Cotton, Document Retention Programs for Electronic Records

Journal of Corporation Law

Winter, 1999

Note

*417 DOCUMENT RETENTION PROGRAMS FOR ELECTRONIC RECORDS: APPLYING A

REASONABLENESS STANDARD TO THE ELECTRONIC ERA

Christopher V. Cotton

I. Introduction

Corporations [FN1] create and maintain records for a number of reasons. [FN2] Notably, the effective maintenance of records facilitates the organization and retrieval of information used to support the corporation's operations and activities. [FN3] In addition, the creation and maintenance of records enables a corporation to "better comply with legal requirements imposed by statutes and regulations." [FN4] The effective maintenance of records "[p]rovide[s] support for organization actions" and helps the organization "avoid adverse consequences during litigation, government investigation and audit." [FN5]

Since corporations will continue to create and maintain records, the development of effective document retention programs is necessary. [FN6] Such programs serve a number of functions. [FN7] Notably, an effective document retention program can significantly reduce storage problems. [FN8] Such programs also facilitate the retrieval of needed documents for business purposes. [FN9]

Notwithstanding the underlying rationales for the implementation of document retention programs, [FN10] particular applications of such programs might result in severe consequences to corporations. [FN11] Notably, the implementation of document retention programs for electronic data could create enhanced exposure to civil liability if the retention program is unreasonable. [FN12] The reasonableness of any particular document retention program for electronic data, however, should be a function of the unique facts and circumstances that have driven the electronic revolution. Specifically, the tremendous capacity and efficiency afforded by electronic instrumentalities should compel the implementation of longer retention periods.

Part II of this Note outlines the underlying rationales for the implementation of such programs and discusses the features of an arguably valid document retention policy. [FN13] Part III then examines the application of a reasonableness standard to document retention programs for electronic data. Specifically, it compares "traditional" document retention procedures, which have historically been tailored to paper records, with modern document retention procedures, which are aimed at information stored in electronic form.

II. Underlying Rationales

A. Defining "Document Retention Program"

A document retention program involves the systematic review, retention, and destruction of documents received or created in the course of business. [FN14] "The existence of a document policy may under certain circumstances be deemed a mitigating factor in litigation when documents are destroyed pursuant to it, while a company's failure to have a coherent policy may be an aggravating factor." [FN15] Historically, document retention programs have been geared toward concerns regarding the accumulation of documents in paper form. The electronic revolution, however, has created a new concern--the accumulation of information stored by electronic instrumentalities. [FN16]

B. Rationales Underlying the Adoption of Document Retention Programs

The decision to implement a particular document retention program [FN17] involves the balancing of potentially competing interests. These interests take a number of forms, but certainly include (1) legal obligations, [FN18] (2) efficiency considerations, [FN19] and (3) pre-litigation concerns. [FN20] Each interest, in its own way effectuating a distinct policy concern, [FN21] affects the nature of the program ultimately adopted by the corporation.

1. Legal Obligations

State or federal law might subject a corporation to an "affirmative legal requirement" to keep certain records for specific time periods. [FN22] To the extent thecorporation must comply with these specific mandates, [FN23] these regulations encourage the implementation of minimum retention periods. [FN24] Specifically, the final version of the program must incorporate the particular mandates of the law. [FN25]

2. Efficiency Considerations

Though specific legal mandates alone might sufficiently encourage the development of a document retention program, efficiency considerations also play an important role. Notably, an effective document retention program offers certain cost saving advantages. [FN26] Aside from economic benefits, from an efficiency standpoint a well-planned document retention program also affords the organization improved access to information necessary for operation. [FN27] In the end, the interplay between legalrequirements and efficiency considerations will likely be the declared rationale for the implementation of any particular program. [FN28]

3. Pre-Litigation Planning

"Every litigator and corporate counsel knows that the Achilles heel in almost every case involving a complex dispute is the paper found in the company's own files." [FN29] Corporations understand that "maintenance of records for longer than necessary can preserve evidence of potential violations of the law which might otherwise go unnoticed." [FN30] Thus, with these considerations in mind, [FN31] it has been suggested that "[a]ny serious program for guarding against the discovery of a nettlesome document in the midst of a lawsuit must contain a 'document retention' feature." [FN32]

C. Fundamental Components of a Valid Program

If a corporation intends to adopt a document retention program, the program should be tailored to the corporation's particular needs. [FN33] In general, records retention programsshould include a method for determining retention periods, [FN34] the records retention schedule, [FN35] and the records retention procedures. [FN36] The corporation implementing a retention program should (1) systematically develop the program; (2) adopt a program that covers all records, including reproductions; (3) include provisions for records maintained on other media; (4) identify appropriate procedures for obtaining written approvals for all records retention schedules; (5) strictly adhere to the policy that is instituted; (6) articulate appropriate control and management provisions; (7) provide for the suspension of document destruction where litigation is imminent; and (8) retain all documentation relating to the development and implementation of the program itself. [FN37]

III. Reevaluating "Reasonableness"

A. Acknowledging a Reasonableness Standard

1. Early Evolution of a Standard

Carlucci v. Piper Aircraft Corp. [FN38] illustrates a poorly conceived effort at document retention/destruction. In Carlucci, the district court reviewed the defendant's 'policy and practice of destroying documents. ' [FN39] The court noted that '[t]he stated purpose of the destruction of records was the elimination of documents that might be detrimental to [the defendant] in a law suit [sic]." [FN40] The policy [FN41] was administered on an ongoing basis by employees who systematically reviewed and destroyed all potentially harmful documents. [FN42] Given the pervasive nature of the corporation's activities, the court entered a default judgment against the corporation. [FN43]

The Carlucci court, however, noted that a "reasonable" document retention program might survive judicial review. [FN44] In fact, the court suggested that "the good faith disposal of documents pursuant to a bona fide, consistent and reasonable document retention policy" might actually provide a justification for failing to produce documents requested in the course of discovery. [FN45] Characterizing the disposal of documents as a justification, as opposed to an excuse, may or may not be far reaching. [FN46] Notwithstanding this potentially subjective distinction, [FN47] the characterization is unequivocally qualified by the "reasonableness" requirement.

