Electronically Stored Information (ESI): Preserve or Beware
Dec. 21, 2015|By Kercsmar & Feltus
On December 1, 2015, the Federal Rules of Civil Procedure were amended to impose specific (and potentially significant) penalties for failing to preserve electronically stored information (ESI), which “should have been preserved in the anticipation of litigation.” Rule 37, commonly known as the “sanctions rule,” now includes subsection (e):
(e) 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:
(A) presume that the lost information was unfavorable to the party;
(B) instruct the jury that it may or must presume the information was unfavorable to the party; or
(C) dismiss the action or enter a default judgment.
The duty to preserve ESI (which includes social media) pre-existed this rule change and is triggered upon the reasonable anticipation or foreseeability of litigation. But section (e) makes it clear that sanctions may be imposed if (1) ESI is relevant to a claim or defense at issue in the litigation (i.e. it should have been preserved), (2) a party failed to take “reasonable steps” to preserve the lost ESI, (3) the ESI cannot be recovered or restored (i.e. it is not stored in an email server or back-up hard drive), and (4) the absence of the ESI is prejudicial to another party in the lawsuit.
While this Rule permits Courts to impose heavy penalties ranging from an award of attorneys’ fees to dismissal of the action, the sanctions must be proportionate to address the prejudice created by a party’s failure to preserve ESI. The imposition of case-determinative sanctions (such as dismissal or default judgment) is limited to situations where one party has proved that the other acted with culpability and intended “deprive another party of the information’s use in the litigation.” Moreover, determining the reasonableness of the steps taken to preserve ESI must be examined on a case by case basis; a party is not always required to choose the most costly and comprehensive data retention option as long as the less expensive option is “substantially as effective.” A party is also not required to maintain all of its ESI forever: routine deletion of ESI has been recognized by Courts as a valid part of a data management system.
If you are currently in litigation or are considering filing a lawsuit of your own, your attorney should warn you about these new rules and should take the time to learn about your data retention systems. This is particularly important the party is an entity. Even if you or your company is not currently in litigation, though, reexamining your data retention and destruction systems, drafting policies and procedures relevant to data retention, and routinely monitoring compliance with these policies will be beneficial if you ever find yourself in Court.