Electronic Discovery Institute Course - Class 15 - FRCP 37(e) and Sanctions
Here's a continuation of my postings about the Electronic Discovery Institute's online e-discovery certification program, that you can subscribe to for just $1. I last blogged about this program on December 2, 2017. Go to https://www.lawinstitute.org/ to sign up for it.
The course on Federal Rule of Civil Procedure 37(e) and Sanctions, is taught by Pamela Sargent, a magistrate judge for the Western District of Virginia; Frank Maas, a former magistrate judge for the Southern District of New York, and Thomas Allman, a former general counsel for the BASF Corporation, and Chair Emeritus of the Sedona Conference Working Group 1 on Electronic Document Retention and Production.
2015 Version of FRCP 37
The current version of FRCP 37(e) as amended in 2015, replaces the prior version amended in 2006. Judge Maas noted that the new rule as amended is intended to make it clear that mere negligence is not a sufficient basis on which to award to award sanctions. When prejudice does result, the court can engage in curative measures. If someone has acted with intent then there are a number of things the court can do such as issuing an adverse inference instruction to the jury. There is no requirement that the court take action.
Judge Sargent noted that a party has an obligation to take reasonable steps to preserve evidence in anticipation of litigation. If sanctions are to be imposed, there must be lost information that cannot be retrieved or replaced. If this is the case, the court should look to see if the party requesting the information has been prejudiced. Then the court can take action to cure this prejudice. The court should ask if the party who lost the information acted with the intent to deprive another party of the information. If so an adverse inference instruction can be entered.
2006 Version of FRCP 37
Under the prior version of FRCP 37, there was not a uniform national standard for imposing sanctions. Some courts held that a failure to preserve with less than purposeful intent could bring an adverse inference. Judge Sargent feels that there was only so much even a small business could do to preserve evidence. She likes that the amended version of FRCP 37 sets a standard but does not take complete discretion away from the judge.
Allman noted that there were was not a clear way to handle spoliation matters. Judge Sargent said that judges used to rely on their inherent authority because the 2006 version of the rule did not offer much guidance on when sanctions should be issued. Courts currently make a hybrid analysis, and look at the power to sanction under FRCP 37(e) and their inherent authority.
The old version of 37(e) provided a safe harbor when there was routine, good faith destruction of evidence. The 2015 amendment requires that good faith efforts be made for the preservation of evidence. Judge Maas noted that corporations did not feel comfortable destroying old data under the old version of 37(e) despite its provision for safe harbor. Allman asserted that Rule 37(e) was designed to avoid the use of inherent authority.
Curing Prejudice & Determining Intent to Deprive
Judge Sargent noted that courts always have the option of shifting the costs for discovery. With the new focus on proportionality, there should be renewed focus on the importance of the information and if it is necessary to prove a claim or defense. A court should go no further than is necessary to cure prejudice.
Spoliation turns on the culpability of the party and the impact of the lost information - only measures which alleviate the prejudice should be imposed where there is no intent to deprive another party of the use of the information.
To show intent to deprive may be difficult. According to Judge Sargent it may have to be shown through circumstantial evidence. Rarely will an email be found indicating that party deliberately got rid of relevant data. There must be a showing that a party knew of litigation and the importance of the data and did not act reasonably to preserve the data. There must a heightened awareness that what they are doing will have impact on the litigation.
There are two types of measures that are case dispositive - dismissals and defaults - which should only be imposed in extreme situations.
The court may impose a sanction that the jury must infer that the lost information was adverse to the party that lost it. Judge Sargent said that she thought that juries can be trusted to only consider that the information was adverse and was not sure that the Rule should require them to treat it as adverse.
Determining "Reasonable Steps" & Defensibility
Allman thinks that reasonable steps could have been taken, even if information was lost, contrary to Judge Scheindlin's view the loss of any information indicates that a party was not taking reasonable measures. It is clear to Allman that the mere fact that something has been lost does not preclude a finding that reasonable steps were taken.
Judge Sargent said that parties should ensure they have a litigation hold system in place that shows the reasonable steps they take to preserve information. If information was difficult to retain, and was held for a long period time it may show that discarding it was reasonable.
Issues Moving Forward
Magistrate judges cannot dismiss cases or enter default judgments. They can make reports and recommendations to issue the most serious sanctions.
Impact of 37(e)
The new rule 37(e) was intended to be a sea change. Judge Sargent said that many courts have seen a drop in civil litigation because many parties could not afford to pursue claims or defenses. The cost of litigation, including the cost of preservation, the retrieval of ESI, and its production was so high that few parties could afford it. Rule 37(e) will only have its desired effect with the party litigants are comfortable relying upon it. Many parties were afraid that courts would not regard their efforts to preserve data was reasonable. Parties must feel comfortable about when courts will regard their efforts as reasonable.
Judge Sargent thought it was not possible to fathom how information would be stored even as little as 10 years from now, and that the rules would have to be changed in order to account for changes in information storage. In the future the burden to preserve certain types of information may be greatly reduced.