2. Establishing a Standard: Lewy v. Remington Arms Co.

The Eighth Circuit, in Lewy v. Remington Arms Co., reviewed a document retention program implemented by the defendant-corporation. [FN48] The plaintiffs in that case brought claims alleging strict liability design defect, strict liability failure to warn, and negligent failure to warn. [FN49] Specifically, the case arose from injuries sustained as a result of the accidental discharge of a shotgun owned by one of the plaintiffs. [FN50] The jury returned a judgment for the plaintiffs on all three theories of liability. [FN51]

On appeal, the defendant argued that the general instruction given to the jury by the trial court judge was inappropriate. [FN52] The instruction provided: "If a party fails to produce evidence which is under his control and reasonably available to him and not reasonably available to the adverse party, then you may infer that the evidence is unfavorable to the party who could have produced it but did not." [FN53] The plaintiffs had requested the imposition of the instruction when the defendant was unable to produce several documents that had been destroyed pursuant to the defendant's document retention policy. [FN54] The defendant, however, argued that the destruction took place pursuant to routine procedures and thus could not result in an adverse inference. [FN55]

In remanding the case, the Lewy court set forth a number of factors which the trial court was to consider if the lower court was again called upon to impose sanctions arising from the defendant's implementation of a document retention program. [FN56] The trial court was asked to first "determine whether [the defendant's] record retention policy is reasonable considering the facts and circumstances surrounding the relevant documents." [FN57] The trial court was then to consider the extent to which the destroyed documents were relevant to pending or probable lawsuits. [FN58] Finally, the Lewy court instructed the trial court to consider whether the document retention policy was instituted in bad faith. [FN59]

In addition to considering the nature of the destroyed documents, the Lewy court concluded that certain circumstances might compel the retention of certain recordsnotwithstanding the policy. [FN60] The court reasoned that "if the corporation knew or should have known that the documents would become material at some point in the future then such documents should have been preserved." [FN61] Toward that end, the court concluded that "a corporation cannot blindly destroy documents and expect to be shielded by a seemingly innocuous document retention policy." [FN62]

3. Accepting the Reasonableness Standard

When challenged, document retention programs should be held to a reasonableness standard. [FN63] In evaluating the reasonableness of such programs, courts should examine the facts and circumstances underlying the documents that are destroyed. [FN64] The implementation of a reasonableness standard seems appropriate as it provides an objective mechanism by which a reviewing court can assess the legality of the application of any particular program. The reasonableness of any particular program or, more specifically, the reasonableness of a particular destruction schedule should, however, also be a function of the medium upon which the document exists. [FN65]

B. Applying the Reasonableness Standard to Electronic Records

1. Electronic Dependence: Creating the Need for Retention Programs

As the electronic revolution [FN66] has continued to mature, people have become more willing to rely upon the capabilities of electronic devices. [FN67] These mechanisms, when used efficiently, have the ability to simplify tasks that were once quite onerous. This reality has not evaded the attention of corporations that are now, more often than not, [FN68] turning to electronic-based instrumentalities to effectuate their objectives. [FN69] For example, e-mail [FN70] now permeates corporate life. [FN71] Its invasion into the corporate realm is likely the function of a number of factors. First, it affords its users the opportunity to quickly transmit written documents. [FN72] These documents can be easily stored upon the recipient's hard drive or floppy disk for future reference or as a matter of convenience. [FN73] Second, e-mail is often considered to afford an opportunity to communicate more casually. [FN74] Thus, employees often turn to e-mail to transmit messages that they once would have communicated via telephone. [FN75]

The blessing of simplicity afforded by electronic instrumentalities is, however, mixed. For example, the "casual feel" of e-mail correspondence often gives rise to ill-considered statements. [FN76] When litigation arises, these statements might haunt a corporation. Specifically, opposing counsel, through the discovery process, [FN77] will likely make a concerted effort to access the corporation's hardware containing electronically retained messages. [FN78]

Given the liability exposure arising from potentially damaging electronically stored records, [FN79] corporations may institute document retention programs for electronic data. [FN80] Such programs, effectively managed, can "prevent[ ] unnecessary disclosure of information and ensure[ ] that documents which should exist are available for discovery." [FN81] However, judicial review of an electronic document retention program should take place within the same "reasonableness" formulation to which more traditional document retention programs are held. [FN82]

2. Application of a Uniform Standard of Reasonableness

The reasonableness standard for document retention programs suggested by Carlucci [FN83] and adopted by Lewy [FN84] should apply to document retention programs for electronic data. The Lewy court outlined a fair, systematic approach to the review of any particular document retention program. [FN85] Specifically, the court required an assessment of the "facts and circumstances surrounding the relevant documents." [FN86] Such a "facts and circumstances" assessment is certainly capable of application in the context of document retention programs for electronic data. The nature of such an inquiry would take potentially competing interests into account. On the one hand, corporations have a legitimate interest in minimizing the retention of useless records. Aside from pre-litigation planning, [FN87] corporations have a legitimate interest in purging their recordkeeping facilities of unnecessary records. On the other hand, society has an interest in the maintenance of certain records for minimum periods of time. [FN88]

Assuming a document retention program for electronic data is held to the same reasonableness "formula" as a more traditional document retention program, [FN89] three potential generalizations are possible. First, it is possible that any particular document, whether in paper format or electronic format, could be held to the same retention period. [FN90] If such a conclusion were reached under the reasonableness formulation, it would suggest that the systemic equilibrium between the facts and circumstances of the destroyed document would not have shifted.

