Need I Remind You About The E-mail [non] Retention Policy.

“In the spirit of the end of the year (and the slow down … work), we want to remind[] you of the … document retention policy . . . ”  That quote comes from the 2nd Circuit’s ruling in U.S.A. v. Quattrone, where they recite the direction to CSFB staff about the retention/destruction of records.  After reading the decision that chastises the VC firm, Hummer Winblad, for an ambiguous direction to delete e-mails, comparisions between that and the directives in the Quattrone and Arthur Andersen cases are apparent.

Judge Patel, in another In re Napster, C-MDL-00-1369 (N.D. Cal. 10/25/2006), C-MDL-00-1369 (N.D. Cal. 10/25/2006) ruling, finds that “Hummer deleted e-mails which it had a duty to preserve and produce.”  Sanctions of an adverse inference instruction, some preclusion, and attorneys fees were imposed.  In this case, as well as the criminal actions against Quattrone and Andersen, the intent of the directive, or reminder about policy, was ambiguous.  The demonstrable result of the notice, though, clearly was deletion of discoverable information.

When an “email to nine Hummer employees” comes from “Hummer officer Ann Winblad” about a present need to “reinforce compliance” with document retention policy, then that is more compelling than an e-mail received from some IT-meister resident at the server farm.  When that intro about employee “compliance” is followed with five bullet points containing the verbiage “do not retain” and “to delete,” then again, it is fairly compelling to the “employees” who get it.  It seems that the employees do ‘get it’?

In the Quattrone case, the reminder was of the five categories of documents in a proper CFSB file, and that for “greater compliance with these policies, no file categories other than those [five] may be created .”  Just so the employees ‘get it’, the reminder instructed, “what does this mean? “Generally speaking, if it Is not (i) – (v), it should not be left in the file.”  One read is, that what “is not” among the five, is contraband, so disappear it.  The Winblad ‘reminder’ largely conforms to the missive quoted in the Quattrone case.  If anything, Winblad added the line “it is your responsibility to delete your handled e-mails immediately.” Capece?

Much of what Judge Patel heard argued about was over any indicia of intent, or of innocence, to be gleaned from the reminder & directive.  That, of course, is at the heart of the Quattrone and Andersen cases.  With both criminal and civil sanctions, there is the SNAFU defense or dodge, or as Judge Patel posed it, is this a “willful deception or simple incompetence.”  Hummer contended that non-production of Winblad’s “reminder” e-mail (not the e-mails deleted as a result) was due to “inadvertence,” or a “mistake” about that e-mail being privileged.  The objective facts were that the firm lacked a clear plan to preserve and avoid deletion, and that, if Hummer thought it to be privileged, why was it left off the privilege log. 

One overriding issue is the “duty” to preserve, which attaches when litigation is known or expected.  On that point, Hummer Winblad was late being added to the Napster cases, and the first case was dismissed.  Thus, the duty was on-again-off-again, arguably.  That reminds one of the fire-line set out in the Arthur Andersen ‘reminder’ message, “[I]f its destroyed in the course of [the] normal policy and litigation is filed the next day, thats great. . . . [W]eve followed our own policy, and whatever there was that might have been of interest to somebody is gone and irretrievable.”  374 F. 3d 281, 286 (CA5 2004).”

This decision is another where, one wonders whether, the cover-up caused more harm than the deletions.  Judge Patel concludes that it was “not shown that Hummer acted willfully in destroying its e-mails, and there is evidence that the actual number of e-mails lost is small.”  The opinion ends with an award of counsel fees, with a reminder to plaintiff’s counsel that the amount sought must be “reasonable {italicized by Judge} in light of the degree of Hummer’s culpability.”

E-discovery is expensive, as is paying lots of associate time to log and review files then for partners to oversee that review.  It doesn’t make much sense to secret, or worse to destroy e-mails that are not that harmful.  When those worms crawl out of the apple, then it becomes the cover-up that poisons the entire barrel.