In my last blog post, I analyzed a number of proposed amendments to the Federal Rules of Civil Procedure developed by the Advisory Committee’s Duke Conference Subcommittee. In this post, I will examine proposed amendments to Rule 37(e) drafted by the Discovery Subcommittee.
But first, a quick update. In its meeting earlier this month, the Standing Committee accepted the Advisory Committee’s recommendation to publish the full slate of rules amendments for public comment. The six-month public comment period opens on August 15.
The Proposed Rule 37(e)
In the works for more than two years, revised Rule 37(e) would entirely replace the existing rule. The new rule is intended to address the uncertainty now felt by litigants around possible spoliation sanctions, and the over-preservation of information caused by that fear of sanctions uncertainty. The current climate results in part from an inconsistent body of federal case law, which creates different standards of culpability for spoliation sanctions from jurisdiction to jurisdiction. Expensive, burdensome over-preservation seems necessary to some litigants, “due to the risk that very serious sanctions could be imposed even for merely negligent, inadvertent failure to preserve some information.” See proposed Committee Note. The new Rule 37(e) would create a uniform federal standard for the imposition of spoliation sanctions.
The new rule provides for two types of measures that may be imposed if a party fails to preserve discoverable information:
- A new category of remedies and “curative measures” that are not considered sanctions, such as allowing additional discovery, or requiring a party to pay reasonable expenses caused by the spoliation; and
- Traditional “sanctions” as currently defined by Rule 37(b)(2)(A), or adverse inference jury instructions.
The second category of more severe measures may be ordered only if the court finds that the failure to preserve caused “substantial prejudice” and was “willful or in bad faith.” This language in the proposed new rule is perhaps the most controversial, as it would expressly reject the view adopted in some cases, such as Residential Funding Corp. v. DeGeorge Finan. Corp., 306 F.3d 99 (2d Cir. 2002), that permitted sanctions for merely negligent behavior. According to the draft Advisory Committee note, “The amended rule is designed to ensure that potential litigants who make reasonable efforts to satisfy their preservation responsibilities may do so with confidence that they will not be subjected to serious sanctions should information be lost despite those efforts.”
Sanctions may also be imposed in what the drafters characterize as “very rare cases,” in which the party’s actions (and not some cause outside the party’s control, like an Act of God) “irreparably deprived a party of any meaningful opportunity” to litigate the claims in the action. The Committee Note cautions that this provision applies only in “narrowly limited circumstances,” and only if no alternative, less severe curative measures exist.
The proposed Rule 37(e) focuses on the consequences of a party’s failure to preserve; it does not dictate or regulate the actual preservation efforts. However, the rule does set forth some factors to consider in assessing whether a party failed to preserve information it should have. Those same factors help determine whether a failure was willful or in bad faith. They include:
- The extent to which the party was on notice that litigation was likely;
- The reasonableness of the party’s efforts to preserve information;
- Whether the party received a clear, reasonable request to preserve, which was subject to good-faith consultation;
- The proportionality of the preservation efforts; and
- Whether the party sought timely guidance from the court on any disputes about preservation.
Practical Implications Today
Regardless of whether the proposed Rule 37(e) ever takes effect, the efforts to draft it have revealed that the obligation to preserve discoverable information is too uncertain and too expensive in today’s environment of huge (and growing) volumes of electronic data. Something must be done, and the Advisory Committee suggests that two measures will bring significant improvement: (1) creating a uniform national standard for sanctions and curative measures, and (2) requiring bad faith or willful conduct before the most severe sanctions can be ordered.
In the meantime, what should litigants and potential litigants do? First, they can take comfort in the increased focus on proportionality, both in the suggested revisions to Rule 37(e) and in other proposed amendments to the civil rules. If preservation efforts are proportional and reasonable, sanctions are less likely to result from a loss of information.
Second, parties litigating in jurisdictions that have not imposed sanctions for merely negligent behavior can probably relax — the winds of change are not blowing in that direction, and courts that now require willfulness or bad faith likely will stay that way. If your jurisdiction does allow sanctions for negligent spoliation, and you find yourself accused of such negligence, point to the list of factors in the proposed new rule and make the factual argument that the loss of information was not even negligent.
Stay tuned as the proposed new Rule 37(e) makes its way into public comment – the debate promises to be lively!