Migrated from eDJGroupInc.com. Author: Greg Buckles. Published: 2014-04-06 20:00:00Format, images and links may no longer function correctly.
Ever since the 2006 Federal Rules of Civil Procedure were amended to address Electronically Stored Information as potential evidence, practitioners have struggled to interpret them. The public comment period closed February 18, 2014 and latest round of changes to the potential rules have been published in the Agenda Book for the Advisory Committee meeting to be held on April 10-11, 2014 in Portland, OR. Now these proposed rules cover a lot of ground, so I am hammering on the FRCP 37(e) changes to understand their potential impact from my corporate client perspective. Overall, I feel that the proposed changes do a good job of clarifying the court’s job and their curative measures available for ESI loss. However, I am not sure that these rules will actually accomplish that stated goals of reducing the over-preservation burden on litigants. Reducing the fear of ‘sanctions’ does little to clear the ‘fog of war’ that envelopes most companies trying to scope and enact reasonable litigation holds. I hoped that the proposed rules would address the potential reliance on new analytic technologies to develop selective preservation criteria, but the committee kept the guidance on principles rather than concrete prescriptives.
Rule 37(e) Notes – *Please remember that this is a non-attorney interpretation, read the proposed rules and consult with counsel before making up any decisions*
Goal – reduce over-preservation burden and provide clarity of process
Scope – Limited to ESI only now vs. ‘discoverable material’. Committee felt that existing caselaw covered physical documents adequately. The scope of ‘duty to preserve’ should remain based on case law and federal rule does not affect any state jurisdiction spoliation remedies. The trial court will determine whether ESI “should have been preserved in the anticipation or conduct of litigation”. So the new rules essentially give the court a framework to evaluate the primary issues of prejudice and intent when loss of ESI under preservation occurs.
Challenge – Diverse types of litigation prevent prescriptive solutions. The committee called out expert projections that the majority of ESI will be stored in the Cloud or on devices in the long run. Stated the expectation that preservation and discovery challenges will increase, not decrease for litigants of every level of sophistication. Good news for eDiscovery subject matter experts, but no real relief for litigants.
Curative Measure Stages –
1) Loss without prejudice – ESI is gone, but the court did not find the potential evidence of substantive weight or impact to prejudice the outcome of the case.
- Remedy – additional discovery and related attorney’s fees paid by the party that lost the ESI. This could waive any protection for ‘not reasonably accessible’ ESI on tapes, legacy systems or expand discovery scope. Measures shall be “no greater than necessary to cure the lost of information”.
2) Loss with prejudice – ESI is lost that the court determines might have prejudicial weight in the matter.
- Remedy – Trial court has broad measures to cure the prejudice such as precluding specific evidence or deeming facts in evidence.
3) Loss with intent – Although the term ‘Sanctions’ has been removed from the rule, that is exactly what is spelled out. The court must determine that the party acted with intent to deprive another party of the ESI for use in the matter. An important qualification here is that the intent and loss was related specifically to the litigation.
- Remedies
i. presume that the lost information was unfavorable to the party;
ii. instruct the jury that it may or must presume the information was unfavorable to the party; or
iii. dismiss the action or enter a default judgment.
Factors:
- the extent to which the party was on notice that litigation was likely and that the information would be relevant;
- the reasonableness of the party’s efforts to preserve the information;
- the proportionality of the preservation efforts to any anticipated or ongoing litigation; and
- whether, after commencement of the action, the party timely sought the court’s guidance on any unresolved disputes about preserving discoverable information.
Noteworthy Items:
There is a specific exemption for ‘Act of God’ losses that occur outside of parties control. Flooding of data centers from Sandy was cited as an example. But that also covers losses by Cloud providers of hosted data.
Recognition of burden from old rules. Good quote, “it also drives persons and entities to over-preserve because they must assume that their preservation efforts will be judged by the most stringent standard of the various courts in which they might be sued.” I am just not sure that the new rules relieve that fear.
The 2006 exception for “loss of information through the routine, good-faith operation of an electronic information system” is removed. No curative measures if loss prior to duty to preserve. The court can address if loss after duty to preserve. Interestingly enough, I have seen the old rule language used in arguments around aggressive system expiry. This does reset those expectations.
I am disappointed that there was limited guidance on selective preservation. There was some commentary on reasonableness and proportionality in early preservation efforts when the scope if uncertain. Proportionality under 37 (e) (4) (c) could justify strategies of preserving all ‘perpetual custodial’ ESI or specific data sets/systems that are subject to multiple litigations. That still leaves room for selective preservation for second tier custodians or tangential data sources.
The overall remedy for loss without prejudice or intent is no greater that to repair the loss. This could make backup tapes a way to limit recovery cost or even create a fall back for selective preservation strategies. However, tapes have become increasingly ‘accessible’ and so this is probably not a safe strategy.
Since loss by end users not heavily engaged in the matter cannot easily be attributed to ‘intent to deprive’, custodians could be evaluated based on their ‘stake’ in the litigation for specificity of preservation. This is still too early to base preservation strategies on these rules, but the current language does lend itself to tiering of custodians and different levels of preservation effort in light of relative risk.
The rules reject penalties under 37(e)(3) for adverse inference based on negligence or gross negligence. How that will play out in line with new ABA competence standards should be interesting.
So there are my fast takes from reading the new Rule 37(e) proposed rule language and commentary. Love to hear your takes.
Greg Buckles can be reached at Greg@eDJGroupInc.com for offline comment, questions or consulting. His active research topics include mobile device discovery, the discovery impact of the cloud, Microsoft’s 2013 eDiscovery Center and multi-matter discovery. Recent consulting engagements include managing preservation during enterprise migrations, legacy tape eliminations, retention enablement and many more.
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