Another Approach to Drafting and Discovery of Litigation Hold Notices

[EDRM Editor’s Note: The opinions and positions are those of Michael Berman.]

By definition, a litigation hold notice is a communication from an attorney to a client regarding the duty to preserve potentially responsive information.^[1] In Homeland Ins. Co. of Del. v. Independent Health Ass’n., Inc., 2025 WL 428547 (W.D.N.Y. Feb. 7, 2025), the court held that litigation hold notices were privileged. There may be a better solution.

THE HOMELAND DECISION

Homeland is an insurance coverage lawsuit. Homeland sued for a declaration that it had no duty to defend or indemnify under its policy. Defendants filed a third-party complaint against another insurer, Ace.

The Magistrate Judge had “ordered that Defendants provide Homeland and Ace with redacted copies of litigation-hold communications that Defendants alleged were protected by attorney-client privilege.” Defendants did so and the insurers challenged the assertion of privilege. 

The Magistrate Judge ordered in camera production of unredacted copies and reviewed them. He “concluded that the documents ‘merely describe[d] DxID’s document retention practices and offer[ed] instructions for document preservation,’ and therefore ordered Defendants to produce the documents to Homeland and Ace.” 

Defendants objected. “In their objection, Defendants maintain that Documents 1–5 ‘are privileged because they contain and memorialize communications between DxID personnel and outside counsel for the purpose of obtaining and providing legal advice in connection with complying with the document preservation requirements that were prompted by the government’s investigation [of Defendants’ billing / coding practices].’”

The insurers disagreed, asserting that in context the documents were “strictly about document retention practices and/or instructions related to preservation.” Thus, it was argued that they should be disclosed.

The Homeland court held that New York law provided the rule of decision as to privilege, because jurisdiction was based on diversity. It wrote:

Viewing the communications at issue in their full content and context, the Court finds that they constitute privileged communications between an attorney, the attorney’s employee, and the client for the purpose of obtaining and providing legal advice.

Homeland Ins. Co. of Del. v. Independent Health Ass’n., Inc., 2025 WL 428547 (W.D.N.Y. Feb. 7, 2025).

As to one document, “the Court’s review of the substance of each of the redacted paragraphs makes clear that the letter involves the application of legal principles relevant to discovery and evidence preservation to guide the future conduct of Defendants…. The opening paragraph indicates that Defendants sought legal advice from counsel about preserving electronic information, and the letter provided recommendations based on the firm’s legal expertise.” It added:

That Defendants’ attorney classified the letter as “PERSONAL & CONFIDENTIAL,” and limited distribution to a few top executives within the company, co-counsel, and an employee of the attorney, were further indicators of the communication’s entitlement to privilege.

Id.

The other related, implementation documents sought clarification of the first one, and all were deemed to be privileged.

DISCOVERY OF LITIGATION HOLD NOTICES HAS LONG BEEN AN ISSUE.

I first addressed discovery of litigation hold notices in a law review article with the Hon. Paul W. Grimm (ret.) and others. “Discovery About Discovery: Does the Attorney-Client Privilege Protect All Attorney-Client Communications Relating to the Preservation of Potentially Relevant Information?,” 37 U.Balt.L.Rev. 413 (2008).

I have also blogged on the topic. 8 Lessons Learned – Part IV – Disclosure of Recipients of Litigation Hold Notices (May 9, 2024); Are Litigation Hold Notices Discoverable? (Mar. 5, 2022); When is a Litigation Hold Notice Discoverable? — When a Litigation Hold is Defective (Aug. 9, 2021); When is a Litigation Hold Notice Discoverable? (Dec. 1, 2020).

On a closely-related topic, I discussed Discovery of Steps Taken to Implement a Litigation Hold is Permitted (Mar. 26, 2022); Discovery on Discovery – Steps Taken to Produce Documents (Jun. 14, 2022). That topic was also discussed in the University of Baltimore law review article.

A BETTER MOUSETRAP?

Let me start with a premise. If one litigant asserts spoliation, and if the opposing litigant has done a good job at preservation and collection, the opposing litigant may want to disclose those efforts in order to avoid the costs and delay of defending a spoliation motion. However, if the opposing litigant discloses litigation hold communications with their client, and if they are privileged or work product, then, absent a protective Fed.R.Evid. 502(a, d) order, disclosure risks privilege waiver. And, even under Rule 502(a)(2, 3), there is some risk of a wider waiver.

At the risk of oversimplifying, I suggest a few guidelines and a different approach. 

• The identities of recipients of litigation hold notices are not privileged – for example, even the recipients of other privileged communications are disclosed in privilege logs;
• The steps taken by recipients of litigation hold notices are generally discoverable, despite concerns about “discovery about discovery,” 37 U.Balt.L.Rev. at 455; and,
• While a litigation hold notice is a communication by an attorney to a client, and may have been prepared and sent at the client’s request, it is prepared and transmitted to fulfill a common law duty to preserve potentially responsive information.

While I recognize that many decisions state that litigation hold notices are privileged: “[T]he predominant purpose of that communication was to give recipients forceful instructions about what they must do, rather than advice about what they might do.” Bagley v. Yale Univ., 318 F.R.D. 234, 240 (D. Conn. 2016) (ordering production); Equal Emp. Opportunity Comm’n v. Formel D USA, Inc., 2024 WL 4172527, at *5 (E.D. Mich. Sept. 12, 2024); accord Grimm, Berman, et al., “Discovery About Discovery,” 37 U.Balt.L.Rev. at 445-46.^[2]

The law review article suggests that, absent a preliminary showing of a breach of the duty to preserve, litigation hold notices should generally not be viewed as discoverable. One line of cases holds that they are not discoverable because they are privileged. However, the law review article suggests that, absent a preliminary showing of breach, the litigation hold notices are not discoverable because, absent a preliminary showing of spoliation, they not within the scope of discovery – they are not relevant to the claims or defenses. That approach was followed in Am. Soc’y for the Prevention of Cruelty to Animals v. Ringling Bros. & Barnum & Bailey Circus, 2008 WL 11388433, at *2 (D.D.C. Aug. 5, 2008).^[3]

The article suggests that, upon a preliminary showing of breach, some attorney-client implementation communications are discoverable, and have been since at least the 2004 Zubulake decision and the 2007 Sedona Guidelines. 37 U.Balt.L.Rev. at 429-35.

