Litigation Holds in California Employment Cases: When the Duty Starts

A California employer has to preserve evidence once a lawsuit is reasonably foreseeable, and that can be months before any complaint is served. In Victor Valley Union High School Dist. v. Superior Court, the Court of Appeal held the duty arises when litigation is “probable and likely to arise from an incident or dispute and not a mere possibility.” Routine auto-deletion after that point isn’t a defense. Lost evidence can lead to sanctions that shape the case before a jury ever hears the merits.

When does the duty to preserve evidence start?

When a reasonable company in the same position would see a lawsuit coming. The summons is usually too late.

The Court of Appeal stated the test in Victor Valley (2023) 91 Cal.App.5th 1121: “The duty to preserve relevant evidence is triggered when the party is objectively on notice that litigation is reasonably foreseeable, meaning litigation is probable and likely to arise from an incident or dispute and not a mere possibility.” The word “objectively” matters. A manager’s honest belief that the employee would never sue doesn’t control. The question is what a reasonable party would have expected on the facts it knew.

The case involved a school district, not a private employer, but the rule applies to any party in California civil litigation. A special education student allegedly was assaulted in a campus restroom. The school’s surveillance system recorded over the footage on its normal cycle. The trial court found that a lawsuit was reasonably foreseeable as early as the day the school told the student’s father about the incident, and that keeping the video “would not have been burdensome.” The Court of Appeal held the record supported that finding.

In an employment case, some triggers are easy. A demand letter, a PAGA notice, a CRD or EEOC complaint, or a preservation letter from the employee’s lawyer puts the company on notice. The harder calls come earlier: an internal harassment complaint, an employee who mentions a lawyer during a termination meeting, a workplace injury with a disputed cause. The safer course is to treat any serious complaint of discrimination, harassment, or retaliation as a trigger for the records it involves. Overpreserving costs storage. Underpreserving can cost the case.

Does routine auto-deletion protect the company?

Only until the duty attaches.

Code of Civil Procedure section 2023.030, subdivision (f)(1) provides a safe harbor: “absent exceptional circumstances, the court shall not impose sanctions on a party or any attorney of a party for failure to provide electronically stored information that has been lost, damaged, altered, or overwritten as the result of the routine, good faith operation of an electronic information system.” The next paragraph limits it. Subdivision (f)(2) says “This subdivision shall not be construed to alter any obligation to preserve discoverable information.”

Victor Valley put the two together. The court held the safe harbor “does not shield a party from sanctions for the spoliation of electronic evidence if the evidence was altered or destroyed when the party was under a duty to preserve the evidence.” It added that “The duty to preserve evidence includes the related duty to suspend the routine destruction of documents.”

For employers, that means every automatic deletion setting has to be checked once a claim is foreseeable. Common problems include email retention rules that purge mailboxes after 90 days, chat platforms like Slack or Teams set to delete messages, security cameras that record over themselves every few weeks, and timekeeping systems that archive or purge old punch data. The most frequent loss in practice is simpler. IT wipes a departed employee’s laptop and hands it to a new hire, often within days of the termination that later becomes the lawsuit.

What should a litigation hold cover in an employment case?

Everything that bears on the employee’s claims and the company’s reasons, in whatever form it exists.

That usually starts with the personnel file, payroll and timekeeping data, and the handbook and policy versions in effect during the employee’s tenure. It extends to the emails and messages of the decision-makers and witnesses, including texts on personal phones if managers used them to discuss the employee. Investigation files belong in the hold, including interview notes and drafts. So does the equipment the employee used, from the company laptop to the work email account.

A hold notice works only if people follow it. Send it in writing to each custodian, explain in plain terms what to keep, and get a written acknowledgment. IT needs its own instruction to suspend deletion for the named accounts and devices. Then follow up. A hold that went out once and was never repeated is weak evidence of good faith if something goes missing six months later.

What sanctions can a court impose for lost evidence?

A wide range, and the most serious ones can decide the case.

The California Supreme Court held in Cedars-Sinai Medical Center v. Superior Court (1998) 18 Cal.4th 1 that there is no separate tort claim against a party for intentionally destroying evidence in its own case. It relied instead on the remedies inside the lawsuit. “Chief among these,” the court wrote, “is the evidentiary inference that evidence which one party has destroyed or rendered unavailable was unfavorable to that party.” The court also explained that destroying evidence “in anticipation of a discovery request” would count as a misuse of discovery, just like destroying it after a request arrives.

The sanctions for misuse of discovery are listed in section 2023.030. They include monetary sanctions, an issue sanction “ordering that designated facts shall be taken as established in the action,” evidence sanctions, terminating sanctions, and contempt.

