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Appeals Court Affirms “Broad Discretion” Given to Courts to Issue E-Discovery Sanctions

Created on May 28, 2020


Director of Marketing at Exterro









EPAC Technologies v. HarperCollins Christian Publishing, Inc. (6th Circuit April 15, 2020)
shows that, even with new FRCP Rule 37(e) clarifying the standards for spoliation sanctions, the court is still given “broad discretion” to issue e-discovery sanctions outside the confinements of 37(e), making it more important than ever to ensure defensible preservation practices are followed.

Overview:

What seemed to be a “simple contract dispute,” now “has cost both parties millions of dollars in attorneys’ fees and years of litigation.” The defendant appealed a verdict for the plaintiff based on numerous allegations including that the defendant was “prejudiced by two adverse inference instructions given by the jury,” one of which pertained to electronically stored information.

The district court ruled that the defendant had a duty to preserve relevant “warehouse” data and the defendant failed to do so based on their negligence.

Ruling:

    • Re-affirms District Court Ruling. Citing that the adverse inference instructions were permissive and not mandatory, the court ruled that a claim for a new trial based on giving these instructions is not warranted.
    • Broad Discretion. The Court of Appeals reaffirmed the notion that District Courts have “broad discretion to craft sanctions for spoliated evidence” which includes awarding adverse inference instructions.
    • Negligence. The defendant argued that their negligence in not preserving relevant data didn’t warrant the sanctions. But the court rebuts that argument stating, “only mandatory adverse instructions require a culpable state of mind in the destruction of evidence.
Mike Hamilton, J.D.

Expert Opinion from Mike Hamilton, J.D. Director of Marketing, Exterro

This serves as an important ruling from a U.S. Circuit Court on how higher courts will interpret and give deference to lower courts when issuing sanctions. Even with FRCP 37(e), the new standard for spoliation sanctions regarding ESI, courts are afforded the discretion to issue sanctions outside the purview of this rule. Thus, making it extremely important to ensure your preservation practices are defensible to protect against negligent spoliation.

Case Law Tip:

Download this guide to understand the rules and requirements for e-discovery practices under the FRCP.