LITIGATION HOLDS JUST GOT ENHANCED
LITIGATION HOLDS JUST GOT ENHANCED
When someone files a lawsuit or begins an arbitration, the parties are supposed to place a hold on destroying any files about the matter, even tangentially related documents. It is especially important for businesses that have automatic deletion of correspondence, video, documents or other items to ensure that instead of deletion, those items are retained. If a party does not retain them and items are destroyed, even inadvertently, it could mean sanctions (monetary or issue sanctions) or judgment enters against that party.
California’s Supreme Court has again addressed litigation holds, not by creating new rules, but by reinforcing old ones and tightening the language.
In City of Gilroy v. Superior Court of Santa Clara County, 19 Cal. 5th 28 (2026), the Court made two critical observations:
• Destroying evidence after litigation begins (or when a party knows or suspects it will begin) is a misuse of discovery.
• Destroying evidence in anticipation of a discovery request is equally problematic.
And perhaps more importantly, preservation duties arise for a party when litigation is “reasonably foreseeable.” The Court did not define “in anticipation of a discovery request” or when litigation is “reasonably foreseeable” and that omission is intentional. Preservation obligations are fact-driven. Courts evaluate them case by case. There are no bright-line triggers, no universal checklist, no safe harbor date circled on a calendar; which, means businesses must make judgment calls in real time.
Most people and businesses assume preservation obligations begin when they are served with the lawsuit. That assumption can get the person or business in deep trouble. Under California law, preservation obligations may begin when:
• A demand letter is received
• A regulatory inquiry begins
• A serious internal complaint surfaces
• A dispute escalates beyond routine business friction
• Some other fact-driven event occurs pointing to potential litigation
The question courts will ask later is simple: was litigation reasonably foreseeable at the time documents were destroyed? If the answer is yes, sanctions become possible, even likely.
Sanctions for spoliation can include:
• Monetary penalties
• Evidentiary presumptions
• Issue sanctions
• Adverse jury instructions
• Judgment
In extreme cases, they can alter the outcome of a lawsuit before it is ever tried on the merits. This is not about perfect retention. It is about defensible retention.
No organization can retain every email, draft, message, or communication indefinitely. But, arguments like, data storage is finite, operational efficiency, privacy regulations imposing competing retention limits, and the like, where the issue is easily remedied, will not sway the judge or arbitrator.
The goal is structured preservation, which requires:
• Clear document retention schedules
• Defined escalation protocols
• Immediate litigation hold procedures
• Internal reporting channels
• IT coordination
And most importantly sound judgment, including consultation with counsel.
The recent Supreme Court decision did not give businesses more clarity. It gave them more responsibility. If litigation is “reasonably foreseeable,” the duty to preserve already exists whether or not a complaint has been filed. Retention policies are no longer administrative housekeeping. They are litigation risk management. And the people and businesses that treat them as such will be far better positioned when the inevitable dispute arrives.
Please contact Epps & Coulson, LLP for any questions on the updates to litigation holds: Dawn – dawn@eppscoulson.com
EPPS & COULSON, LLP
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