Protecting Evidence for Another Party’s Litigation

When companies believe they might be sued or that they might sue, New York law requires them to save information and evidence that may be important to the litigation. Sometimes this important information or evidence is in the hands of third parties, like a vendor, accountant, bank, storage facility, or hospital. The party to the litigation, if it has control over the third parties, must take reasonable steps to make sure the third parties do not destroy the important information. Until asked, however, third parties are generally not required to save anything.

There are a few ways third parties can be asked to save important information. They can receive a letter asking them to save it. They can be asked to enter into a contract to save the information—in return for a fee, of course. Third parties may also receive a subpoena, court order, or other litigation discovery request demanding that they turn over the important information. And there are times that, even before they are asked or required to, third parties should protect what they believe to be key information when it might become important to another’s litigation.

In all of the above instances—whether asked, contracted, demanded, or simply aware of a potential future need—third parties should err on the side of preservation. If not, the third parties could possibly be subject to enforcement proceedings, legal costs, and in extreme cases, sanctions. There is even some authority that suggests that third parties can be held liable for monetary damages for intentionally destroying evidence. These costs and money damages typically far outweigh the initial cost that would have been incurred to preserve the evidence.

Take-aways for businesses: Third parties generally do not have to do anything out of the ordinary course of business until they receive a formal demand to preserve evidence. Once a formal request or demand is made, third parties should protect the information important to another party’s litigation and seek formal legal counsel on how to comply with their obligations. Once the important information is safe, third parties can look into whether they should continue to hold it or turn it over. Failing to preserve it (for instance, by deleting it) may be just as bad as not turning it over when required to do so.

For more information, please contact:
Jennifer A. Mucha

Jennifer A. Mucha was part owner of a technology company and vice president of operations for the online division of a large telecommunications company before becoming an attorney at Hodgson Russ.

Kevin J. Espinosa

Kevin J. Espinosa focuses his practice on commercial litigation and has represented numerous clients regarding trade secret and other intellectual property matters.


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