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Proposed amendment to FRCP Rule 37 addresses sanctions for failure to preserve ESI

The revised proposed Rule 37(e) is a significant change from the initial proposal that was submitted in August 2013

The process of amending the Federal Rules of Civil Procedure is entering its last phases before promulgation. Please see our previous article outlining the proposed amendments and the amendment process in detail. The six-month public comment period that ended on Feb. 18, 2014, spawned a heated debate and many public comments focused in large part on the proposed amendments to Rule 37(e), which included a new federal standard for sanctions resulting from spoliation. As many anticipated, after further consideration and in response to the many public comments, in April 2014 the Standing Committee on Rules of Practice and Procedure revised proposed Rule 37(e) before submitting it to the Judicial Conference of the United States with a recommendation for approval.

The revised proposed Rule 37(e) is a significant change from the initial proposal that was submitted in August 2013. The original objective in revising Rule 37(e) was to replace the differing treatment of preservation obligations and sanctions in federal circuits throughout the country with a uniform federal standard. Thus, the initial proposed amendment essentially rewrote the entirety of Rule 37(e). The proposed amendment was drafted to apply to losses of all types of discoverable information, created a uniform willfulness standard for sanctioning a litigant for spoliation, and listed a set of factors that a court was to consider when deciding whether to award sanctions for the loss of discoverable information.

After further review, the rule drafters concluded that the proposed amendments were unlikely to reduce over-preservation and were too restrictive of judicial discretion.  Accordingly, the rule drafters revised the proposed amendment to Rule 37(e) and restricted its application only to a failure to preserve electronically stored information, or ESI. Moreover, the proposed rule was changed by removing the set of factors that courts were required to consider when assessing whether a party’s failure to preserve was willful or in bad faith. The revisions continue to reject sanctions based on a finding of mere negligence or even gross negligence, and emphasize judicial discretion to apply curative or remedial measures. Further, the proposed rule maintains its adoption of a standard where there are no severe measures to be awarded without a showing of specific intent equivalent to bad faith.

Although now revised, the proposed amendments to Rule 37(e) continue to provide advantages to in-house counsel dealing with e-discovery obligations. Now that we have a better understanding of the rule that is likely to be promulgated, document retention policies and litigation holds can be crafted appropriately without fear of repercussions for mere negligence or where a loss of ESI does not prejudice the requesting party. The proposed revisions, with a national uniform standard for spoliation, also will provide greater predictability when addressing the loss of ESI.  

Contributing Author

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Raymond M. Ripple

Raymond M. Ripple is a partner in the litigation department of Edwards Wildman Palmer LLP in Providence, Rhode Island.

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Contributing Author

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Krystle Guillory Tadesse

Krystle Guillory Tadesse is an associate in the Litigation Department of Edwards Wildman Palmer LLP in Providence, Rhode Island.

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