Proposed Rule 37(e): Failure to Preserve Electronically Stored Information

I mentioned yesterday that the proposed FRCP amendments include all three top priorities of the defense-oriented "Lawyers for Civil Justice," as stated on its web site:

LCJ’s . . . current federal rulemaking agenda is focused on . . . FRCP amendments related to our three pillars of discovery reform: (1) a national and uniform spoliation sanction approach; (2) a fair and practical revised scope of discovery; and (3) development of incentive-based “requester pays” default rules.

The proposed amendment to Rule 37(e) covers the first of the items on the LCJ's wish list.

The current version of Rule 37(e), adopted in 2006, provides a narrow safe harbor that prohibits sanctions for the loss of information due to "the routine, good-faith operation of an electronic information system," such as document-destruction policies adopted without regard to particular litigation.  The recently-revised proposed amendment to Rule 37(e) omits the existing explicit safe harbor and overhauls the earlier published-for-comment version of the proposal:

Rule 37.  Failure to Make Disclosures or to Cooperate in Discovery; Sanctions

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(e) Failure to Preserve Provide 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 may:

(1) upon finding prejudice to another party from loss of the information, 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:

(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.

Notice how many obstacles a party seeking ESI would have to surmount to obtain relief for the failure of the responding party to preserve ESI.  First, the court will have to find that the duty to preserve was triggered before the information was lost.  Second, the court will have to find that the responding party failed to take reasonable steps to preserve the ESI.  Third, the court will have to find that the lost ESI "cannot be restored or replaced through additional discovery."  (By definition, the ESI is lost, so it is unclear to me how the seeking party would know with certainty that "additional discovery" could restore or replace the missing information.)

At that point, the court will have found that (1) the responding party failed to take reasonable steps to preserve (2) irreplaceable ESI (3) after a duty to preserve had been triggered.  Still, the court is not required to impose any curative measures or sanctions on the responding party without additional findings.  The court "may" take one of two paths:

• if it makes the additional finding that the seeking party was "prejudiced" from the loss of the ESI, the court may order "measures no greater than necessary to cure the prejudice," OR
• if it makes the additional finding that the responding party "acted with the intent to deprive another party of the information’s use in the litigation," it may order more serious sanctions, such as an adverse inference jury instruction or default judgment.

In the draft of Rule 37(e) that was published for comment in August 2013, the drafters allowed the court to order both "curative measures" and "sanctions."  In the draft that was approved, it appears that the court may order either curative measures or sanctions. 

As to sanctions, the LCJ, like many others, advocated "a national and uniform spoliation sanction approach" in light of differing mens rea requirements adopted by different courts, including negligence, gross negligence, and willfulness.  A uniform standard would indeed be useful, but a specific "intent to deprive another party of the information's use in the litigation" is the toughest standard to prove that the Advisory Committee could have adopted.