The Impact of Recent Revisions to Fed. R. Civ. P. 37(e) — Electronic Spoliation

bresnahan_elizabethby Elizabeth Bresnahan

Heads Up

The amendments to the Federal Rules of Civil Procedure, effective December 1, 2015, include significant changes to Rule 37(e) concerning spoliation of electronic evidence.  See Fed. R. Civ. P. 37(e).  With electronically stored information (“ESI”) becoming increasingly prevalent, the amendments are designed to clarify and streamline litigants’ preservation obligations, imposing a high bar on parties who seek to have sanctions imposed on their opponents.  Litigants can now expect uniform standards for curative measures where the circuits had previously been split and sanctions inconsistently applied.  For example, the amended Rule 37(e) represents a departure from the negligence standard which precipitated sanctions in a variety of circuits under the former Rule, and “forecloses reliance on inherent authority or state law to determine when” sanctions and remedial measures should be used.  Fed. R. Civ. P. 37(e) advisory committee’s note to 2015 amendment, available at https://www.law.cornell.edu/rules/frcp/rule_37.  (“Advisory Committee Notes”).  Instead, under the current Rule 37(e), courts are instructed not to impose an adverse inference, or other harsh sanctions, absent a party’s intent to deprive the other party of the at-issue evidence, resulting in prejudice.   Moreover, under the amended Rule, such corrective measures can only be imposed where electronic information that should have been preserved in anticipation of litigation is lost.  The amended Rule offers some additional protection to litigants by permitting additional discovery to repair or replace such presumed “missing” evidence.  And, even if the court eventually finds that sanctions are appropriate, they are limited to “measures no greater than necessary to cure the prejudice.”  Fed. R. Civ. P. 37(e)(1).  Thus, the result may be that, as litigants find additional protections under the amended Rule, and higher hurdles to imposing sanctions on their opponents, we may see a decrease in litigation concerning failure to preserve.

Fed. R. Civ. P. 37(e), as amended.

The text of the amended Rule, marked to show changes from the prior version, follows:

(e)  Failure to Provide[Preserve] Electronically Stored Information. Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good faith operation of an electronic information system.[If electronically stored information that should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery, the court:

(1) upon finding prejudice to another party from loss of information, may order measures no greater than necessary to cure the prejudice; or

(2) only upon finding that the party acted with the intent to deprive another party of the information’s use in the litigation may:

(A) presume that the lost information was unfavorable to the party;

(B) instruct the jury that it may or must presume the information was unfavorable to the party; or

(C) dismiss the action or enter a default judgment.

Evidentiary Sanctions Under the Amended Rule.

Failure to take reasonable measures to preserve.  Rule 37(e) does not create a new duty to preserve, and as such, does not apply if the ESI is lost before the duty to preserve arises.  See Advisory Committee Notes.  Indeed, a party’s preservation obligations remain triggered when litigation is pending or reasonably foreseeable, or where the party has independent preservation obligations, e.g., under a specific statute or internal company policy.

In determining whether a party has taken reasonable steps to preserve, the Rule allows courts to consider “routine, good-faith operation of an electronic information system,” as well as the “proportionality” of the efforts to the case and to a party’s resources.  Id.  The Advisory Committee directs that courts be “sensitive to the party’s sophistication with regard to litigation in evaluating preservation efforts…” Id.  And, a party’s efforts need not be perfect.  Id.

No sanctions or other remedial measures unless information is lost.  Critical to whether remedial measures are permitted under the amended Rule is that the information at issue be lost; if it can be “restored or replaced through additional discovery,” Rule 37(e) does not permit remedial action.  Fed. R. Civ. P. 37(e).  The Advisory Committee reasons that “[b]ecause electronically stored information often exists in multiple locations, loss from one source may often be harmless when substitute information can be found elsewhere.”  Advisory Committee Notes.  Moreover, “efforts to restore or replace lost information through discovery should be proportional to the apparent importance of the lost information…. [S]ubstantial measures should not be employed to restore or replace information that is marginally relevant or duplicative.”  Id.

Measures “no greater than necessary” on finding of prejudice.  Assuming the above prerequisites are met, a court may order certain proportional remedial measures under subsection (e)(1) of the amended Rule only “upon finding prejudice to another party from loss of information.”  Fed. R. Civ. P. 37(e)(1).  The measures must also be “no greater than necessary to cure the prejudice.” Id. How to assess prejudice is left to the discretion of the courts; the Rule does not address which party has the burden.  Advisory Committee Notes.

Upon finding prejudice, courts may impose remedial measures that are proportional to the prejudice.  Id.  The Advisory Committee identifies these less severe, but serious measures, as “forbidding the party that failed to preserve information from putting on certain evidence, permitting the parties to present evidence and argument to the jury regarding the loss of information, or giving the jury instructions to assist in its evaluation of such evidence or argument, other than instructions to which subdivision (e)(2) applies.”  Id.

Specified and severe measures only upon finding “intent to deprive.”  Under the amended Rule, the most severe sanctions, such as adverse inference jury instructions, dismissal of claims, and entry of a default judgment, are now reserved for a “finding that the party acted with the intent to deprive another party of the information’s use in the litigation.”  Fed. R. Civ. P. 37(e)(2).  The Advisory Committee counsels the importance of a finding an “intent to deprive” in order to address and deter such failures.  Advisory Committee Notes.  Mere negligence — or even gross negligence — is no longer sufficient.

While the Rule sets forth four severe sanctions that may be imposed under the Rule upon a finding of intent, proportionality again directs the analysis.  Likewise, the Advisory Committee cautions that “[t]he remedy should fit the wrong, and the severe measures authorized … should not be used when the information lost was relatively unimportant or lesser measures such as those specified in subdivision (e)(1) would be sufficient to redress the loss.” Id.

Elizabeth Bresnahan is a litigation associate in the Boston office of Morgan, Lewis & Bockius LLP.

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