In December 2015, the electronic discovery provisions of the Federal Rules of Civil Procedure (FRCP) were amended to substantially expand the Safe Harbor against sanctions for destruction of electronic data. In my November 2015 white paper, C-Level Guide to Covering Your Information Governance Assets, I predicted that the amended rules signaled a pivot away from one of the main sources of eDiscovery uncertainty - the inconsistent imposition of severe sanctions for the loss of electronically stored information (ESI) relevant to dispute resolution. The prediction holds.
The prior Safe Harbor under the 2006 FRCP provided modest protections against sanctions where ESI was lost due to routine and automatic deletion. Because of the inconsistent standards previously applied by courts around the country, organizations fearful of doomsday sanctions would over-preserve. The new discovery rules greatly expand this protection.
A cursory review of sanctions cases decided under the new rules in influential U.S. District Courts indicates that the Federal bench is successfully applying the new rules as the Rules Advisory Committee intended – limiting judicial discretion to impose case-killing sanctions to situations where a party intentionally deprives its opponent of documents covered by a “legal hold.” An excerpt from a Northern District of California case stated:
In amending Fed. R. Civ. P. 37(e), the advisory committee lamented the "excessive effort and money" litigants needed to spend on preservation because of inconsistent standards among the federal appellate circuits. In particular, the committee stressed that the amended rule was designed to "reject cases such as Residential Funding Corp. v. DeGeorge Financial Corp., 306 F.3d 99 (2d Cir. 2002), that authorize the giving of adverse-inference instructions on a finding of negligence or gross negligence." The committee also sought to foreclose "reliance on inherent authority or state law to determine when certain [curative or sanctioning] measures should be used." To that end, Rule 37(e) now provides a genuine safe harbor for those parties that take "reasonable steps" to preserve their electronically stored information.
Matthew Enterprise, Inc. v. Chrysler Group LLC, Dist. Court, ND California 2016.
The rule change and Advisory Committee notes were an attempt to constrain the judiciary from applying sanctions that have the effect of deciding the outcome of a case (e.g., default judgment, adverse inference jury instruction). Even though recent written discovery decisions show that judges jealously wish to maintain their “inherent authority” to impose sanctions for misconduct, the legal analysis now regularly focuses on the new rules.
One year later, the white paper still provides a legally defensible argument and pathway for enterprises to embark on a data remediation project as part of the regular process of updating retention policies:
The revised sanctions rule provides a game-changing “green light” to organizations to defensibly automate the deletion / destruction of unneeded legacy and other data in accordance with a reasonable document retention policy and retention schedule. In the simplest of terms, by properly implementing currently available software, every single record and document that is not covered by a legal hold and is slated for destruction under the retention policy and schedule, can disappear forever.
There has never been a better time to clean up your information governance assets.