Practice Tip: Crafting a Winning Document Retention Policy to Avoid Court-Imposed Penalties

From the moment a manufacturer decides to undertake a new venture, it creates a staggering number of documents. These documents run the gamut from new product designs to market studies to safety test results. Even small-scale manufacturers may generate enough documents to fill a small warehouse, thus begging the question: Are we required by law to keep all these documents?

The short answer is 'no.' The law does not require a company to maintain every document it has for all eternity. Nevertheless, companies do have a legal obligation to preserve documents and other evidence once the company has notice that such materials are potentially relevant to future litigation or government investigation. If a company fails to preserve these materials once it has notice of their potential use in litigation, the company has engaged in 'spoliation,' which is defined as the destruction or material alteration of evidence or the failure to preserve property for another's use as evidence in pending or reasonably foreseeable litigation. Once spo-liation is found, courts can im-pose a wide variety of sanctions on the party who failed to preserve relevant evidence. This two-part article addresses some of the issues involved in document retention in a product liability context.