Will the Rules Amendments Resolve the Burden of Preservation?

A recent report from University of Chicago Law Professor William Hubbard revealed the results from the Preservation Costs Survey, commissioned in 2011 by the Civil Justice Reform Group (“CJRG”).

The survey collected data from 128 companies of a variety of sizes and industries. The overwhelming majority—more than 79 percent—of respondents claimed to experience a “great” or “moderate” preservation burden—with the largest respondents citing preservation costs in excess of $40 million per year—which they attributed to uncertainty in the case law on the duty to preserve. Respondents felt the burden was especially hefty because less than half of the data they preserved was ever collected, processed, or reviewed.

The report concluded that rules amendments that limit courts’ ability to impose sanctions could resolve organizations’ angst over preservation and “generate meaningful cost savings.” For example, the report claimed “[f]or the largest companies in the sample, a 3 percent reduction only in employee time spent on litigation holds would equate to savings of over $1 million per company per year.” Moreover, “[r]ules amendments that rein in overpreservation will likely have essentially no adverse impact on discovery and the ultimate resolution of litigation.”

However, the proposed rule still contains some gray areas that could continue to contribute to organizations’ preservation dilemma: namely, the requirement that they take “reasonable steps to preserve” information to be immune from sanctions for spoliation. The reasonableness inquiry opens the door for subjectivity, which is further complicated by the draft Committee Note. The Note acknowledges that given the “ever-increasing volume of electronically stored information and the multitude of devices that generate such information, perfection in preserving all relevant electronically stored information is often impossible.” While the language appears to be forgiving, it nonetheless raises the question of what standard parties must meet.

In determining compliance with the “reasonable steps” standard, the Note directs courts to consider the “routine, good-faith operation of an electronic information system” and to account for parties’ “sophistication with regard to litigation in evaluating preservation efforts.” Courts should also evaluate whether organizations lost data due to events outside their control, such as floods and viruses; these events can excuse organizations from meeting their preservation duties if they “knew of and protected against such risks.” Finally, the Note directs courts to evaluate parties’ preservation efforts based on proportionality, including a consideration of their financial and human resources. This guidance will likely require courts to employ precedent; thus, it may prove too amorphous to lend itself to the uniform standard that organizations have lobbied for.

Overall, the draft rule takes positive steps toward easing the burden of preservation, but the fact that it leaves several items open to judicial interpretation may not give organizations the comfort they need to stop over-preserving data.

Chris O’Brien is chief operating officer at Conduent. He can be reached at cobrien@conduent.com.