The validity of this first potential generalization is questionable. Notably, the electronic revolution has, by definition, reshaped the landscape of corporate communication. [FN91] Thus, the maintenance of the status quo seems an unlikely result given the magnitude of the change that has taken place.

The second potential generalization suggests that the tremendous capacity of electronic storage devices should operate to liberalize corporate document retention programs for electronic data. [FN92] Advocates of this generalization note that, though document retention policies are supposed to be neutral, they should be adjusted over time. [FN93] These advocates suggest that the seemingly infinite capacity of electronicinstrumentalities [FN94] and the simplicity afforded by such devices allow for the implementation of new, broader retention procedures. [FN95]

These new procedures would, however, effectively permit the routine destruction of otherwise discoverable documents. To the extent this destruction takes place pursuant to a valid document retention program, the corporation should avoid liability. [FN96] However, the Lewy reasonableness formulation [FN97] requires an examination of the "facts and circumstances" surrounding the relevant documents. [FN98] Notably, the destruction of otherwise discoverable documents should not be permitted simply because the documents might prove to be damaging in the event of litigation. [FN99] Rationalizing the destruction with the suggestion that the documents are easily created and easily stored on a long-term basis, with seemingly no interference with the organization's activities, [FN100] would turn the Lewy formulation on its head. Specifically, the facts and circumstances surrounding the relevant documents [FN101] mitigate against the systematic destruction of electronically stored data under traditional retention periods.

Thus, the third generalization that could be made in assessing the application of the reasonableness formulation in the context of a document retention program for electronic data suggests that retention periods for electronically stored data should be longer than those that govern traditional "paper" documents. [FN102] In evaluating this generalization, consider two documents--one document casually [FN103] discussing expert opinions regarding Design Decision A [FN104] exists in paper form, and the second document casually discussing expert opinions regarding Design Decision A exists in electronic form. It is assumed that the two documents are identical in every conceivable way (e.g., content, language, author, recipient) except in terms of the form of manifestation (i.e., one document is in paper form and the other electronic). In applying the Lewy reasonableness formulation, it appears the "facts" surrounding the relevant documents are identical. [FN105] However, the "circumstances" of the two documents are certainly quite distinct. [FN106] Specifically, "[t]he space required to store [the] information in electronic form is several orders of magnitude less than the space required to store [the] paper information." [FN107]

The inherent efficiency that comes with the use of electronic instrumentalities conflicts with the asserted need to systemically destroy documents. Though the storage capacity of an electronic device is certainly finite, [FN108] it is much larger relative to traditional paper filing systems (e.g., file cabinet). Thus, the portion of the reasonableness equilibrium which once weighed in favor of the corporation's destruction of documents (i.e., the organization's legitimate interest in minimizing storage costs) is counterbalanced by society's interest in the retention of records that are reasonably likely to be relevant in current or future litigation. [FN109] Assuming society's legitimate interest in such documents remains unchanged, and assuming the burden upon the corporation to maintain electronic records is reduced in comparison to the burden it experienced in retaining the same documents in paper form, the generalization that retention periods for electronic records should be longer than the retention periods for paper records appears to be the valid conclusion. [FN110]

IV. Conclusion

Corporations have a legitimate interest in the destruction of unnecessary records/documents. However, society has an interest in imposing upon corporations an ongoing obligation to retain documents potentially relevant to current or future litigation. [FN111] The balance between these two competing interests takes the form of a reasonableness standard. [FN112] The uniform reasonableness formulation constructed to address paper documents should also apply to electronic records. [FN113] However, in applying this standard, it is apparent that retention periods for electronically stored data should be longer than "reasonable" periods for paper records. Specifically, if society's interest in the potentially relevant documents remains unchanged, but the administrative expense to the corporation to maintain the records decreases, a reasonable document retention program for electronic data will provide for longer retention periods.

[FN1]. Though this Note focuses upon document retention programs in a corporate context, the analysis regarding the reasonableness of document retention programs should also have application in non-corporate contexts.

[FN2]. Donald S. Skupsky & John C. Montana, Law Records and Information Management: The Court Cases ix (1994).

[FN3]. Id.

[FN4]. Id.

[FN5]. Id.

[FN6]. See Steven G. Johnson, What to Do if a Federal Search Warrant is Served on Your Corporate Client, Utah B. J., Apr. 1997, at 11, 12 ("Each company should institute a document retention program through which all documents which are no longer necessary from a business standpoint and not required to be maintained by tax, environmental or other laws are regularly destroyed."); see also Lawrence Solum & Stephen Marzen, Truth and Uncertainty: Legal Control of the Destruction of Evidence, 36 Emory L.J. 1085, 1185 (1987) ("The vast majority of large business enterprises now have some formal document management program. Nevertheless, some companies still approach document retention and destruction in an ad hoc manner.") (footnote omitted).

[FN7]. See infra Part II.B (discussing rationales for the implementation of such programs).

[FN8]. Johnson, supra note 6, at 12; see also James K. Lehman, Litigating in Cyberspace: Discovery of Electronic Information, S.C. Law., Mar./Apr. 1997, at 15, 16 (discussing the implementation of "electronic document retention policies whereby electronic backups and e-mail files are not maintained beyond a certain time, as with normal document retention policies").

[FN9]. Johnson, supra note 6, at 12 (noting that a document retention program can also enable the organization to better cooperate with federal investigators executing a search warrant).

[FN10]. See infra Part II.B (discussing the rationales for implementation).

[FN11]. See generally Carlucci v. Piper Aircraft Corp., 102 F.R.D. 472, 481, 486 (S.D. Fla. 1984) (imposing a default judgment against the defendant where "[t]he stated purpose of the destruction of records was the elimination of documents that might be detrimental to Piper in a law suit").

