A Safe Harbor from Spoliation Sanctions Can an Amended Federal Rule of Civil Procedure 37(e) Protect Producing Parties?

Abstract

Discovery plays a crucial role in modern litigation, but imposes many costs both apparent and hidden. On its face, discovery requires corporate litigants to spend money on the retention, review, and production of relevant evidence. However, the rules governing discovery—especially those governing sanctions for spoliation of evidence—also create externalities that are borne by the parties and society alike. Specifically, the threat of sanction for failure to preserve relevant information causes potential litigants to engage in costly over-preservation of electronically stored information (“ESI”). This problem is further amplified by a circuit split regarding whether severe sanctions can be imposed for merely negligent spoliation, which creates additional incentives to over-preserve.

In response, the Judicial Conference proposed a rewritten version of Federal Rule of Civil Procedure 37(e), which creates a safe harbor from severe sanctions for parties that take reasonable steps to preserve relevant ESI. However, as this Note argues, the proposed Rule will not be successful in creating a uniform national standard governing when judges may issue severe sanctions because (1) it does not limit judges’ inherent power to sanction parties notwithstanding the Federal Rules and (2) it contains a loophole that could be used to issue a type of severe sanctions, adverse inference jury instructions, where the spoliating party was only negligent. This Note suggests two alterations to the Committee Note that accompanies the proposed Rule 37(e) in order to effectively limit judges’ inherent power and reserve adverse inference instructions for parties that recklessly or intentionally destroy relevant ESI. These changes are likely to establish a truly uniform standard for spoliation sanctions in federal courts and could cause states to adopt similar rules, which would go even further towards creating true national uniformity and remedying the problem of over-preservation.