Rule 37(e) of the Federal Rules of Civil Procedure is being overhauled as part of a group of amendments to the Federal Rules that address, among other things, proportionality and cooperation in discovery. A central objective of the proposed changes to Rule 37(e) is to establish a uniform federal standard for imposing sanctions for spoliation of discoverable information.

Current Rule 37(e) permits a court to impose sanctions when electronically stored information (ESI) is lost as a result of "the routine, good faith operation of an electronic information system" (FRCP 37). This vague standard has resulted in significant variations among the circuits as to when sanctions could be imposed, particularly whether a requesting party must prove bad faith or prejudice before a court will grant an adverse inference sanction.

For example, in the Second Circuit, a requesting party need not prove bad faith in seeking an adverse inference sanction. If there is proof of prejudice, a court may impose the sanction even for negligent conduct. In addition, if the court finds that evidence was destroyed as a result of gross negligence or willful conduct, the spoliating party must rebut a presumption of prejudice. (Residential Funding v. DeGeorge Financial Corp., 306 F.3d 99, 101, 109 (2d Cir. 2002).) Applying this standard, a district court recently granted a request for an adverse inference instruction against a party for destroying ESI after finding that the destruction was "willful" even though:

(Sekisui v. Hart, (S.D.N.Y. Aug. 15, 2013).)

Other circuits require a showing of bad faith before imposing an adverse inference sanction (see, for example, Turner v. Pub. Serv. Co. of Colo., 563 F.3d 1136, 1149 (10th Cir. 2009) (must prove bad faith for adverse inference sanction); King v. Ill. Cent. R.R., 337 F.3d 550, 556 (5th Cir. 2003), rehearing and rehearing en banc denied, 346 F.3d 539 (2003) (must prove bad conduct for adverse inference sanction); Penalty Kick Mgmt. Ltd. v. Coca Cola Co., 318 F.3d 1284, 1294 (11th Cir. 2003) (must prove bad faith for adverse inference sanction). As a consequence, under current law there is no certainty as to what standard may apply and litigants may "overpreserve" to avoid the potential serious consequences of spoliation.

The proposed amendments seek to remedy this problem by creating a uniform federal standard for imposing sanctions. The proposed rule introduces two important changes. First, the amendments would no longer limit Rule 37(e) to ESI. While the rule likely has the most impact on ESI, if adopted in its current form, the revised rule applies to any type of discoverable information. Second, the amendments provide a clearer standard for when sanctions can be imposed. Under the proposed amendments (absent exceptional circumstances as set forth in proposed Rule 37(e)(1)(B)(ii)), a court cannot impose sanctions, including an adverse inference charge, unless the court makes the following three findings:

(Proposed Rule 37(e).)

If adopted, these amendments would effectively abrogate decisions like Residential Funding and Sekisui.

For more information on the duty to preserve ESI and the consequences for failure to do so, see Practice Note: E-Discovery in the US: Overview.

For more information on the standards for spoliation sanctions by federal circuit, see Spoliation Sanctions by US Circuit Court Chart.