Proposed eDiscovery Rule Would Bring Relief from Specter of Sanctions

by Ballard Spahr LLP
Contact

The Rules Advisory Committee has recommended proposed amendments to the Federal Rules of Civil Procedure that would set guidelines for courts to follow when evaluating a request for sanctions for spoliation of discovery information, both paper and electronic documents. If enacted, the proposed amendments to Federal Rule of Civil Procedure 37(e) (FRCP 37(e)) would become the most significant rule governing eDiscovery to have been enacted since the Zubulake line of cases. Issued amid a flurry of recent eDiscovery rulings, the proposed amendments may have particular importance for corporate defendants in litigation. 

Under the proposed amendments to FRCP 37(e), courts would weigh the following factors when considering sanctions:

  • If, and to what extent, the potential litigant had notice that litigation was likely and that the information at issue would be discoverable
  • The reasonableness of the party’s efforts to preserve the information
  • Whether the requesting party properly communicated its request to preserve and produce the information to the responding party
  • Whether the responding party’s preservation efforts were in proportion to the requests made by the requesting party
  • Whether the requesting party pursued the court’s guidance on unresolved disputes regarding the preservation of information

The issue of preservation and sanctions has been a “hot-button” issue for litigants since the last round of amendments to the Federal Rules of Civil Procedure in December 2006. The proposed amendments to FRCP 37(e) should be well received by litigants, particularly corporate defendants, for a number of reasons.

First, the amendments would provide a much-needed national standard for the imposition of sanctions. This issue has bedeviled defendants who currently grapple with an array of different and often conflicting standards of spoliation in federal courts.

Second, under FRCP 37(e)(1)(B)(i), sanctions would be available solely in instances where the offending party has acted “willfully” or in “bad faith,” and only “if the affected claim or defense was central to the litigation.” Sanctions are only deemed appropriate when the loss of discoverable information caused “substantial prejudice” to the requesting party by irreparably depriving the party of any meaningful opportunity to present or defend against claims in the litigation. Even if the court determines a party has been substantially prejudiced by the failure to preserve discoverable information, the proposed amendments provide leeway for the court not to impose sanctions as long as the court believes curative measures would sufficiently reduce the prejudice caused by the failure to preserve documents.

This is the key provision in the proposed amendments, and it would theoretically protect the “innocent spoliator” who loses or destroys discoverable information by mistake. Indeed, the availability of significant sanctions against parties for mere negligence in preserving data has long been a point of criticism for corporate defendants. To that end, the proposed revisions to FRCP 37(e) suggest an implicit rejection of a 2002 decision by the U.S. Court of Appeals for the Second Circuit in Residential Funding Corp. v. DeGeorge Fin. Corp., permitting sanctions for negligent failure to preserve, in favor of the less stringent standards in the Fourth and Eleventh Circuits, which require a showing of “willfulness” or “bad faith” to support sanctions for spoliation.

Third, the proposed amendments to FRCP 37(e) reiterate that a party’s preservation obligations are limited in scope and in proportion to the circumstances of the case, rejecting the black and white approach toward preservation that many federal courts have imposed since the 2006 rule changes.

The proposed amendments have already come under fire. In Sekisui American Corporation v. Hart, Judge Shira Scheindlin, a well-respected judge in the Southern District of New York and author of the seminal Zubulake cases, criticized the proposed amendments to FRCP 37(e) on the grounds that it will encourage litigants to take the duty to preserve less seriously and inevitably lead to sloppier preservation practices. Judge Scheindlin also criticized the Advisory Committee Note to the proposed amendments for requiring the innocent party to prove that “it has been substantially prejudiced by the loss of relevant information, even where the spoliating party destroyed information willfully or in bad faith.”

Despite its limitation on the imposition of sanctions for the loss of discoverable information, the proposed amendments to FRCP 37(e) provide that courts may impose a variety of remedies short of sanctions that can be severe in their own right. For example, a court would be able to order:

  • Additional discovery normally precluded under the proportionality analysis of FRCP 26(b)(1) and (2)(C)
  • Curative measures
  • Payment of the requesting party’s reasonable expenses incurred as a result of the offending party’s failure to preserve discoverable information

The six-month public comment period for the proposed amendments to FRCP 37(e) concludes on February 15, 2014. Before the proposed amendments can take effect, they must be approved by the U.S. Supreme Court and Congress. Congress has up to six months to reject, modify, or refuse to take action on the proposed amendments. If Congress does not take any action, the proposed amendments will become effective on December 1, 2015.

If enacted, FRCP 37(e) would be a significant benefit for litigants producing large volumes of electronically stored information, or ESI, particularly corporate defendants who routinely face asymmetrical discovery disputes and the constant threat of sanctions. Although the proposed amendments stop short of establishing a bright-line rule for assessing or determining sanctions, the proposed guidelines should nonetheless reduce the prevalence and severity of sanctions for the loss of discoverable information, which would be music to the ears for many in-house legal departments.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ballard Spahr LLP | Attorney Advertising

Written by:

Ballard Spahr LLP
Contact
more
less

Ballard Spahr LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!