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What Businesses Should Know About Michigan’s New Discovery Rule Changes

Nov 21 | 2019  by

By Beth Florkowski of Fausone Bohn, LLP posted in Business on Thursday, November 21, 2019.

Ben Tigay, Esq.

Effective January 1, 2020, the Michigan civil discovery process will change dramatically. Among the changes are new duties on the retention of electronically stored information (ESI), which includes emails, word documents, PDFs, etc. Here is what businesses should know about preserving ESI before and during litigation.

A party must preserve ESI before the lawsuit is even filed. The new rule says that ESI must be preserved “in the anticipation or conduct of litigation.” What does in the anticipation of litigation mean? The new rule does not specify when the duty to preserve ESI attaches. In federal courts, where there is also a duty to preserve ESI, this duty attaches when litigation is reasonably foreseeable. Litigation can often be reasonably foreseeable when one party sends another a litigation hold letter. A litigation hold letter advises the party that the sender puts the other party on notice that litigation is possible and that you should start preserving ESI in anticipation of this litigation. This means that even routine space-saving ESI deletions-like automatically deleting emails after 30 days-should be put on hold when litigation appears foreseeable.

Parties may face severe penalties for failing to preserve ESI, depending on whether the party lost the ESI by failing to act reasonably or acting with malice. For a party that “failed to take reasonable steps to preserve” the ESI, the court “may order measures no greater than necessary to cure the prejudice” to the other party. Sanctions under this standard will likely be tailored to fit the prejudice to the other party; that is, the more important the lost ESI, the more likely the court is to be harsh on the party that lost it. The second way that a court can sanction a party is when that party “acted with the intent to deprive another party of the information’s use in the litigation.” Finding the “intent to deprive” is a high bar, but there are significant consequences. The possible penalties include a legal presumption that the lost information was unfavorable to the party that lost it, allowing the jury to presume that the lost information was unfavorable, and even entering a judgment against the party.

What does this mean for businesses? The Michigan Court Rules will soon impose a duty to preserve ESI, even before a lawsuit begins. This means that, when a lawsuit can be anticipated or reasonably foreseeable, a party now has a duty to preserve ESI and safeguard files. The party should suspend routine destruction of ESI, stop personal or casual destruction of ESI, and preserve ESI from before and after that duty to preserve arises. If a party fails to take reasonable steps to preserve ESI or acts with the intent to deprive another party’s use of that ESI, the court may impose serious sanctions. Starting January 1st, you should pause before you delete that old email.