[FN12]. Id.; see also infra Part III.A (discussing the reasonableness standard applicable to document retention programs).

[FN13]. For the purposes of this Note, a program is valid to the extent its application does not create legal liability.

[FN14]. See generally Daniel S. Hapke, Jr., Developing and Implementing Records Retention Programs in Business Organizations, in American Corporate Counsel Association, Records Retention Manual (1st ed. Supp. 1995) (discussing a "Model Records Retention Guideline").

[FN15]. Ian C. Ballon, How Companies Can Reduce the Costs and Risks Associated with Electronic Discovery, 15 Computer L. 8, 9 (1998) (citing Willard v. Caterpillar, Inc., 48 Cal. Rptr. 2d 607 (1995) and Telectron, Inc. v. Overhead Door Corp., 116 F.R.D. 107 (S.D. Fla. 1987)).

[FN16]. See generally Ballon, supra note 15, at 10 (identifying the need for electronic record retention).

[FN17]. The guidelines for a particular document retention program can be designed specifically to suit the needs of a specific organization. See Hapke, supra note 14 (noting that the development of a records retention policy will be "almost entirely dependent upon the type of business in which your company engages").

[FN18]. An entity operating as a corporation, acting as an employer, and existing within a competitive market is necessarily subject to certain regulations-- including regulations aimed at appropriate forms of record retention. See infra Part II.B.1 (discussing legal obligations underlying the implementation of any particular document retention program).

[FN19]. For the purposes of this Note, efficiency considerations include, among others, storage costs and record retrieval concerns. See infra Part II.B.2 (discussing efficiency considerations underlying the implementation of any particular document retention program).

[FN20]. To the extent destroying potentially "incriminating" documents advances one's position in litigation, a corporation might be inclined to consider the development of a document retention (i.e., destruction) program. See generally Part II.B.3 and accompanying text (discussing "pre-litigation planning" motivations which might, rightly or wrongly, promote the development of document retention programs).

[FN21]. For example, though efficiency considerations might weigh in favor of the earliest possible destruction of a particular document, the law might mandate the maintenance of that record for a minimum period of time.

[FN22]. Henry E. Knoblock & Christopher J. MacKrell, Sample Document Retention Guidelines (1995), in American Corporate Counsel Association, Records Retention Manual (1st ed. Supp. 1995); see also Records Retention Aspects of the Antitrust Laws, Corporate Counsel's Records Retention Report, Feb. 1998, at 1 (noting that, though antitrust laws do not require specific records retention periods, "the antitrust laws inevitably require some type of records retention program if the company later wants to establish something, like the availability of an antitrust defense"); OSHA Records Retention Requirements, Corporate Counsel's Records Retention Report, Apr. 1998, at 1-7 (discussing the requirements outlined at 29 C.F.R. part 1904 (1994)); Records Retention Requirements Related to Independent Contractors, Corporate Counsel's Records Retention Report, May 1998, at 1, 4 (discussing the requirements of 26 U.S.C. § 6041(a) (1994)); Records Retention Requirements for Importers, Corporate Counsel's Records Retention Report, June 1998, at 1-8 (examining 19 U.S.C. §508 (1994)); Record-Keeping Requirements under the Fair Labor Standards Act, Corporate Counsel's Records Retention Report, July 1998, at 1-8 (exploring 29 U.S.C. § 211 (c) (1994) and 29 C.F.R. § 516 (1994)); Records Retention Requirements under ERISA, Corporate Counsel's Records Retention Report, Sept. 1998, at 1-6 (discussing 29 U.S.C. § 1027 (1994) and 29 U.S.C. § 1059 (1994)); Record Retention Requirements under OSHA's Hazard Communication Rule, Corporate Counsel's Records Retention Report, Oct. 1998, at 1-8 (exploring 29 C.F.R. § 1910.1200 (1994)); Records Retention and Reporting under the Fair Employment Practices Laws, Corporate Counsel's Records Retention Report, Nov. 1998, at 1-7 (discussing 29 C.F.R. part 1602 (1994)). See generally Donald S. Skupsky, Recordkeeping Requirements 69-110 (1988) (discussing specific requirements for tax records, employment records, general business records, and selected common business records).

[FN23]. The duty to maintain certain records does not arise as a result of the implementation of a document retention policy, but rather attaches by operation of the law or business necessity. See generally supra note 22 and accompanying text (identifying specific circumstances in which some sort of document retention is required); Skupsky, supra note 22, at 113 (noting that no state or federal law identifies the nature of a retention program's development and operation). Thus, even organizations that choose not to adopt document retention programs of general applicability should consider the requirements of these provisions.

[FN24]. See generally Donald S. Skupsky, Records Retention Procedures 25-40 (1990) (discussing a methodology for the effective identification and analysis of the statutes and regulations affecting a particular organization).

[FN25]. Id. at 67 (explaining the assignment of specific legal codes for particular retention categories).

[FN26]. Id. at 2-3 (discussing specific manners in which an effective document retention program might save an organization money, including space savings, staff savings, and equipment savings); see also Skupsky & Montana, supra note 2, at 4-6 (same).

[FN27]. Skupsky, supra note 24, at 3 ("Record users will appreciate the retention program. They can save time and effort locating and reviewing current records, rather than wasting time handling valueless ones. Decisions also will be based on current, rather than outdated, information."); see also Business Laws, Inc., Guide to Records Retention 112 (1998) ("One of the reasons why companies should have a functioning records retention program is to be able to deal with subpoenas.... The efforts and expenses incident to responding to these subpoenas, which are issued frequently in today's litigious atmosphere, are compelling reasons for implementing a meaningful document retention program."); Craig D. Galli, ISO 14000 and Environmental Management Systems in a Nutshell, Utah B. J., Dec. 1996, at 15, 16 ("A system should be established for destroying obsolete documents or archiving them for their historical significance.").

