Civil Rules Roundtable: Relief from ESI Over-Preservation

Tuesday, December 1, 2015 - 15:01

Substantial changes to the Federal Rules of Civil Procedure that govern the preservation of Electronically Stored Information (ESI) in the context of actual or reasonably foreseeable litigation are now in place. Under the amendments to Rule 37(e), which took effect on December 1, a court may not impose relief for failures to provide ESI unless a predicate showing can be made that: 1) ESI that should have been preserved in the anticipation or conduct of litigation is lost; 2) the loss occurred because a party failed to take reasonable steps to preserve it and 3) it cannot be restored or replaced through additional discovery. A court, upon finding prejudice to another party from the loss of ESI, may then order measures no greater than necessary to cure the prejudice. Alternatively, upon finding that a party acted with intent to deprive another party of the ESI, even without a showing of prejudice, a court may impose the more severe measures enumerated under Rule 37(e)(2), presuming or instructing a jury to presume that lost ESI was unfavorable to the party, or dismissing the action. Courts have great discretion in determining which party bears the burden of proof.

Amended Rule 37 applies only to ESI, an area with unique challenges in terms of both cost and logistical complexity. Acknowledging these difficulties, the amended rule requires only that parties take reasonable steps to preserve ESI; perfection is not required. The Judicial Conference’s Rules Committee report indicates that curative measures will be unavailable where lost ESI was outside of a party’s control or was destroyed by events outside the party’s control. Further, the Committee report states that “proportionality,” which includes cost and other proportionality factors in amended Rule 26(b)(1), should be considered at multiple stages in the analysis, including when a party devises preservation procedures and when a court considers ordering additional discovery. On the last point, the Committee report cautions that efforts to restore lost ESI should be proportional to the apparent importance of the lost ESI to litigation claims or defenses as substantial discovery measures should not be employed to restore marginal ESI.  

Where the predicate showing is made and the loss of ESI did prejudice another party, the amended rule gives courts broad discretion to utilize curative measures. Although the court may employ measures no greater than necessary to cure the prejudice, substantial prejudice may still produce substantial relief.  However, the Committee report warns that courts must avoid ordering the relief described under Rule 37(e)(2) unless a finding is made that a party intentionally deprived another party of ESI.  

The amended rule thankfully clarifies when a court may impose the more severe relief described in Rule 37(e)(2). To date, courts have required various levels of intent, including bad faith, willful intent and negligence to support imposing these measures. The amendment standardizes these requirements, rejecting case law holding that a showing of mere negligence was sufficient to support an adverse inference instruction. Indeed, the Committee report states clearly that the intent requirement is analogous to a bad faith standard. In this respect, the Committee has probably done much to accomplish its goal of relieving what it described as ESI over-preservation. Litigants need no longer worry that accidental ESI destruction will result in such dramatic relief as an adverse inference instruction. Still, the intermediate curative measures of Rule 37(e)(1) are potent enough that litigants or potential litigants must be thoughtful about their ESI preservation procedures.

Amended Rule 37 seeks to, and hopefully will, cure a number of issues related to the burdens associated with preserving ESI. New issues will certainly develop, and future motions practice related to Rule 37(e) is likely to focus on whether preservation procedures are reasonable, whether lost ESI can be restored through additional discovery, whether the relief imposed by courts is proportional to the ESI lost and whether the relief has the effect of the measures available only under Rule 37(e)(2). For example, the distinction between a jury instruction available under Rule 37(e)(1) and a permissive adverse inference described in Rule 37(e)(2) may be difficult to discern.

Additional information and practical advice about the rules amendments is available at http://bit.ly/1NXdSW4.

 

Carmen G. McLean, a partner in Jones Day’s Washington, D.C., office, was assisted in the preparation of this commentary by Joshua L. Fuchs, a partner in the Houston office and fellow member of the firm’s Electronic Discovery Management Team, along with associate Daniel Bleiberg. She can be reached at cgmclean@jonesday.com