 622 (quotation marks omitted). A second letter “indicated her client ‘would be willing to listen to what [the potential defendant] might propose.’” Id. at 622. The letters, coupled with a delay in filing suit, did not trigger the duty to preserve.
The Cache La Poudre Feeds court wrote that: “[A] party’s duty to preserve evidence in advance of litigation must be predicated on something more than an equivocal statement of discontent, particularly when that discontent does not crystalize into litigation for nearly two years.” Id. In short: “While a party should not be permitted to destroy potential evidence after receiving unequivocal notice of impending litigation, the duty to preserve relevant documents should require more than a mere possibility of litigation.” Id. at 621 (emphasis added).
Cache La Poudre Feeds is not alone. It was approvingly cited in Bhattacharya v. Murray, 2022 WL 1510550, at *4 (W.D. Va. May 12, 2022)(“statements that ‘identify a dispute but express an invitation to discuss it or otherwise negotiate, without openly threatening litigation, generally do not trigger the duty to preserve evidence relevant to that dispute because they do not provide objective notice that such litigation is reasonably foreseeable.”)(emphasis added; cleaned up; citations omitted), appeal denied, 2022 WL 2873176 (W.D. Va. July 21, 2022).
Vague threats of litigation have been deemed insufficient as a trigger:
[T]he duty to preserve evidence only arises when there have been “direct, specific threats of litigation.” … “Vague” and “ambiguous statements” alluding to possible or “hypothetical” litigation, on the other hand, are “insufficient to trigger the duty to preserve” information. … There were no such direct, specific threats of litigation here, much less reasonable ones, given that Plaintiff widely and vaguely threatened to sue many individuals during the period in question. … Although Plaintiff might have made isolated comments about “hiring lawyers” and that UVA was “violating his rights”…, those statements were too ambiguous to trigger Defendants’ duty to preserve when considering the totality of the circumstances.
Bhattacharya v. Murray, 2022 WL 2873176, at *2 (W.D. Va. July 21, 2022)(citations omitted).
To the same effect, under Cache La Poudre Feeds, a statement that a patient “would be contacting her attorney” was only a general possibility that did not trigger the duty. Van Treeck v. Takeda Pharmaceuticals AM Rica, 2015 WL 968877, at *6 (Wis.Cir. Mar. 2, 2015); accord Josh Gilliland, So Sue Me Does Not Trigger the Duty to Preserve in New York State – Bow Tie Law (Nov. 8, 2018). A request to see certain documents was not sufficient as a trigger. Hines v. Bd. of Governors of the Colorado State University System, 2019 WL 2070696, at *3 (Colo.Dist.Ct. May 2, 2019).
Cache La Poudre Feeds was approvingly cited for the proposition that: “Courts often analyze the specific language used by the parties to determine whether an interaction or communication caused a potential adversary to reasonably anticipate litigation.” Philmar Dairy, LLC v. Armstrong Farms, 2019 WL 3037875, at *3 (D.N.M. July 11, 2019); accord Steves & Sons, Inc. v. JELD-WEN, Inc., 327 F.R.D. 96, 106 (E.D. Va. 2018)(citing Cache La Poudre Feeds).
That is what was done in Complete Ent. Res. LLC v. Live Nation Ent., Inc., 2016 WL 11785092, at *4 (C.D. Cal. Nov. 10, 2016)(citing Cache La Poudre Feeds): “This court cannot say that a party should have reasonably foreseen litigation based on Mr. Wall’s letter dated January 21, 2015…. Wall expressly disclaimed any desire by Ticketmaster to ‘get into conflict with [Songkick].’ … Wall’s letter reasonably is read as a request that discussions between the parties about the Fan Club Policy be conducted at the business level rather than between lawyers…. This court finds no duty to preserve based on Mr. Wall’s letter…. Even’s letter does not mention or threaten a lawsuit, and instead welcomes business-to-[business] discussions to reach a workable resolution of any disagreements. The court cannot say that a party should have reasonably foreseen litigation based on Even’s letter.”
