Proposed Changes to Federal Rules of Civil Procedure for ESI

October 6, 2015

With the widespread use of electronic communication methods, discovery is often the most onerous, time-consuming and costly aspects of litigation. Case law has established that a party has a duty to preserve information when litigation is reasonably anticipated, so litigants’ discovery duties begin before the complaint has even been filed in court.

Failure to preserve information, including electronically stored information (“ESI”), can lead to sanctions ranging from instructing a jury that it may draw an adverse inference that the evidence a party failed to preserve would have been harmful to that party’s position, to ordering a party to pay reasonable costs–including attorney’s fees–caused by the loss of the information, to dismissing an action in the severest of cases.

However, courts have applied inconsistent approaches regarding which sanctions should be proposed in various situations. This landscape has led to the over-preservation of ESI, often at great costs, and often for anticipated litigation that never arises.

The current version of Rule 37(e) of the Federal Rules of Civil Procedure states that “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,” absent exceptional circumstances. In other words, if a computer system automatically deletes or erases ESI on a routine basis–which is the case with systems that overwrite old email after a certain number of days–courts are not to impose sanctions due to lost ESI.

However, the operation of the system must be in “good faith,” which means parties cannot exploit the operation of the system to delete information it knows to be relevant to litigation. In addition, if a party is under a duty to preserve information, it must intervene into the normal operation of the computer system to preserve ESI.

Courts have interpreted this rule differently, with some allowing an adverse inference jury instruction for the negligent or grossly negligent loss of ESI. Others have held that a showing of bad faith is required before courts can give an adverse inference jury instruction.

In August 2013, a proposed amendment was published to establish greater uniformity in how federal courts respond to the loss of ESI and to relieve litigants from the pressure to over-preserve ESI in the fear that they could end of sanctioned if they don’t.  

The new proposed rule provides:

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 the 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: 
  • Presume that the lost information was unfavorable to the party;
  • Instruct the jury that it may or must presume the information was unfavorable to the party; or
  • Dismiss the action or enter a default judgment.

The proposed rule requires litigants to take “reasonable steps” to preserve ESI, but it does not require their preservation efforts be perfect. In determining whether a party took reasonable steps, courts are to consider the party’s resources and the proportionality of efforts to preserve ESI. A party’s sophistication also may be considered in determining whether a party realized certain information should have been preserved.

Only upon a finding of prejudice to another party can a court order measures to address the loss of ESI, but those measures must be “no greater than necessary to cure the prejudice.” Some of the curative measures could include preventing a party from presenting evidence or deeming certain facts established.

Since the harshest measures can only be imposed if a court finds that a party acted with the intent to deprive another party of the information, the proposed rule should relieve some stress on litigants who fear the accidental loss of ESI can lead to sanctions.

The U.S. Supreme Court has approved the proposed amendment. If it is passed by Congress, it will go into effect on December 1, 2015.

About the Author: Ambi Biggs is an associate with PilieroMazza who practices in the areas of litigation and government contracts.  She may be reached at abiggs@pilieromazza.com.

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