Rule 37(e) is not about perfection when it comes to preserving electronically stored information (ESI), but reasonableness. Which means, parties took reasonable steps in good faith to preserve and produce requested ESI. However, reasonableness is a subjective concept, and that’s where this rule comes in: it creates a standard to guide everyone involved.
“If electronically stored information that should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery, the court:
Everyone wants to know what the consequences of an action are, especially if those consequences could possibly have a huge monetary impact. That’s why 37(e) is maybe the most talked about e-discovery rule in the Federal Rules of Civil Procedure (FRCP), because it sets the standard for curative measures in the case of spoliated ESI.
The old rule, before the 2015 amendment, was vague regarding when parties could be penalized for the loss of requested ESI, stating only that sanctions could not be levied if data was lost as a result of the “routine, good-faith operation of an electronic information system.” This led to different standards across US circuit courts on what constituted spoliation of ESI.
The new Rule 37(e) doesn’t depart from the common law duty to preserve relevant information, but rather authorizes specific measures that the court may employ in those instances where information that should have been preserved was lost, and more importantly, it specifies the findings the court must make in order to impose curative measures (which the rule states “no greater than necessary to cure the prejudice” to the aggrieved party) or more extreme measures (monetary penalties, entering a default judgement, or case dismissal). With this in mind, a 5-part test was created for deciding whether spoliation sanctions apply, which attempts to clarify ambiguity and create standardization across the US federal courts.
The new Rule 37(e) met the demand for relief from “e-discovery extortion” coming from corporate interests seeking to avoid “over-preservation” and its attendant costs. Prior to the Rule change, corporations holding terabytes of information often faced the Hobbesian choice of preserving everything imaginably relevant or running the risk that years after the commencement of a case, a court might determine that some unpreserved ESI-- that was viewed at the time of preservation as irrelevant or of marginal value-- should have been preserved and impose a drastic sanction for the preservation failure.
Under the new Rule, a documented reasonable, good faith and thoughtful preservation plan should go far in warding off dispositive sanctions, or, what is almost the equivalent, an adverse inference instruction to the jury.
But while addressing corporate concerns, the new Rule frustrated elements of the plaintiffs’ bar. If a failure to preserve evidence that should have been preserved results in substantial prejudice, why should the court be limited in applying an appropriate remedy --even dismissal or an adverse inference instruction-- because the complaining party cannot meet the excruciatingly high standard of demonstrating that the evidence was lost as part of a strategy to deprive the party of the use of the information in the litigation.
Our justice system is built on the discretion of courts to accomplish justice; why tie a judge’s hand in these factually complex situations involving the loss of otherwise discoverable information that cannot be restored or replaced?
The new Rule’s application is being watched carefully. Will future amendments be necessary?