Delaware Court of Chancery Adopts ESI Preservation Guidelines

Following the lead of other state courts, Delaware’s Court of Chancery — known for handling of some of the nation’s most complex corporate matters — has adopted guidelines for the preservation of electronically stored information (“ESI”).

The guidelines reference counsel’s “common law duty to their clients and the Court” to preserve ESI, noting that a “party to litigation must take reasonable steps to preserve information, including ESI, that is potentially relevant to the litigation and that is within the party’s possession, custody or control.” At a minimum, this means that “parties and their counsel must develop and oversee a preservation process,” including the dissemination of a litigation hold notice. The guidelines further indicate that “counsel oversight” is “very important” and that the adequacy of such oversight is to be evaluated on a “case-by-case basis.” The guidelines reference “serious consequences,” i.e., potential sanctions, that may befall a party “or its counsel” if ESI is not adequately preserved, and note that in some cases a preservation notice must be sent prior to the commencement of litigation. The guidelines specifically state that “the Court will consider the good-faith preservation efforts of a party and its counsel” when deciding whether sanctions are warranted in a given case.

Among the specific advice to parties in the guidelines is:

  • Take a collaborative approach to the identification, location and preservation of potentially relevant ESI by specifically including in the discussion regarding the preservation processes an appropriate representative from the party’s information technology function (if applicable);
  • Develop written instructions for the preservation of ESI and distribute those instructions (as well as any updated, amended or modified instructions) in the form of a litigation hold notice to the custodians of potentially relevant ESI; and
  • Document the steps taken to prevent the destruction of potentially relevant ESI.

This guidance from one of the country’s most influential state courts comports with now longstanding guidelines issued by other courts and standard setting organizations like The Sedona Conference®, and with the mandates of the Federal Rules of Civil Procedure. Significantly, however, on the heels of the recent Pension Committee opinion out of the Southern District of New York, the Court of Chancery now adds another voice to the building consensus that preservation activities, including specifically litigation hold notices, should be documented in all cases. The Court of Chancery Rules Committee is continuing to monitor the broader topic of ESI discovery and has not yet proposed specific rules or guidelines as to electronic discovery in general.

Jeffrey L. Nagel is a Director on the Gibbons E-Discovery Task Force.
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