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Case shelved under Reasonableness

Rules FRCP 37(e) Does Not Apply to “Intentional Deletion”

Hsueh v. N.Y. State Dep’t of Fin. Servs.
S.D.N.Y. March 31, 2017
Why This Case is Important

Some courts, especially courts within the S.D.N.Y., have questioned if rule 37(e) applies to all ESI spoliation cases. In this case, the court uses its inherent authority, not rule 37(e), to issue sanctions.

Overview

In this sexual harassment case, the defendant motioned for spoliation sanctions, an adverse inference instruction, against the plaintiff based on the deletion of an audio recording.

While the alleged sexual harassment occurred, the plaintiff stated that she had met with an HR representative employed by the defendant. When asked if the plaintiff recorded any conversations between the two, she said no, but then eventually conceded she had recorded one meeting but deleted it after the commencement of this lawsuit. A day before the plaintiff’s opposition to spoliation sanctions was due, the plaintiff said she had recovered the allegedly deleted audio file.

Ruling:
  1. Rule 37(e) Does Not Apply. Since the rule “applies only to situations where ‘a party failed to take reasonable steps to preserve’ ESI, not to situations where, as here, a party intentionally deleted the recording,” the court side-stepped applying Rule 37(e) to this case.
  2. Inherent Authority Authorizes Spoliation Sanction. Based on the interpretation of Rule 37(e) above, the court relied on its inherent authority to issue an adverse inference instruction against the plaintiff. The court found that the plaintiff had a duty to preserve the recording, that the recording was highly relevant to the claim, and the plaintiff had an intent to deprive the defendants the use of the recording, making an adverse inference instruction appropriate.
  3. ESI Growth and E-Discovery Costs. In ruling that Rule 37(e) does not apply, the court stated, “Rule 37(e) is meant to address “the serious problems resulting from the continued growth in the volume of’ ESI as well as ‘excessive effort and money’ that litigants have had to expend to avoid potential sanctions for failure to preserve ESI. These considerations are not applicable here.”
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Download the PDF version of Hsueh v. N.Y. State Dep’t of Fin. Servs. case analysis here.

relevant resource
Learn how to create a reasonable and defensible preservation process, by downloading this FRCP Visual Guide now.
Infographic
How to Create a REASONABLE Preservation Process Under Rule 37(e)
How to Create a REASONABLE Preservation Process Under Rule 37(e)
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