Estimated reading time: 5 minutes, 35 seconds

The Federal Rules of Civil Procedure (FRCP) are tantamount to the rules of playing the board game Monopoly.

Just as the rules of that popular board game establish how much a player must spend to buy Boardwalk and Park Place, the FRCP details how civil litigation should proceed. However, different than the rules of Monopoly, the FRCP undergoes changes to keep up with the ever changing landscape of civil litigation and society, in general.

The most recent amendments to the FRCP, which went into effect December 1, 2015, are its first major updates since 2006. Although those changes only went into effect late last year, one amendment in particular has already led to litigation seeking to clarify the duties of parties when it comes to preserving electronic discovery.

“Rule 37(e), enacted as part of the 2015 Amendments, applies to spoliation motions involving losses of ESI in cases filed after December 1, 2015” and, insofar as just and practicable, to then-pending proceedings, according to Thomas Allman, a retired attorney and former general counsel who teaches e-discovery at the University of Cincinnati School of Law. Allman, who is Chair Emeritus of The Sedona Conference Working Group 1 on Electronic Retention and Production (WG1) and who was also a Member of the E-Discovery Panel at the 2010 Duke Litigation Conference, is so intrigued by e-discovery that he could be labeled an electronic discovery junkie. He was also a proponent of the changes to FRCP 37(e), which he called a “rule-based spoliation doctrine for ESI (electronically stored information).”

“To date, relief under the rule has been granted in five reported decisions," Allman says. "It has been denied in a total of nine cases, either because the pre-conditions were not shown or because the court left issues open for trial.”

A View From the Bench

Jennifer Brunner is a Judge in the Ohio’s Tenth District Court of Appeals, based in Columbus. According to Judge Brunner, “A party must take reasonable steps to preserve ESI.” Failure to do so can result in sanctions if:

  • The information is such that it cannot be restored or replaced through additional discovery
  • The court finds prejudice to another party from such loss of ESI
  • The court finds the party that lost the ESI acted with intent to deprive another party of the information’s use in litigation

In sanctioning the party that failed to produce the ESI under these conditions, a federal court may order measures no greater than necessary to cure the prejudice. This necessarily involves the exercise of discretion by the federal trial judge, Brunner says. When fashioning sanctions for violating FRCP 37(e), a federal court may do any of the following:

  • Presume the information was unfavorable to the party who lost it
  • Instruct the jury it may or must find the lost information was unfavorable to the party who lost it
  • Dismiss the action or enter a default judgment against the party that does not produce it

In the judge’s opinion, the amendment will cause a wealth of litigation because its application is “highly discretionary by the federal trial judge.” She based her statement on the comments from Allman’s formulating committee which state, in part, “Once a finding of prejudice is made, the court is authorized to employ measures ‘no greater than necessary to cure the prejudice.’” Because that directive can be interpreted broadly, it invites litigation to establish case law to decipher it.

Was the Amendment Necessary?

Technology is at the heart of the work Tim Thames does every day. As Legal Technology Manager for a law firm in Columbia, South Carolina, Thanes deals with e-discovery and ESI on a constant basis. “I specifically apply the FRCP pertaining to electronically stored information,” he says.

According to Thanes, the amendment was necessary to “further define and suggest compromise in ever changing and challenging e-discovery cases. From the initial changes to the FRCP to address electronically stored information, we will certainly see new changes.”

However, Thanes does not believe the amendment will result in a landslide of new litigation. What it will do, he said, is “create a higher degree of motions work to establish sanctions. It is important for attorneys to define steps taken during the entire process to identify and preserve data to establish” their client complied with their duty to preserve and produce ESI once they are aware litigation may ensue.

Pros & Cons

As with anything, there are pros and cons to the amended FRCP 37(e). According to Judge Brunner, one negative of the amendment is that when ESI loss is due to negligence or gross negligence, the application of sanctions described in the amendment is not authorized.

She pointed to another comment from the formulating committee she deemed a negative of the new rule: “’Adverse-inference instructions were developed on the premise that a party’s intentional loss or destruction of evidence to prevent its use in litigation gives rise to a reasonable inference that the evidence was unfavorable to the party responsible for loss or destruction of the evidence. Negligent or even grossly negligent behavior does not logically support that inference. Information lost through negligence may have been favorable to either party, including the party that lost it, and inferring that it was unfavorable to that party may tip the balance at trial in ways the lost information never would have.’”

Brunner continues: “This still deprives the opposing party of the discovery it should have had, and the teeth of the new sanctions are not available to such a party.”

As amended, FRCP 37 (e) applies only when ESI is lost. Because ESI often exists in multiple locations, loss from one source may often be harmless when substitute information can be found elsewhere. The new rule applies only if the lost information should have been preserved in the anticipation or conduct of litigation and the party failed to take reasonable steps to preserve it, said the judge.

Many court decisions hold that potential litigants have a duty to preserve relevant information when litigation is reasonably foreseeable. Rule 37(e) is based on this common-law duty but it does not attempt to create a new duty to preserve, she says, noting the rule does not apply when information is lost before a duty to preserve arises.

A positive impact of the amendment is that the rule “creates a single standard for federal courts” who formerly had established significantly different standards for imposing sanctions or curative measures on parties who failed to preserve electronically stored information, Judge Brunner says. “These developments have caused litigants to expend excessive effort and money on preservation in order to avoid the risk of severe sanctions if a court finds they did not do enough.” 

Tami Kamin Meyer is an Ohio attorney and writer.

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