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La. Federal District Court Greatly Expands the Duty to Preserve in Response to a Litigation Hold Notice

August 27, 2015

A recent decision from the Western District of Louisiana raises new questions as to the traditional protocols followed in preserving records after the issuance of a litigation hold. In re Actos, No. 6:11-MD-2299, 2014 WL 2921653 (W.D. La. June 23, 2014).

A class of plaintiffs sued pharmaceutical company Takeda Pharmaceuticals (“Takeda”) in a Multi-District Litigation (“MDL”) alleging its drug Actos caused bladder cancer. At trial, the district court instructed the jury that it could draw a spoliation related adverse inference against Takeda for violating its duty to preserve any and all information related to Actos. The district court found the duty dated back to a 2002 litigation hold notices issued by Takeda in response to several lawsuits involving liver failures of patients taking Actos.

Actos issued a litigation hold in 2002 that instructed its employees “to preserve any and all documents and electronic data which discuss, mention, or relate to Actos” and it was to be interpreted “in its broadest sense.” Takeda argued that 2002 hold was not applicable to the MDL, because it applied only to claims involving the liver. The district court disagreed, describing this notice as a “general product liability litigation hold,” broad and sweeping in its scope and breadth, and contains no such limitation to or identification of a particular malady. The wording of the hold, coupled with Takeda’s assistant general litigation counsel’s admissions that the hold was “refreshed” multiple times over 12 years and still remains in effect, led the district court to conclude the hold was not limited to only documents relating to liver injuries.

Traditionally, the case law on spoliation treats issuance of a litigation hold as an effective way for an organization to preserve relevant documents specific to particular litigation only after the litigation is filed or can be reasonably anticipated, i.e. when credible facts and circumstances are present to suggest litigation is probable. Therefore, spoliation occurs with “the destruction or significant alteration of evidence…for another’s use as evidence in pending or reasonably foreseeable litigation.”

The district court abandoned this traditional rule by instead focusing on the broad wording of the 2002 litigation hold notice. Because the hold was not malady specific, the district court held the company had a permanent, unqualified and sanctionable duty to save all Actos-related documents. The court sanctioned Takeda for deleting the electronic files of 46 employees, stating “[t]he potential relevance of the foregoing deleted and destroyed information was obvious” even before it had any knowledge of bladder cancer claims.

Takeda appealed the ruling to the Fifth Circuit Court of Appeals, but it reached a settlement in the MDL litigation in May of 2015 before appellate briefing commenced. The Actos ruling is isolated to date; no other court has applied this holding or followed its interpretation. Another court distinguished Actos, finding its holding to be limited to the specific factors therein, including the likelihood of further litigation facing Takeda.

The Actos decision is nonetheless troubling in that it could be read to impose an ongoing and unabated duty on organizations prone to lawsuits to permanently preserve and maintain documents that could at some later point in time be potentially relevant to an unknown plaintiff’s lawsuit. This holding of this case arguably imposes a dilemma on organizations in balancing the wording of a litigation hold against considerations of how that wording will be looked at in tangentially related litigation.