One justification for production may be the crime, fraud, or tort exception. Id. at 437. Another rationale is that the communications have been placed “in issue” if the client defends a spoliation allegation based on advice of counsel or if a dispute arises between the client and attorney. Id. at 440-41.

The law review article suggests a different analysis: 

In Fisher v. United States, the Supreme Court wrote that the privilege “protects only those disclosures necessary to obtain informed legal advice which might not have been made absent the privilege.” If the duty to preserve ESI was imposed solely on the client, and counsel’s job was limited to advising the client on the nature and scope of that duty, attorney-client communications relating to the duty to preserve would fall squarely within the privilege protection under the Fisher rule. But decisions such as Zubulake V have held that the duty is not the client’s alone, and that counsel has an independent duty to ensure that relevant information is preserved. That duty runs to the court and the justice system.

Id. at 445-46 (emphasis added). 

The approach that litigation hold notices are not privileged, but generally irrelevant, offers a number of advantages. Id. at 448. For example, it would permit voluntary disclosure of litigation hold notices without any concern of privilege waiver:

If implementation communications are viewed as unprivileged, but conditionally protected from discovery as wholly irrelevant, that conclusion will have the practical benefit of facilitating the resolution of discovery disputes. The “duty” rationale appears best suited to effectuate the purposes of both the privilege and the duty to preserve. Adequate protection may be provided to attorney-client preservation communications in the absence of a loss of discoverable information, because disclosure of those communications would be wholly irrelevant to the claims, defenses, and subject-matter of the action.

Id. at 449.

In sum:

• “Where counsel has performed properly, and the client has done what it should do, so that the requesting party is unable to make a preliminary showing of a breach of the duty to preserve ESI, attorney-client [preservation] communications would not be discoverable.” Id. at 449-50.
• “Where the requesting party is able to make a preliminary showing of a failure to preserve, because the attorney-client communications were exchanged in furtherance of an extrinsic legal duty–the duty to preserve information–and because the preservation of potential evidence is fundamental to fair and equitable civil litigation, courts may permit discovery into the litigation hold, the steps taken or not taken by counsel, and the client’s response to those steps. This is necessary both to further the civil justice system and to allocate responsibility between attorney and client.” Id. at 450.

The potential of discoverability under all of the approaches mandates careful drafting of a litigation hold notice:

In today’s practice, counsel and their clients are well advised to think early and often about the potential for discovery on discovery…. For this reason, counsel and client should be aware, when drafting preservation documents and engaging in implementation discussions, that those documents and discussions may voluntarily or involuntarily be presented to a court for review in connection with a spoliation motion. Prudence suggests, for example, that litigation hold letters should not contain surplus tactical and strategic discussions, and should be no more expansive than necessary to effectively accomplish the preservation task. It may be advisable to circumscribe preservation discussions and segregate notes regarding the implementation of preservation efforts from substantive communications involving the merits of the dispute.

Grimm, Berman, et al., 37 U.Balt.L.Rev. at 454 (emphasis added). 

The article adds: “As a tactical or strategic matter, attorney and client may intentionally draft some or all preservation documents in a manner that would create the option of disclosing them without waiving any privilege. If implementation discussions are viewed as communications that are unprivileged because they are compelled by a legal duty, nothing would prohibit voluntary disclosure and such disclosure could be made without concerns relating to waiver of privileges. Careful drafting may make it easier to respond to a spoliation motion.” Id. at 455.

Assume that this approach was followed in a Homeland type of hypothetical.

If plaintiff said to defendant “I demand to see to see your litigation hold notice,” the defendant’s first response is “can you make a showing – at least a prima facie one – that I breached the duty to preserve?” 

If the answer is “no,” then the litigation hold notice is not relevant to a claim or defense and is not within the scope of discovery.

It the answer is “yes” and factually supported, the litigation hold notice becomes relevant to a possible issue in the lawsuit. Under the analysis suggested in the law review, it is not privileged, having been sent pursuant to a common law duty to the court. Therefore, defendant can produce it to plaintiff without risk of waiver of privilege. And, if it was carefully drafted, there should be no need for redaction.

The parties can then discuss how the defendant implemented the legal hold and what the recipients did in response to the notice. That may defuse a costly spoliation motion and result in a mutually agreeable solution through cooperative efforts.

Notes

[1] While a “litigation hold notice” is sent to one’s client, a “preservation demand” is sent to a potential opponent. M. Berman, et al., eds., “Electronically Stored Information in Maryland Courts,” (Md. State Bar Ass’n. 2020), 155 n. 7.

[2] In Bagley: “The court rejected Yale’s argument that production of litigation hold notices could only be ordered if proof of spoliation were produced.” See “Spoliation—Litigation Holds—Discoverability of Hold Notices,” 32 No. 5 Fed. Litigator NL 11 (May 2017).

[3] “[L]itigation hold letters may indeed be discoverable where there has been a preliminary showing of spoliation.” Roytlender v. D. Malek Realty, LLC, 2022 WL 5245584, at *4 (E.D.N.Y. Oct. 6, 2022).

Assisted by GAI and LLM Technologies per EDRM GAI and LLM Policy.