Phillip M. Adams & Assocs. LLC v. Dell Inc., D. Utah, Case No. 1:05-CV-64 TS, 3/30/09 (2009 WL 91080) is a federal court decision emanating from the U.S. District of Utah is garnering quite a bit of attention in regards to the court’s preservation and information management duties imposed on the defendants.  Corporations should watch this case, along with cases that cite Adams as precedent because of the court’s vast expansion of the duty to preserve and manage enterprise data.

The most interesting aspect of the court’s decision discusses preservation obligations and its potential to greatly broaden a litigant’s duty to preserve responsive ESI.  The court’s decision sets a new threshold for the duty to arise from a reasonable expectation to a mere “sensitized” view.  Specifically, the court rejected ASUS’ assertion that the duty first arose in February 2005 upon receipt of notification from Adams of potential infringement claims.  Instead, the court determined that the duty to preserve arose four years earlier “in the 1999-2000 environment” in which companies (other than ASUS) were being sued related to the floppy disk errors.

The implication of the court’s holding is to make the duty to preserve even more broad and ambiguous than the current triggering events.  Corporations who feared recycling enterprise ESI in the past are now left with an even more ambiguous standard that will result in continuing overly broad retention practices.  The Adams holding raises serious questions such as would a company facing litigation potentially be required to look back when it should have known about pending litigation based on other similar litigation when determining when to trigger preservation?   Or, should a company that has not been involved in a stock option backdating case continue to preserve its human resources and stock option records beyond what is required by regulation based on the flurry of stock option backdating cases of a couple years ago?  As with most cases that take a deviant turn from established precedent, it will be interesting to see how future cases cite and apply this aspect of the Adams holding.  This case and its progeny will surely be worthy of keeping an eye on for while.