Similarly, in Price v. Peerson, 2014 WL 12558253, at *7-8 (C.D. Cal. Apr. 23, 2014), the District Court wrote: “Plaintiff points to multiple letters of ‘administrative complaint’ that he filed with the USMS, all of which detail Plaintiff’s allegations of the incident and request that the video recordings be retained and preserved…. Plaintiff’s September 21, 2011 letter, for example, states that ‘[t]his a formal complaint against one your employees—[Deputy] Peerson’ and further notes that in order ‘[t]o settle this matter, I wish that [the USMS] investigate and ‘pull’ the video/audio of this incident.’ …. Notably, however, none of Plaintiff’s letters, ranging from September 21, 2011 to March 20, 2012, threaten the USMS with litigation.… Plaintiff’s letters do not even mention the possibility of litigation…. In fact, the letters read the opposite way, as Plaintiff clearly states in the September 21, 2011 letter his willingness to ‘settle’ his administrative complaints with the USMS.” [emphasis added; following Cache La Poudre Feeds]. The decision was affirmed. 643 F. App’x. 637, 638-39 (9th Cir. 2016).
Again, and more recently:
Plaintiffs contend that the duty to preserve first arose from a phone call on October 27, 2019, when Ava told Plaintiff Barak that the hemp had been stolen, and he responded by “yell[ing] and scream[ing] at Ava, informing her that he would be coming to the farm, that he and his lawyer would be suing and that they better not be destroying or selling off the evidence.” … But the Court is not persuaded that this heated exchange constitutes “unequivocal notice of impending litigation” giving rise to a duty to preserve. See Cache La Poudre Feeds, 244 F.R.D. at 621.
Barak v. Rooster’s Guide & Outfitting Adventures, 2023 WL 3178026, at *6 (D. Colo. May 1, 2023)(emphasis added).
Also applying Cache La Poudre Feeds, the court in Salvatore v. Pingel, 2009 WL 943713, at *7 (D. Colo. Apr. 6, 2009), held that a letter of representation that did not threaten litigation – followed by failures of plaintiff’s counsel to respond to an insurance adjustor – did not trigger the duty. A subsequent settlement demand that “I have … attached a draft of a complaint that we will file in this case if this does in fact constitute your final offer…. However, it is in the best interest of both parties to settle this case without commencing costly litigation. My client is willing to greatly compromise his demand,” although “equivocal,” was sufficient to trigger the duty to preserve potentially responsive information. Id. at *7.
The judicial author of Cache La Poudre Feeds later factually distinguished it. Asher Assoc., LLC v. Baker Hughes Oilfield Operations, Inc., 2009 WL 1328483 (D. Col. May 12, 2009)(Shaffer, J.). There, a second letter “adopted a decidedly different and emphatic tone.” Id. at *8. The second letter referred to a “failed” attempt to resolve the dispute without litigation, claimed significant damage, provided an interim damages calculation, and asserted that damages continue to accrue. The letter identified specific claims that the potential plaintiff would assert if it initiated litigation, demanded immediate payment, and set a five-day deadline. That notice sufficed to trigger the duty. Litigation was “more than a possibility.” Further, the recipient responded by denying liability and refusing to pay.
The rationale supporting the Cache La Poudre Feeds rule is not without substantial force:
The undeniable reality is that litigation “is an ever-present possibility” in our society.… While a party should not be permitted to destroy potential evidence after receiving unequivocal notice of impending litigation, the duty to preserve relevant documents should require more than a mere possibility of litigation.… Ultimately, the court’s decision must be guided by the facts of each case.
Cache La Poudre Feeds, 244 F.R.D. at 621 (citations omitted; emphasis added). Nevertheless, I disagree with the need for an unequivocal notice of litigation for the following reasons.
IN MY OPINION,
THE DUTY TO PRESERVE MAY BE TRIGGERED
BY LESS THAN AN UNEQUIVOCAL NOTICE OF LITIGATION
I suggest that the Cache La Poudre Feeds “unequivocal notice” rule should not be followed. Because it is well-settled that no preservation notice is required to trigger the duty to preserve, Thompson, 219 F.R.D. at 100; Cache La Poudre Feeds, 244 F.R.D. at 623, it seems illogical for Cache La Poudre Feeds to hold that a settlement demand that does not expressly threaten litigation fails to trigger the duty. For example, The Sedona Conference wrote:
A musician writes a song that sounds very similar to a famous song. Immediately, there are critical reviews and radio disc jockeys calling the song a “blatant rip-off.” Although the copyright owners of the original song have not yet made any claim, the high-profile nature of the criticism is a consideration that may lead the musician’s publisher to determine that a preservation obligation has arisen.
