The Civil Rules Committee Goes Back to the Drawing Board on Rule 37(e)

Calling its prior proposal “too restrictive,” the Advisory Committee on Civil Rules published a substantially revised version of Federal Rule of Civil Procedure 37(e) in the agenda for its April 10-11 meeting. The Committee took into account findings during three hearings as well as voluminous public comments on the revisions.

The revised rule limits the application of the rule to electronically stored information (ESI) rather than discovery as a whole, and it eschews the use of the word “sanctions” in favor of “curative measures.” The rule also sets forth a three-tier set of measures based on the severity of the destruction at issue:

1. Rule 37(e)(1) permits the imposition of curative measures for the mere loss of evidence, without requiring a showing of prejudice or intent. The court cannot order measures “greater than necessary to cure the loss of information,” and the rule includes a nonexclusive list of measures, “including permitting additional discovery; requiring the party to produce information that would otherwise not be reasonably accessible; and ordering the party to pay the reasonable expenses caused by the loss, including attorney’s fees.”
2. Rule 37(e)(2) requires a finding of prejudice to the opposing party and only permits measures so far as “necessary to cure the prejudice.” In the prior version, to be sanctionable, a loss of evidence had to be willful or in bad faith and cause “substantial prejudice” or “irreparably deprive[] a party of any meaningful opportunity to present or defend against the claims in the litigation.” As the committee notes indicate, the rule does not assign the burden of establishing prejudice to either party. The breadth of the language suggests courts have a range of options to consider in choosing the appropriate curative measure.
3. Rule 37(e)(3) requires severe penalties to be imposed only where a party “acted with the intent to deprive another party of the information’s use in the litigation.” In this case, the court can “(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.” On its face, this subsection does not seem to require a finding of prejudice.

Rule 37(e)(4) instructs courts to “consider all relevant factors” in applying the rule, incorporating four nonexclusive factors it carried forward from the five it enumerated in the prior version of the rule with minor changes. The most significant was to add “after the commencement of the action” to the final factor:

1. the extent to which the party was on notice that litigation was likely and that the information would be relevant;
2. the reasonableness of the party’s efforts to preserve the information;
3. the proportionality of the preservation efforts to any anticipated or ongoing litigation; and
4. whether, after commencement of the action, the party timely sought the court’s guidance on any unresolved disputes about preserving discoverable information.

The factors appear in brackets because the Committee plans to debate whether to include them in the rule or in the committee notes at the upcoming meeting.

Although some questions remain, these changes represent a significant improvement over the prior version of the rule. Importantly, the revisions should resolve the controversy about whether sanctions can be applied where conduct is merely negligent, creating greater uniformity among courts. The additional guidance for courts should also improve predictability for litigants. However, whether the new schema has the potential to relieve organizations of the burden of overpreserving evidence is less clear. Given the discretion that the proposed rule still affords judges, the breadth of subsection (e)(2), and the inclusion of nonexclusive factors, many organizations are likely to adopt a wait-and-see attitude, observing how courts apply the rule before choosing to purge their data stores.

Chris O’Brien is senior vice president at Conduent. He can be reached at cobrien@conduent.com.