[FN28]. See generally Business Laws, Inc., supra note 27, at 151 (outlining the objectives of a sample records retention policy and guide). The declared objectives of the sample program include:

(1) the continued reduction in the volume of records maintained by the Company;

(2) the promotion of studies to advise the Company in the creation and maintenance of records systems;

(3) the determination of official retention periods for each class of record;

(4) an increase in the efficient use of existing record-keeping equipment and storage facilities; and

(5) the reduction of costs for filing equipment and storage space and the evaluation of new types of equipment.

Id.

[FN29]. Philip Allen Lacovara, What Corporate Counsel Should Do About Bad Documents, at 1, in American Corporate Counsel Association, Records Retention Manual (1995) (noting that "[n]othing is quite as dismaying--or as inevitable-- as finding a memorandum written by some employee that seems to prefigure the opposing party's theory of the case"); see also infra Part III.A.1 (examining an ill-advised approach to document retention).

[FN30]. Business Laws, Inc., supra note 27, at 103 ("The very liberal discovery procedures used by federal and state courts make it likely that virtually all company documents bearing on a particular question would be required to be produced in court if the question were to become subject of the litigation.").

[FN31]. "Pre-litigation planning" may or may not be a valid consideration underlying the implementation of a document retention program. See generally infra Part III.A.1 (discussing the document retention effort in Carlucci v. Piper Aircraft Corp., 102 F.R.D. 472 (S.D. Fla. 1984)). Rather, it seems that the legality of any particular document retention program must be considered in the context of a reasonableness standard which is applied to the program as that program is applied to particular documents. See infra Part III.B.2 (discussing the application of a uniform standard of reasonableness).

[FN32]. Business Laws, Inc., supra note 27, at 3; see also Jeffrey S. Raskin, Practice Tips: Discovery of Ghosts in the Machine: Electronic Mail Communications Can Have Major Litigation Consequences, Los Angeles Lawyer, Nov. 1996, at 17 ("Parties who may become the subject of such [discovery] requests must consider minimizing potential risks by, among other things, adopting document-retention policies for electronic data that take into account the specific problems associated with electronic records."). But see Hapke, supra note 14 ("The occasional presence of a 'smoking gun' in documents produced is not what motivates a business to implement a document retention and destruction program. Rather, it is the administrative burden and cost of searching through mounds of paper and electronic files in response to each request.").

[FN33]. See supra Part II.B (discussing rationales underlying the adoption of document retention programs).

[FN34]. Skupsky, supra note 24, at 7 ("The best retention procedures incorporate methods for determining legal, user (or operational), or other retention periods for records.").

[FN35]. Id. ("The records retention schedule is a report identifying the approved retention period for your organization's records.").

[FN36]. Id. at 7-8 ("Organization policies and procedures control the development of records retention periods, preparation of the records retention schedules, and implementation of the program."); see also id. at 11-14 (outlining the "Skupsky Retention Method").

[FN37]. Business Laws, Inc., supra note 27, at 148-49 (listing the procedures mandated by Skupsky's approach); see also Janet Douvas Chafin, Corporate Document Retention Policies and Related Ethical Considerations, Presentation to Houston Chapter of the American Corporate Counsel Association, June 11, 1996, in American Corporate Counsel Association, Records Retention Manual (1st ed. Supp. 1995). Chafin argues:

A reasonable, responsible document retention policy should include consideration of the following elements:

1. All records are retained for at least the minimum period stated in any applicable statute or regulation;

2. All records effecting obligations of the company are retained for a period of time assuring their availability when needed;

3. Records are made and maintained substantiating compliance with relevant laws;

4. Document destruction occurs pursuant to a standard policy developed for business reasons so that the company cannot be accused of deliberately destroying records in anticipation of a specific problem;

5. Destruction procedures include a mechanism which permits management to halt the destruction of records (a) upon receipt of service of legal process requiring production of documents (b) upon learning of a relevant government inquiry, or (c) during the course of voluntary cooperation with government authorities;

6. Vital records are identified and safe guarded; and

7. The privacy and security of records are appropriately assured.

Id. (citing John M. Fedders & Lauryn H. Guttenplan, Document Retention & Destruction: Practical, Legal and Ethical Considerations, 56 Notre Dame L. Rev. 5 (1980)). Given the importance of society's and/or litigants' interests in the retention of documents for minimum periods of time, a corporation implementing a document retention program should carefully consider the nature of the policy ultimately put into place. See infra Part III.A.1 (discussing a case where a default judgment was entered against the defendant corporation); see also Greg Davis & Robert M. Barker, The Legal Implications of Electronic Document Retention, Bus. Horizons, May 1, 1995 (discussing four basic areas that must be addressed when an organization creates or revises a document retention program to encompass electronic documents).

[FN38]. 102 F.R.D. 472 (S.D. Fla. 1984).

[FN39]. Id. at 481.

[FN40]. Id.

[FN41]. See supra Part II.B.3 (discussing the pre-litigation planning considerations for implementing such policies).

[FN42]. Carlucci, 102 F.R.D. at 481.

[FN43]. Id. at 486 ("Having determined that Piper intentionally destroyed documents to prevent their production, the entry of a default is the appropriate sanction.").

[FN44]. Id.

[FN45]. Id. ('I am not holding that the good faith disposal of documents pursuant to a bona fide, consistent and reasonable document retention policy can not be a valid justification for a failure to produce documents in discovery. ') (emphasis added).

[FN46]. See generally Peter W. Low et al., Criminal Law: Cases and Materials 511-630 (2d ed. 1986) (discussing the distinction between justifications and excuses). "Justification defenses state exceptions to the prohibitions laid down by specific offenses." Id. at 511.

