When Does a Litigation Hold End?

Much has been written about what triggers a litigation hold, i.e., reasonable anticipation of litigation.[1]

Less has been written about when a litigation hold ends.  That became a potential problem for the defendant in Thomas v. Cricket Wireless, LLC, 2021 WL 1017114 (N.D. Cal. Mar. 16, 2021).

The question of when a litigation hold ends is especially acute for businesses that may be facing multiple related claims.

I first addressed this issue in 2009. See “When Does a Litigation Hold End?” 9 DDEE 10 (BNA Oct. 1, 2009).  I expanded on it in M. Berman, et al., eds., “Managing E-Discovery and ESI” (ABA 2011), Chap. 11; accord V. Brummel and K. Warner, “Perfect timing: The right time to release legal holds,” 49 Ill. St. Bar Assn. (Jul. 2018).

The risk is straightforward:

[I]f preserved data is prematurely destroyed, and then litigation commences, a strong argument may be presented that intentional destruction occurred after litigation was anticipated, and therefore the destruction was presumptively prejudicial and sanctionable.

“Managing E-Discovery” at 279.  On the other hand, if unnecessarily retained, costs can balloon.

However, there are many situations where the end of a litigation hold is unclear.  The Sedona Best Practices suggest that “[w]hen the circumstances that gave rise to the hold cease to exist, the organization should determine whether the hold can be lifted in whole or in part….”  Id.  Further, Sedona suggests that organizations develop a termination procedure as part of their litigation hold process.  Id.

[T]he comprehensive Sedona analysis may be summarized to provide that a litigation hold and the coextensive duty to preserve terminates when, even though litigation once was reasonably anticipated, due to intervening events (such as the passage of time, judicial resolution, or acts or inaction inconsistent with reasonable anticipation of litigation), it is no longer reasonable to anticipate litigation.

Id.

The problem of when a litigation hold ends is probably most acute for businesses that face the potential of multiple related claims.  In that context, I wrote:

Once the decision [that litigation is not reasonably anticipated in one matter] has been supportably made, prior to any destruction, there must also be an analysis of all other threatened or reasonably anticipated claims, litigation holds, and statutory, regulatory, and contractual obligations to ascertain whether they impose a separate preservation obligation.

Id. (Emphasis added).

In Cricket, it appears that Cricket may have failed to do this.  Instead, it may have jumped the gun and ended up facing discovery-about-discovery and a sanctions motion.

Cricket was the target of multiple lawsuits alleging false advertising.  One lawsuit – “Barraza” – was a putative class action that was resolved on an individual basis in December 2015.  Counsel for the Barraza plaintiffs told the court that there was no “scenario under which the merits of the case could come back to life….”

However, the statute of limitations had not run.  A second suit was filed in September 2016 and dismissed after a tolling agreement was entered.  The instant suit was filed on November 4, 2019, the expiration date of the tolling agreement.

Discovery revealed that, after Barraza was resolved in December 2015, Cricket discarded data.  The court described the alleged destruction at page *2.  Suffice it to say that, if the allegations are correct, the deletions were substantial. It was also alleged that the destruction was manually performed.

Cricket claimed that it “was entitled to stop preserving documents after Barraza.…”  Cricket also claimed that “it had no duty to preserve the missing information….”  Id. at *2.  It argued that there was “no way that Cricket could have been under a continuing duty to preserve documents” after Barraza, because “the named plaintiffs’ lawyers told Judge Alsup in open court that no ‘side deal’ existed to allow them to file a similar case in another court.”  Cricket asserted that it “had every right to dispose of the disputed documents.”  Id. at *4.

One problem was that Barraza settled on an individual, not a class, basis.  Barraza’s lawyers could bind only the individual Barraza plaintiffs.  They could not bind the “hundreds of thousands of other putative class members whose identical claims against Cricket were still viable at the time Barraza was resolved.”[2] 

The fact that the court approved of discovery about the litigation hold process indicates that Cricket’s decision may have been premature.  See, Blog, “When is a Litigation Hold Notice Discoverable? – When a Litigation Hold is Defective.”

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[1] See, e.g., Blog, “Documenting When the Duty to Preserve Potentially Responsive Information Was Triggered.”

[2] Although not clear from the decision, the timing of destruction may present another issue.  If it occurred after September 2016, when the second suit was filed, or after the tolling agreement was entered, the tolling agreement, which led to the dismissal of the second lawsuit, likely constitutes notice that litigation should reasonably be anticipated.