“Commentary on Legal Holds, Second Edition: The Trigger & The Process,” 20 Sedona Conf. J. 341, 382 (2019)(emphasis added). When an inmate asked to “review” video showing that he was not given a full hour for a urine sample, that “request” placed the opponents on notice and triggered a duty to preserve the video. Franklin v. Stephenson, 2022 WL 6103342, at *4 (D.N.M. Oct. 7, 2022), appeal filed, Nov. 14, 2022.
It is well settled that: “Ultimately, the court’s decision as to when a party was on notice must be guided by the particular facts of each case.” Cache La Poudre Feeds, 244 F.R.D. at 621. “Whether litigation can be reasonably anticipated should be based on a good faith and reasonable evaluation of the facts and circumstances as they are known at the time.” Commentary, 20 Sedona Conf. J. at 372.
The standard is objective. Genuine Dubmax, Inc. v. Greektown LLC, 2012 WL 1664067, at *3 (D. Md. May 10, 2012); Bhattacharya v. Murray, 2022 WL 1510550, at *4 (W.D. Va. May 12, 2022), appeal denied , 2022 WL 2873176 (W.D. Va. July 21, 2022); Commentary, 20 Sed.Conf.J. at 354, 370.
The decision of the Hon. Paul W. Grimm in Goodman, 632 F.Supp.2d at 510-11, provides a framework. There, an email stating that a potential litigant had “real questions” was too vague to trigger the duty. It did not cross the “mere dispute” threshold.
However, “constructive notice” of likely litigation is enough to trigger the duty. Id. at 511 (citation omitted). A notice stating that counsel had been contacted and that, if “forced to litigate,” the damages would be more than the disputed amount was not “conciliatory.” On those facts, Judge Grimm wrote:
It may be that a letter that merely identifies a dispute but expresses an invitation to discuss it or otherwise negotiate does not trigger the duty to preserve evidence, but where, as here, the letter openly threatens litigation, then the recipient is on notice that litigation is reasonably foreseeable and the duty to preserve evidence relevant to that dispute is triggered. [emphasis added].
In Goodman, 632 F. Supp. 2d at 509 at n. 7, the Court expressly declined to follow Cache La Poudre Feeds. In fact, The Sedona Conference noted that: “In Goodman v. Praxair Servs., Inc., the court refused to require an unequivocal notice of impending litigation.” Commentary, 20 Sed.Conf.J. at 371-72 (emphasis added).
In the Fourth Circuit, the duty to preserve arises “somewhere between [mere] knowledge of the dispute and direct, specific threats of litigation.” Huggins v. Prince George’s Cty., 750 F.Supp.2d 549, 560 (D. Md. 2010), aff’d, 683 F.3d 525 (4th Cir. 2012); accord Jennings v. Frostburg State Univ., __ F.Supp.3d __, 2023 WL 4567976, at *33 (D. Md. June 27, 2023)(quoting Huggins).
This makes clear that the trigger may be something less than the unequivocal threat required by Cache La Poudre Feeds. Under the Fourth Circuit principle, a preservation notice may be sufficient.
In the District of Maryland, for example, the receipt of a pre-litigation “demand letter, a request for evidence preservation, a threat of litigation, or a decision to pursue a claim will all trigger the duty to preserve evidence.” Jennings v. Frostburg State Univ., __ F.Supp.3d __, 2023 WL 4567976, at *33 (D. Md. June 27, 2023)(emphasis added); accord Mod. Remodeling, Inc. v. Tripod Holdings, LLC, 2021 WL 3852323, at *6 (D. Md. Aug. 27, 2021); Hale v. Mayor and City Council of Baltimore City, et al., 2022 WL 374512, at *6 (D. Md. Feb. 8, 2022)(“a preservation notice” may create reasonable anticipation of litigation), appeal filed; Haysbert v. Bloomin’ Brands, Inc., 2021 WL 5003284, at *5 (E.D. Va. July 9, 2021), aff’d, 2021 WL 5003280 (E.D. Va. Aug. 10, 2021); cf Charter Oak Fire Ins. Co. v. Marlow Liquors, LLC, 908 F. Supp. 2d 673, 678 (D. Md. 2012); Sampson v. City of Cambridge, Md., 251 F.R.D. 172, 175, 181 (D. Md. 2008)(“duty to preserve relevant evidence is an independent duty… It is clear that defendant had a duty to preserve relevant evidence that arose no later than June 26, 2006, when plaintiff’s counsel sent the letter to defendant requesting the preservation of relevant evidence, including electronic documents.”)
