Significant Change to ESI Preservation Under the Federal Rules of Procedure

Chris Hanslik

November 24, 2015

In recent years, the cost of complex litigation has soared due to the growth of electronically stored information (ESI). Standard discovery requests now include a request for the opposing party to produce a multitude of electronic data from the other party – emails, documents, text messages, file path listings, external storage devices, etc. This can translate into terabytes of data – a monumental volume of ESI that a party must preserve, review and potentially produce.

What keeps most trial lawyers up at night is making sure that their client’s ESI is properly preserved to prevent the opposing party from alleging spoliation – an allegation that the opposing party intentionally destroyed or otherwise wrongfully failed to preserve and produce relevant information. In fact, sometimes an opposing party is just hoping to find any mistake in the preservation process – no matter how big or small – to turn the focus of the case to the preservation of ESI rather than the underlying merits. Anyone who has participated in the process of preserving large amounts of ESI knows that innocent mistakes can happen. In an effort to reign in the fights over the preservation of ESI, the U.S. Supreme Court recently amended Rule 37 of the Federal Rules of Civil Procedure. These changes go into effect on December 1, 2015.

Rule 37(e) now reads:

Failure to Preserve Electronically Stored Information.

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:

(1) upon finding prejudice to another party from loss of the information, may order measures no greater than necessary to cure the prejudice; or

(2) only upon finding that the party acted with the intent to deprive another party of the information’s use in the litigation may

(A) presume that the lost information was unfavorable to the party;

(B) instruct the jury that it may or must presume the information was unfavorable to the party; or

(C) dismiss the action or enter a default judgment.

Under this framework, ESI that should have been preserved but wasn’t will not automatically result in harsh penalties. If a court finds prejudice, it must limit any corrective measures to those necessary to cure the prejudice and nothing more. More importantly, Rule 37(e) now requires a finding that a partyacted with the intent to deprive another party before the more severe consequences of spoliation instructions and/or death-penalty sanctions are available.

While the new standard set forth in Rule 37(e) will certainly not eliminate disputes over the preservation of ESI, it should focus future disputes on whether a party has truly been prejudiced by the failure to preserve and leave the more punitive consequences for the cases where intentional bad acts are at play.