The law also recognizes doctrines of excuse. These defenses accord exculpatory significance to claims by particular defendants that they cannot fairly be blamed for admittedly wrongful conduct. The defendant is excused not because his conduct was socially desirable, or even tolerable, but rather because the circumstances of the offense evoke the societal judgment that ... punishment would be morally inappropriate.

Id.

[FN47]. See Black's Law Dictionary 865 (6th ed. 1990) (defining "justification" as a "[j]ust, lawful excuse or reason for act or failing to act" (emphasis added)).

[FN48]. 836 F.2d 1104 (8th Cir. 1988); see also Peter V. Lacouture, Discovery and the Use of Computerbased Information in Litigation, R.I. B.J., Dec. 1996, at 9, 11 (examining the standard outlined by the Lewy court).

[FN49]. Lewy, 836 F.2d at 1106.

[FN50]. Id. at 1105.

[FN51]. Id. at 1106.

[FN52]. Id. at 1111.

[FN53]. Id. (noting that the instruction was taken from Edward J. Devitt Et al., 3 Federal Jury Practice and Instructions § 72.16 (4th ed. 1987)).

[FN54]. Lewy, 836 F.2d at 1111.

[FN55]. Id.

[FN56]. Id. at 1112.

[FN57]. Id. (emphasis added). "For example, the court should determine whether a three year retention policy is reasonable given the particular document. A three year retention policy may be sufficient for documents such as appointment books or telephone messages, but inadequate for documents such as customer complaints." Id.

[FN58]. Id. "[I]n making this determination the court may also consider whether lawsuits concerning the complaint or related complaints have been filed, the frequency of such complaints, and the magnitude of the complaints." Id.

[FN59]. Lewy, 836 F.2d at 1112. "In cases where a document retention policy is instituted in order to limit damaging evidence available to potential plaintiffs, it may be proper to give an instruction similar to the one requested by the [plaintiffs in the Lewy case]." Id.

[FN60]. Id.

[FN61]. Id.

[FN62]. Id. The implications of this conclusion may be troubling in our world of overflowing e-mail "in-boxes." See infra Part III.B (discussing the destruction of electronic records).

[FN63]. See generally Carlucci v. Piper Aircraft, 102 F.R.D. 472, 485 (S.D. Fla. 1984). See also William T. Thompson Co. v. General Nutrition Corp., 593 F. Supp. 1443, 1455 (C.D. Cal. 1984).

While a litigant is under no duty to keep or retain every document in its possession once a complaint is filed, it is under a duty to preserve what it knows, or reasonably should know is relevant in the action, is reasonably calculated to lead to the discovery of admissible evidence, is reasonably likely to be requested during discovery, and/or is the subject of a pending discovery request.

Id. (emphasis added).

[FN64]. Lewy, 836 F.2d at 1112; see also In Re The Prudential Ins. Co. of Amer. Sales Practices Litig., 169 F.R.D. 598, 615 (D. N.J. 1997) ("While there is no proof that Prudential, through its employees, engaged in conduct intended to thwart discovery through the purposeful destruction of documents, its haphazard and uncoordinated approach to document retention indisputably denies its party opponents potential evidence to establish facts in dispute." (emphasis added)). The Prudential court's discussion, in essence, can be read to suggest that the document retention program implemented in that case was manifestly unreasonable given the circumstances of the case.

[FN65]. Business Laws, Inc., supra note 27, at 148-49 (noting that document retention programs must take into consideration records maintained on other media); see also supra note 33-37 and accompanying text (discussing the characteristics of a valid document retention program).

[FN66]. See Henry H. Perritt, Jr., Electronic Records Management and Archives, 53 U. Pitt. L. Rev. 963, 980-81 (1992). "The electronic information revolution is ... as profound as the printing press revolution in its potential impact on cultural and social patterns for creating and using information." Id.

[FN67]. Gregory S. Johnson, Emerging Technologies and the Law: A Practitioner's Overview of Digital Discovery, 33 Gonz. L. Rev. 347, 348 (1997) ("From the largest corporations to the smallest families, people are using computers to cut costs, improve production, enhance communication, store countless data and improve capabilities in every aspect of human and technological development.").

[FN68]. See Stephen Zovickian & Geoffrey Howard, Electronic Discovery in Construction Litigation, Construction Law., July 1998, at 8-10. "By some estimates, only 30 percent of corporate information exists in paper form; the rests resides electronically." Id. (citing Susan J. Silvernail, Electronic Evidence: Discovery in the Computer Age, 58 Ala. L. Rev. 176, 177 (1997)).

[FN69]. See generally Zovickian & Howard, supra note 68, at 8-10 (discussing the use of computers to manage project documents, schedule data, bid materials, job costs and estimates, contract control databases, financial statements and G&A ledgers, payrolls, and project correspondence and diaries).

[FN70]. See generally Betty Ann Olmsted, Electronic Media: Management and Litigation Issues When "Delete" Doesn't Mean Delete, 63 Def. Couns. J. 523, 524 (1996). Most e-mail messages are created and stored in the following manner:

When a user sends someone an e-mail message, the original document is not sent. Instead, the user's computer stores the original document and produces a copy it sends to a file server. The file server, in turn, stores the copy and produces another copy to send on. Depending on the computer network structure, the e-mail message may go through two or more servers, with each storing a copy and making new copies to forward to the intended recipient.

Id.