THE TRIGGER DECISION IS
MORE NUANCED THAN CACHE LA POUDRE FEEDS
I suggest that the Jennings formulation is preferable to that of Cache La Poudre Foods.
Plaintiff’s letter was described by the Cache La Poudre Feeds court: “On June 5, 2002, Cache La Poudre’s outside counsel, Cheryl Anderson–Siler, wrote to Mr. Janzen to follow-up on her April telephone call. In her June 5th letter, Ms. Anderson–Siler stated that Cache La Poudre had been using its PROFILE trademark for at least 10 years and expressed her client’s concern over the possibility of confusion for ‘our respective customers.’ Ms. Anderson–Siler warned that Land O’Lakes’ ‘very active marketing campaign … may present a situation that may become a very serious problem.’”
A Settlement Demand May Trigger the Duty to Preserve
In my view, a settlement demand, especially one from an attorney, generally contains a strong implication that, absent settlement, litigation should reasonably be anticipated to follow. “Whether litigation can be reasonably anticipated should be based on a good faith and reasonable evaluation of the facts and circumstances as they are known at the time.” Commentary, 20 Sedona Conf. J. at 372.
The implication may be even stronger in a trademark infringement context with an allegation that defendant “had generated profits of $132 million from the sale of products under Plaintiff’s PROFILE trademark….” Cache La Poudre Feeds, 244 F.R.D. at 617. After trial, judgment was entered against the defendant in the amount of $4,925,336.13. 2008 WL 269451, at *1 (D. Colo. Jan. 29, 2008). The 2008 stipulated motion dismissing the action was the 537th docket entry.
In that context, it may be argued that Land O’Lakes, the recipient of Cache La Poudre Feeds’ “equivocal” letter, should have reasonably anticipated litigation. That said, plaintiff would have been well-advised the threaten litigation and demand preservation.
Logically, A Credible Preservation Notice, Without More,
Suggests That Litigation Should Be Reasonably Anticipated
However, I suggest that the triggering decision should not be grounded on the contextual implication of a settlement demand.
Of course, a well-drafted preservation notice should put the recipient on notice of the factual basis of the claim. Perils of a Vague Preservation Letter.
A preservation notice demands preservation of information that is potentially responsive to a claim. There is no common-law duty to preserve that information if litigation is not reasonably anticipated.
Therefore, if a potential opponent demands preservation, logically that should automatically mean that litigation should reasonably be anticipated because, absent the sender’s intent to litigate a claim, the recipient of the notice has no common-law duty to preserve.
That is likely why the District of Maryland decisions state that a pre-litigation “request for evidence preservation” will trigger the duty to preserve potentially responsive information.
Of course, receipt of the preservation notice triggers a fact-sensitive inquiry. As the Sedona Conference points out, the notice may not be credible, thereby precluding a duty to preserve. “A lack of credibility may arise from the nature of the threat itself, past experience regarding the type of threat, the person who made the threat, the legal basis upon which the threat is purportedly founded, or any similar facts.” Commentary, 20 Sed.Conf.J. at 374. For example, Sedona suggests that a vague threat of a trade secret misappropriation claim that fails to identify the trade secret combined with information that the purported secret was publicly known, is not a credible threat. Id. at 375.
However, I suggest that, if a preservation notice contains facts indicating a credible or reasonably likely potential of litigation, a recipient has a common law obligation to make its own independent investigation and determination as to whether the duty is triggered. Victor Stanley, Inc. v. Creative Pipe, Inc., 269 F.R.D. 497, 522 (D. Md. 2010)(“Of course, the absence of these things [such as a preservation notice] does not vitiate the independent obligation of an adverse party to preserve … information if that party knows or should know of impending litigation.”) (cleaned up), aff’d in part, modified in part, 2010 WL 11747756 (D. Md. Nov. 1, 2010); see Commentary, 20 Sed.Conf.J. at 374-75 (2019)(“Organizations that become aware of a credible threat from which litigation could arise may have a duty to make a reasonable inquiry or undertake a more detailed investigation regarding the facts related to the ‘threat.’”)(citation omitted).