In Victor Valley, the trial court went a long way after the footage disappeared. The trial court ordered that the district’s employees were negligent in supervising students and barred the district from arguing the student was comparatively at fault. The Court of Appeal upheld the finding that the district had a duty to preserve, but sent the case back for the trial court to consider whether lesser sanctions would adequately remedy the loss of the video. The opinion quoted the rule that the discovery statutes “evince an incremental approach to discovery sanctions, starting with monetary sanctions and ending with the ultimate sanction of termination.”

That incremental approach is the defense’s best argument once something has been lost. Counsel should be ready to show what the company did preserve, why the loss was limited, and what other evidence covers the same ground.

Can the adverse inference be used against the employee?

Yes. The rule applies to any party.

Evidence Code section 413 lets the trier of fact consider a party’s “willful suppression of evidence relating thereto.” Employees delete text messages, close social media accounts, and wipe personal devices after they leave. When that happens, the same inference and the same discovery sanctions are available to the employer.

The employer has to build that record, though. A preservation letter to the employee’s lawyer at the start of the case sets the date the employee was on notice. Discovery should then ask which devices and accounts the employee used and what was deleted. Without that groundwork, a claim that the employee destroyed evidence is hard to prove.

Steps to take once an employment claim is foreseeable

1. Issue a written litigation hold for the personnel file, payroll and timekeeping data, the decision-makers’ emails and texts, chat messages, video, investigation notes, and the policy and handbook versions in effect.
2. Calendar the response deadline on the demand letter, agency charge, or summons, and check for an arbitration agreement and an employment practices liability (EPLI) policy that requires prompt notice.
3. Identify every custodian, including managers, HR staff, and witnesses, collect their acknowledgments, and make sure no action against the employee could look like retaliation.
4. Pull the documents the claim depends on, and instruct IT in writing to suspend auto-deletion and to stop reimaging or reissuing the employee’s devices.
5. Talk to a lawyer before responding, contacting the employee or their lawyer, or offering anything to settle, and before anyone deletes or “cleans up” files.

Evidence problems are among the few defense losses that happen before the case starts. Experienced California employment defense counsel sends the hold notice in the first week, because the company’s later arguments on the merits depend on records that still exist. The firm’s guide to the first 60 days of a wage and hour class action covers the other early decisions.

FAQ

Do we need a litigation hold before a lawsuit is filed?

Often, yes. Under Victor Valley, the duty to preserve starts when litigation is reasonably foreseeable, meaning probable and not a remote possibility. A demand letter, an agency charge, or a preservation letter almost always meets that standard. A serious internal complaint or a contested termination may meet it too. Waiting for the summons risks losing records the company will need for its own defense.

Does a litigation hold reach managers’ personal phones?

It can. If a manager texted about the employee’s performance, complaints, or termination on a personal phone, those messages are likely relevant and the manager should be told to keep them. Collecting them raises privacy questions, so counsel should decide how to gather only the work-related messages. Managers shouldn’t delete threads or trade in phones while the hold is in place.

What if data was deleted before anyone knew about the claim?

Code of Civil Procedure section 2023.030(f) generally bars sanctions for electronic data lost through the routine, good faith operation of a system before the duty to preserve arose. The company should document its retention settings and the date of the deletion. If the deletion happened after a claim was foreseeable, the safe harbor won’t apply, and the defense shifts to limiting the sanction.

Can we ask the former employee to preserve evidence?

Yes. A preservation letter to the employee or the employee’s lawyer identifies the texts and social media posts the company expects to be kept, along with any recordings and the devices that hold them. It also fixes the date the employee was on notice. If the employee later deletes that material, Evidence Code section 413 and the discovery sanctions statute give the employer the same remedies the employee would have.

If your company faces a claim and records may be at risk

If your company has received a demand letter, agency charge, or lawsuit from a current or former employee, the records preserved in the first few weeks usually decide what the company can prove later. Rosenberger + Kawabata represents employers defending employment lawsuits and claims through its business litigation practice, including claims involving evidence preservation and discovery sanctions. Contact Rosenberger + Kawabata online for a confidential consultation, or call (310) 894-6921.

Sources

The decisions are Victor Valley Union High School Dist. v. Superior Court (2023) 91 Cal.App.5th 1121 and Cedars-Sinai Medical Center v. Superior Court (1998) 18 Cal.4th 1. The statutes are Code of Civil Procedure section 2023.030 and Evidence Code section 413.

This post is general information about California and federal employment law as of November 7, 2026. It is not legal advice, and reading it does not create an attorney-client relationship. Employment statutes, regulations, and court decisions change often, and the outcome of any claim depends on its facts. Past results do not guarantee future outcomes.