[FN71]. See Symposium, Lawyers Online: Discovery, Privilege, and the Prudent Practitioner, 3 B.U. J. Sci. & Tech. L. 5 (1997). "One study suggests that in the last seven years, business-to-business mail has declined 35 percent. Some argue that the reason for this decline is that business-to-business mail is now done through e-mail." Id. (citing Hearings on U.S. Postal Service Oversight Before the House Comm. on Post Office and Civil Service, 103d Cong. 432 (1994)). One study estimates that the year 2000 will experience the sending of some 60 billion e-mail messages. See Symposium, supra (citing Scott Dean, E- Mail Forces Companies to Grapple with Privacy Issues, Corp. Legal Times, Sept. 1993, at 11)); see also James Pooley & David Shaw, The Emerging Law of Computer Networks: Finding Out What's There: Technical and Legal Aspects of Discovery, 4 Tex. Intell. Prop. L.J. 57 (1995) (suggesting that at least 30 percent of electronic data is never manifested upon a piece of paper) (citing Jessen & Shear, The Impact of Electronic Data Discovery on the Corporation, Address at the National Conference of Am. Corp. Counsel Ass'n (May 1994)); Amy Harmon, Corporate Delete Keys Busy As E-Mail TurnsUp in Court, N.Y. Times, Nov. 11, 1998, at 1 (examining e-mail's role in recent litigation).

[FN72]. Characterizing an e-mail message as a "document" is not without significance, particularly in the context of discovery. See infra Part III.

[FN73]. Modern hardware enables a corporation to store millions of messages on magnetic tapes and optical disks; notably, this storage and accumulation can take place for years and may well go unnoticed. Olmsted, supra note 70, at 523.

[FN74]. Ballon, supra note 15, at 8; see also Charles A. Lovell & Roger W. Holmes, The Dangers of E-Mail: The Need for Electronic Data Retention Policies, R.I. B. J., Dec. 1995, at 7 ("E-mail users often perceive their correspondence as ephemeral and, accordingly, do not exercise discretion in their communications.").

[FN75]. See generally Olmsted, supra note 70, at 523 (discussing voicemail, another form of electronic medium). Olmsted notes that voicemail "turns 'missed' calls into digital messages that can be retrieved easily by telephone anywhere world-wide." Id.; see also Symposium, supra note 71. "E-mail has now replaced the telephone in many instances. That is a helpful insight for a judge ruling on an objection to discovery of e-mail. Telephone conversations have consistently been discoverable." Id. (citing Union Const. Co. v. Western Tel. Co., 163 Cal. 298, 305 (1912); Theisen v. Detroit Taxicab & Transfer Co., 200 Mich. 136, 136-39 (1918)).

[FN76]. See Ballon, supra note 15, at 8 (noting that "[p]eople frequently take less care in composing email messages than they do when writing formal letters or memoranda, which may create potential problems in litigation").

[FN77]. See Pooley & Shaw, supra note 71, at 58 (noting that Rule 34 of the Federal Rules of Civil Procedure was amended in 1970 in such a way as to make electronically-stored information discoverable); Johnson, supra note 67, at 349 (noting that "[i]t is black letter law that electronically-stored information is discoverable if relevant") (citing Anti-Monopoly, Inc. v. Hasbro, Inc., 1995 WL 649934 (S.D.N.Y. 1995)).

[FN78]. Zovickian & Howard, supra note 68, at 8 (stating that because people tend to be more informal and candid when drafting e-mail, "these communications often reveal important information that is not available on paper"); Lovell & Holmes, supra note 74, at 7 (discussing plaintiffs' attorneys' search for a "smoking-gun"); see also Symposium, supra note 71 ("It is no longer a question of whether or not electronic data will be targeted in a given litigation. Now it is a question of when and how it will be done."). See generally Margaret A. Berger, Eliminating General Causation: Notes Towards a New Theory of Justice and Toxic Torts, 97 Colum. L. Rev. 2117, 2135 n.85 (1997) (listing a number of "smoking guns").

[FN79]. For the purposes of this discussion, "electronically stored records" include, but are not limited to, e-mail, voicemail, spreadsheets, word processor documents, backup directories, and any electronic database--e.g., payroll, inventory directories.

[FN80]. See, e.g., Patrick Grady, Discovery of Computer Stored Documents and Computer Based Litigation Support Systems: Why Give Up More Than Necessary, 14 J. Marshall J. Computer & Info. L. 523, 541 (1996) (discussing considerations to take into account when formulating a record retention program for computerized data) (citing Donald S. Skupsky, Recordkeeping Requirements (1991)).

[FN81]. Grady, supra note 80, at 537; see also Raskin, supra note 80, at 17 (noting that corporations must consider adopting these programs to minimize the risks arising from the long term storage of electronic data); Lehman, supra note 8, at 16 (acknowledging the proactive efforts by some companies to implement electronic document retention policies).

[FN82]. Compare with Ballon, supra note 15, at 10 (suggesting that electronic record retention programs should be held to a less demanding standard).

[FN83]. 102 F.R.D. 472 (S.D. Fla. 1984).

[FN84]. 836 F.2d 1104 (8th Cir. 1988).

[FN85]. See id. at 1112; see also supra notes 56-62 and accompanying text (discussing the Lewy court's directions to the lower court on remand).

[FN86]. Lewy, 836 F.2d at 1112.

[FN87]. It is not entirely clear whether pre-litigation planning (i.e., efforts to purge a system of "smoking guns") should be characterized as a legitimate interest. It is, however, an interest which may well drive the implementation of an electronic document retention program. See generally Ballon, supra note 15, at 8-10.

[FN88]. See supra notes 22-25 (discussing statutory minimums).

[FN89]. For the purposes of this Note, a "traditional" document retention program focuses upon retention periods for paper records, as opposed to electronic records. See generally Skupsky, supra note 24.

[FN90]. See Skupsky, supra note 24, at 67-76 (discussing the determination of retention periods).

Legal retention periods represent the period you keep records for legal reasons. User retention periods represent the period record users need records to do their jobs. Other retention periods, such as historical, reflect other values or needs related to records. The total records retention period is the longest of any of these retention periods.

Id. at 7.

[FN91]. See supra Part III.B.1 (examining the tremendous impact e-mail and other forms of electronic communication have had upon the operation of large and small organizations).

[FN92]. See Ballon, supra note 15, at 10 (arguing that "[r]ules applicable to destruction of paper documents... should not be applied uncritically to all forms of electronic records").

