Destruction of Records

Be Very Careful!

Certainly, it's wise for every business to develop a program for storage and retention of records. In addition, routine destruction of "hard copy" or printed data used in business which requires large and costly storage space is appropriate.

However, many businesses and professions develop such plans with the intentional or unintentional result of destroying data that is relevant to subsequent civil or criminal law suits and investigations. A decade ago, it was commonly understood that a record retention program which included document destruction, based upon legitimate reasons such as storage limitations and costs, was permissible if not done in bad faith, even though it may destroy documents relevant to subsequent civil or criminal litigation that had not been known or initiated at the time of destruction.

Such a routine document retention program today may be too aggressive and, in Minnesota, could result in sanctions or penalties even if the destruction of pertinent information was completely innocent and without knowledge of a potential or likely claim or investigation.

The change in restricting what business information may properly be destroyed arises, in part, from the increasing production of such information in digital form and the substantial reduction in costs to store and retrieve that data. A commonly used statistic is that today, well over 90% of all business information and documentation is produced only in digital form.

With advances in storage hardware and data compression software technologies, the often used reason for document destruction, storage space limitations and its costs, is losing credibility for digital data. Without that reason, any document retention program which results in evidence relevant to a future investigation or judicial proceeding being destroyed, innocently or otherwise, increases the likelihood of sanctions or penalties. The scope and severity of the sanctions are often structured to eliminate any advantage to the party destroying the relevant information as well as deterring others from engaging in similar actions.

These sanctions may include, among others, entry of default judgment, preclusion of claims or defenses or evidence, imposition of attorneys fees or a "spoliation instruction." Recently, Minnesota's Court of Appeals approved a trial court's spoliation instruction to a jury, allowing them to infer that evidence destroyed by the Defendant, a local law enforcement agency, would have contradicted its pivotal argument against liability, even though the destruction was undertaken pursuant to a well established routine and not in bad faith. The jury returned a verdict in favor of the Plaintiff which was affirmed on appeal. If such a sanction can be imposed upon a law enforcement agency, it will certainly be applicable to any business in the private sector in Minnesota.

A program in which data is routinely destroyed could also result in destruction of information that may be favorable to the business organization in future civil or criminal proceedings. Obviously, any program which destroys only unfavorable data has never been condoned. Consequently, destruction of data, even without sanctions or penalties, may be more harmful to a business organization than retaining it.

Particularly because most business records are now prepared in digital form and because of the changes made in storage hardware and software, and the contemporary attitudes of the Courts reflecting those changes, any practices of destroying business information should only be pursuant to a plan prepared with detailed deliberation and input from many sources both within and outside the business organization. There are a number of capable consultants and attorneys that can assist an enterprise in implementing such a plan, which incorporates current standards and eliminates or at least substantially curtails the likelihood of disastrous sanctions if any information has been destroyed that may become relevant or important for any legitimate purposes in the future.

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