At its May 29-30, 2014 meeting, the U.S. Judicial Conference's Committee on Rules of Practice and Procedure will be asked to approve a new Rule 37(e) as proposed by the Judicial Conference Advisory Committee on Civil Rules to govern the failure of parties to preserve electronically stored information “that should have been preserved.”
The new rule—along with its Committee Note—is part of a package of civil rule amendments developed by the Rules Committee in the wake of the 2010 Civil Litigation Conference, held at Duke University's law school, sponsored and organized by the JCACCR.
Its final form, Rule 37(e) differs markedly from the complex proposal published for public comment in Aug. 2013 that generated so many issues that it was completely revised—even undergoing a further major revision the night before it was adopted by the Rules Committee at its April Meeting.
FAILURE TO PRESERVE
Rule 37(e) invokes the common law duty to preserve and clarifies that a breach exists only where a party has failed to take “reasonable steps” to preserve ESI once the obligation is triggered. The “reasonable steps” requirement reflects the standard of reasonableness as championed in Rimkus v. Cammarata (688 F. Supp. 2d 598, 618 (S.D. Tex. 2010)) while rejecting the strict liability approach of Zubulake IV (220 F.R.D. 212, 220 (S.D. N.Y. 2003), that holds that “[o]nce the duty to preserve attaches, any destruction of documents is, at a minimum, negligent.” It is intended to incentivize reasonable preservation behavior, not achieve “perfection,” a point emphasized by the "Committee Note."
Moreover, the lost ESI must be shown to be relevant and discoverable (under amended Rule 26(b)(1), it must be “proportional to the needs of the case”). Only losses of such ESI are sufficiently material to have affected the requesting party’s ability to present or defend against a claim, which often represents the “prejudice” from the loss.
By its terms, the rule applies only if the losses of ESI are not susceptible to being restored or replaced by “additional discovery.” Courts are expected to address the availability of alternative sources or take other case management steps before ordering any of the “measures” authorized under the new rule. The "Committee Note" cautions that “substantial measures should not be employed to restore or replace information that is marginally relevant or duplicative.”
• Authorized Measures (Subsection 1)
When a court determines that a failure to preserve has caused prejudice from the loss of the information, subsection 1 of the rule acknowledges the broad discretion of a trial court to select measures that are “no greater than necessary to cure the prejudice.” If there is no such prejudice, the court should ordinarily not act, as is the case under the current case law. Mere speculation about the contents or possible prejudicial impact of the missing ESI will not substitute for positive proof, implied or otherwise. Courts have the responsibility to manage this finding with care. In some instances, it may be unfair to require an innocent party to bear the burden; in others, it may make sense to do so.
Subsection 1 does not, however, require any specific level of culpability to undertake such measures. In this regard, the final form of Rule 37(e) differs from the Aug. 2013 proposal, which required both a showing of substantial prejudice and willful or bad faith conduct to impose “sanctions” as defined in current Rule 37(b)—as well as adverse jury inferences.
However, the "Committee Note" stresses that subsection 1 does not authorize measures that are the “functional equivalent” of the types of case-ending measures listed in subsection 2. Examples might include, depending on the case, the barring or precluding witness testimony central to the case, deeming facts established or altering burdens of proof, etc. under similar circumstances where they have case dispositive impact. Because subsection 1 does not mandate—but merely authorizes—imposition of ”measures,” it is the responsibility of the courts to refuse to impose such sanction-like measures out of respect for the limits of subsection 2.
• Limitations (Subsection 2)
The rule expressly rejects cases likle Residential Funding (306 F.3d 99, 108 (2nd Cir. 2002) under which adverse inference instructions have been justified by merely negligent conduct, i.e., conduct which occurs “knowingly, even if without intent to [breach a duty to preserve it], or negligently.” Id. Instead, subsection 2 requires a preliminary finding that the party acted “with the intent to deprive another party of the information’s use in the litigation” before courts or juries may infer that missing ESI is unfavorable. This prerequisite also applies to dismissals or the entry of default judgments.
The specific intent requirement applies to the use of both mandatory and permissive jury instructions, so that without the “intent to deprive” finding, a court may not instruct a jury that it “may” presume the lost ESI was unfavorable to the party. The "Committee Note" cautions that instructions about ESI losses that “do not involve” such an inference may be available under subdivision (e)(1) if no greater than necessary to cure prejudice.
No comments:
Post a Comment