[FN93]. See id. at 9.

[FN94]. See Olmsted, supra note 70, at 523 (noting that "advances in computing hardware storage media enable business organizations and law firms to store millions of messages on backup magnetic tapes and optical disks, where archived documents can accumulate, perhaps unnoticed for years"). The reality that these forgotten documents accumulate unnoticed for years may well form the basis of the decision to implement a document retention program for electronic data. See generally supra note 29 and accompanying text (identifying the "Achilles heel" of corporate litigation).

[FN95]. See Ballon, supra note 15, at 11.

To minimize the risk of being subject to unreasonably broad court orders or retention obligations, companies should adopt email policies intended to delineate official company email, which should be treated as a paper document and subject to regular document retention policies, and personal or unofficial email, which should be routinely deleted.

Id.

[FN96]. See generally Lewy v. Remington Arms Co., 836 F.2d 1104, 1112 (8th Cir. 1988) (identifying the factors to be used by the trial court in that court's analysis of what instruction should be given to the jury).

[FN97]. The Lewy case involved a "traditional" document retention program. See supra notes 48-62 and accompanying text. However, the Lewy reasonableness standard should certainly apply to document retention programs for electronic data. See generally Barbara S. Mishkin, Why Banks Should Institute Record Retention Policies, 109 Banking L.J. 585, 587 (1992) (discussing Lewy in the context of document retention policies for banking records).

[FN98]. Lewy, 836 F.2d at 1112.

[FN99]. See generally Carlucci v. Piper Aircraft Corp., 102 F.R.D. 472, 481 (S.D. Fla. 1984) (discussing the defendant's intentional destruction of potentially damaging documents); see also supra notes 38-47 (examining Carlucci).

[FN100]. See Olmsted, supra note 70, at 523 (identifying the quiet accumulation of electronic information); see also supra note 71 and accompanying text (examining the implementation of electronic communication within organizations).

[FN101]. See Lewy, 836 F.2d at 1112.

[FN102]. But see Ballon, supra note 15, at 12 ("The retention time for email legitimately should be much shorter than for other forms of documentary evidence....").

[FN103]. It is assumed that the discussion in this illustration is "casual" in order to address concerns regarding the ephemeral nature of e-mail. See generally Olmsted, supra note 70.

[FN104]. See generally Christopher Scott D'Angelo, Creating and Managing Documents, 65 Def. Couns. J. 494 (1998) (highlighting the importance of documents to the defense of product manufacturers when litigation arises).

[FN105]. Lewy, 836 F.2d at 1112 (discussing the "facts and circumstances" standard).

[FN106]. See generally id.

[FN107]. Perritt, supra note 66, at 983.

[FN108]. Id.

[FN109]. Lewy, 836 F.2d at 1112. "[I]f the corporation knew or should have known that the documents would become material at some point in the future then such documents should have been preserved." Id.

[FN110]. Corporations should carefully consider the nature of the guidelines outlined in a document retention program for electronically stored data given the array of sanctions that might be imposed following the implementation of an "unreasonable" document retention program. See generally Procter & Gamble Co. v. Haugen, 179 F.R.D. 622 (D. Utah 1998) (imposing monetary sanctions where a party failed to search or preserve e-mail communications by people with relevant information); Capellupo v. FMC Corp., 126 F.R.D. 545 (D. Minn. 1989) (imposing monetary sanction for the intentional, systematic destruction of evidence); James T. Sparkman & John W. Reis, Spoliated Evidence: Better than the Real Thing?, Fla. B.J., July/Aug. 1997, at 22 ("[S]poliation can actually benefit [a] party through the imposition of sanctions, evidentiary presumptions, or even a separate cause of action for spoliation of evidence against the spoliator."); Robert L. Tucker, The Flexible Doctrine of Spoliation of Evidence: Cause of Action, Defense, Evidentiary Presumption, and Discovery Sanction, 27 U. Tol. L. Rev. 67, 67 (1995) ("The doctrine of spoliation of evidence has recently been held to give rise to a cause of action in tort, usually in product liability cases."); Terry R. Spencer, Do Not Fold Spindle or Mutilate: The Trend Towards Recognition of Spoliation as a Separate Tort, 30 Idaho L. Rev. 37 (1993) (examining the development of the spoliation tort). Given the nature of the consequences involved, a cautious corporation might prefer implementing longer retention periods rather than face potentially devastating sanctions once litigation arises.

[FN111]. Society also has an interest in the promotion and maintenance of the right to privacy. See generally Judith Wagner DeCew, In Pursuit of Privacy: Law, Ethics, and the Rise of Technology 9 (1997) (discussing the roots of privacy). However, the retention of electronically stored information for periods longer than otherwise desired by the actual parties to the communication (i.e., the sender and receiver) could certainly raise valid privacy concerns. See generally William S. Hubbartt, The New Battle Over Workplace Privacy 140-59 (1998) (discussing issues related to e-mail in the workplace). In addition, assuming a corporation can treat electronically stored information as its property, one wonders whether requiring the retention of electronically stored data for periods longer than otherwise desired by the "owner" of the information is also a violation of its right to privacy. See generally Deckle McLean, Privacy and its Invasion 129 (1995) ("In our information age, privacy is threatened by surveillance technologies, data management, and mass media, but also by the goal these technologies serve. The goal is to promote social problems over private and public problems, with a blurring of the distinction between private and public as a consequence.")

[FN112]. See supra Part III.A (discussing the Lewy and Carlucci opinions).

[FN113]. See generally Public Citizen v. John Carlin, 2 F. Supp. 2d 1 (D. D.C. 1997) (noting that "computers have now become a significant part of the way the federal government conducts its business" and thus "[t]he federal government must adapt its electronic recordkeeping capabilities to reflect that reality").

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