That is why I have suggested that: “It may be prudent to document the analysis of the point at which a potential litigant believes that its duty to impose a legal hold, or ‘litigation hold,’ has or has not been triggered. While it may not be dispositive, documentation may be useful in the event of a subsequent allegation of spoliation.” Documenting When the Duty to Preserve Potentially Responsive Information Was Triggered.
At bottom, I agree that the trigger analysis is a fact-sensitive judgment call. In my opinion, the duty may be triggered by less than a direct, specific threat of litigation, as long as there is also more than mere knowledge of a dispute. There is no common law duty to preserve unless litigation is reasonably anticipated and therefore a demand for preservation necessarily includes a threat that litigation will follow.
I disagree with the concept that a settlement offer makes litigation unlikely. A settlement offer is nothing more than an offer. Until accepted – which an initial offer almost never is – I suggest that inclusion of it does not undermine the preservation demand. At a minimum, the receipt of a preservation notice coupled with an offer to settle should shift some burden to the recipient to conduct an independent analysis. For example, if a hypothetical letter makes a preservation demand and offers to settle for a substantial sum, and if the recipient knows that it would pay only 10% of that amount, litigation should be reasonably anticipated.
In light of the decisions requiring an unequivocal threat of litigation, it is prudent to include a clear threat of litigation in a preservation notice that provides a factual predicate of the claim. It seems advisable to “demand” preservation. It also appears prudent to avoid including a settlement offer in a preservation notice. The notice should be drafted to tip the analytical scale away from “mere knowledge of a dispute.” But, older notices that do not contain direct, specific threats of litigation should be given effect.
 See e.g., M. Berman, et al., eds., “Electronically Stored Information in Maryland Courts”(Md. State Bar Ass’n. 2020), Chap. 14.
 I wrote that there are “at least” five principles because this blog does not address run-of-the-mine drafting considerations that are addressed elsewhere. See, e.g., A Focused Preservation Letter; The Perils of a Misfocused Preservation Letter; Perils of a Vague Preservation Letter, and, Craig Ball, The Perfect Preservation Letter: A New Guide | Ball in your Court (craigball.net)(Sept. 10, 2020). Nor does this blog address Some Tactical Options for Businesses Faced With Pre-Litigation Preservation Demands.
 It is not totally clear to me what the Cache Le Poudre Feeds court would have decided if an offer to settle had been coupled with a notice for preservation, because, in Cache Le Poudre Feeds, the “letter did not threaten litigation and did not demand that Land O’Lakes preserve potentially relevant materials.” My guess is that a letter combining a preservation notice and a settlement offer would not have been deemed to be a trigger because it would not be “unequivocal.”
 The Sedona Conference seems to pigeonhole Cache La Poudre Feeds as an instance where the threat of litigation was not credible. Commentary, 20 Sed.Conf.J. at 372. Certainly, if a preservation demand is not credible, it does not trigger any duty. While that is a fair reading of Cache La Poudre Feeds, it is not the only one.
 The Goodman Court wrote: “In a January 5, 2001 letter, Goodman stated that he had consulted with two attorneys regarding the dispute, one of whom suggested he was entitled to ‘$230,000’ under the law, and if he was ‘forced to litigate,’ then he would be awarded ‘treble this amount based on a recent line of cases.’” About a month later, Mr. Goodman wrote a letter that “markedly ratcheted up the dispute,” again mentioning litigation and attorneys as an option. Id. at 502. The defendant then sought counsel and instituted a legal hold.
 On the facts presented in Huggins, a settlement agreement stating that plaintiff did not waive the right to file future, unrelated actions “was not sufficient to give the County notice of the pendency of a suit and trigger an obligation to preserve.”
 “It is undisputed that counsel for Cache La Poudre contacted Land O’Lakes’ General Counsel, Peter Janzen, by telephone on April 4, 2002.” Cache La Poudre Feeds, 244 F.R.D. at 621–22.