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There are two main issues that every constructive executive should know and understand about electronically stored information: 

  1. what is electronically stored information (ESI); and 
  2. why should ESI matter? 

In its simplest form, ESI refers to all information stored in computers and storage devices. This includes e-mail, voicemail, text messages, instant messages, databases, metadata, digital images, social media and applications (e.g. WhatsApp, RING). 

ESI is governed by both federal and state rules and many states, including Georgia, mimic the federal rules with respect to ESI. According to Fed. R. Civ. P. 34 (a)(1)(A), ESI encompasses any information “stored in any medium from which information can be obtained either directly or, if necessary, after translation by the responding party into a reasonably usable form.” The federal rules do not limit or provide a precise definition of ESI but is broadly intended to cover all current types of computer-based information and flexible enough to encompass future changes and developments. Adv. Comm. Notes to Fed. R. Civ. P. 34 (a)(1). 

Due to new technology, ESI has expanded even further. For instance, the Internet of Things is the concept of connecting any device with an on and off switch to the internet. Many construction companies are using IoT as well as artificial intelligence to monitor safety at a construction site. Security surveillance cameras are placed around the construction site but software has been added to that security surveillance system so that the cameras can detect certain images that depict an unsafe environment. Once the software recognizes an unsafe construction environment, the company receives a text message or an email alerting it to this problem in real time and thereby preventing a possible accident from occurring. 

New technology has a plethora of benefits but it can also expose a company to unexpected costs. Constructive executives may have a duty to preserve ESI under the law. The Georgia Supreme Court recently declared that a party no longer has to send a demand letter or preservation of notice letter in order to trigger the duty to preserve evidence. Phillips v. Harmon, 297 Ga. 386, 394, 774 S.E.2d 596 (2015). Rather, the duty to preserve relevant evidence arises when litigation is reasonably foreseeable to the party in control of that evidence which can occur from actual notice or other circumstances. Such circumstances include: the type and extent of the injury; the extent to which fault for the injury is clear; the potential financial exposure if faced with a finding of liability; the relationship and course of conduct between the parties; the internal investigation conducted by defendant; the notification to defendant’s counsel and/or insurer; and the frequency with which litigation occurs in similar circumstances. 

What does this mean? It means that if a company has reason to believe that it may be sued or someone else may be sued but the company has relevant information regarding that lawsuit, then there is a duty to preserve all relevant ESI pertaining to that lawsuit. Notwithstanding the duty that arises from foreseeable or reasonably anticipated litigation, a duty to preserve evidence may also arise from contract, a statute or regulation or a document retention policy. 

The costs for identifying and preserving ESI increases significantly as ESI expands. In attempting to identify ESI, a company’s duty includes an obligation to identify, locate and maintain information that is relevant to specific, predictable and identifiable litigation. Of course, a company does not need to preserve every shred of paper, every e-mail, text message or other ESI. The duty applies only to relevant data, documents and ESI. 

Sanctions can be imposed on the construction executives and their company for failing to preserve ESI. If evidence that is relevant to contemplated or pending litigation is destroyed or not preserved this is called spoliation. Though sanctions can take on many different forms, the most painful spoliation sanction for a company is normally a monetary one. GTFM, Inc. v. Wal-Mart Stores, Inc. is illustrative. There, plaintiff sought electronic data regarding local sales. Without consulting an IT company representative, defense counsel stated that the data was no longer available and producing it would be unduly burdensome because there was no centralized computer capacity to track it. A year later, plaintiffs deposed a vice-president from the company’s management information systems group who testified the sales data could be tracked for up to one year. As a result, the court ordered an on-site inspection at the company’s expense and required the company to pay more than $100,000 toward plaintiff’s legal fees. 

Hindsight is always 20/20. When it comes to ESI and a company’s duty to preserve, it is always best to dot all “i’s” and cross the “t’s.” 


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