E-Discovery Update: Proposed Rule Changes Reflect Trend Toward “Reasonableness” in Preservation

April 1, 2015

The Judicial Conference Committee recently approved changes to Federal Rule of Civil Procedure 37(e) addressing preservation and sanctions and setting forth clearer and more reasonable preservation standards than those imposed by some courts in the past. See Summary of the Report of the Judicial Conference Committee on Rules of Practice and Procedure, Agenda E-19 (Sept. 2014). The proposed change awaits review by the United States Supreme Court and, if approved, will take effect on December 1, 2015 (absent action by Congress). The new language of Rule 37(e) applies only to electronically stored information (ESI) and provides the following:

  1. 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:

      1. presume that the lost information was unfavorable to the party;

      2. instruct the jury that it may or must presume the information was unfavorable to the party; or

      3. dismiss the action or enter a default judgment.

Proposed Fed. R. Civ. P. 37(e) (emphasis added). The revisions create a more uniform standard to be applied across the federal circuits. Proposed Rule 37(e) codifies the standard developed by case law that the duty to preserve arises when litigation is anticipated and limits more severe sanctions to situations involving bad faith.

The changes to the Rule reflect a growing trend by the courts to apply a more reasonable standard. See, e.g., Jones v. Union Pac. R.R. Co., No. 12 C 771, 2014 WL 37843, at *6 (N.D. Ill. Jan. 6, 2014) (finding no obligation for Union Pacific to preserve a hard drive for authentication of a video copied from the hard drive where “reuse of the hard drive after the data relating to the incident has been preserved was a routine practice for Union Pacific”). The standard set out in proposed rule 37(e), which is consistent with some court opinions, imposes sanctions only upon a bad faith failure to preserve ESI, rather than mere negligence. See Automated Solutions Corp. v. Paragon Data Sys., Inc., 756 F.3d 504, 513-17 (6th Cir. 2014) (finding negligent behavior in party’s failure to preserve ESI but affirming magistrate judge’s refusal to impose severe sanctions absent a finding of bad faith).

As intended by the drafters, the proposed changes to Rule 37(e) alleviate the need to over-preserve ESI out of fear of an adverse-inference instruction or even more severe sanctions on the basis of a negligent failure to preserve. See Agenda E-19, supra, at Appendix B-14.