A multi-part series reviewing decisions related to spoliation of ESI since the December 2015 amendments to the Federal Rules of Civil Procedure
In “When the Bough Breaks,” we discussed the December 2015 amendments to Federal Rule of Civil Procedure 37(e). In “Reasonable Steps to Preserve ESI,” we discussed available commentary and cases on what constitutes reasonable steps. In “Intent to Deprive,” we discussed commentary and cases on intent to deprive. In this Part, we review courts’ inherent authority to sanction spoliation.
As we discussed in the last Part, one of the primary goals of the December 2015 Amendments to the Federal Rules of Civil Procedure was to increase predictability and consistency for litigants by eliminating jurisdictional variations in ESI spoliation standards, their application, and the associated penalties. Ensuring predictability and consistency, however, would require foreclosing other alternatives for addressing ESI spoliation.
To accomplish the desired standardization, amended FRCP 37(e) would need to become the only source of authority for the application of ESI spoliation sanctions, to prevent the rule from being bypassed and predictability from being destroyed. As articulated in the Advisory Committee Notes to the 2015 Amendments, the Rules Advisory Committee intended for the new version of FRCP 37(e) to preclude the use of inherent authority to assess ESI spoliation sanctions:
New Rule 37(e) . . . authorizes and specifies measures a court may employ if information that should have been preserved is lost, and specifies the findings necessary to justify these measures. It therefore forecloses reliance on inherent authority or state law to determine when certain measures should be used. [emphasis added]
Advisory notes are only advisory, however, and in the years since, courts have been inconsistent in their responses to this intended effect. Some have treated the amended rule like their sole option, while others have issued decisions expressly relying on – or expressing a willingness to rely on – inherent authority for ESI spoliation sanctions.
Over the past four years, a variety of courts have had the opportunity to issue orders on motions for spoliation sanctions and to consider whether they retain any inherent authority to issue ESI spoliation sanctions beyond that provided by FRCP 37(e). Here is a sampling of those cases:
Where exercise of inherent power is necessary to remedy abuse of the judicial process, it matters not whether there might be another source of authority that could address the same issue. In Chambers, the Supreme Court rejected the argument by the party opposing the sanctions motion that provisions of the Federal Rules of Civil Procedure foreclosed resort to inherent power. [citation omitted; emphasis added]
Without limitation, litigation misconduct may also be otherwise sanctioned by the inherent power of the court. This court is vested with broad discretion to fashion an appropriate sanction pursuant to its inherent powers to sanction and redress litigation abuse. This is so regardless of whether any party suffered prejudice as a result of the activity. [emphasis added]
Federal courts possess certain “inherent powers,” not conferred by rule or statute, “to manage their own affairs so as to achieve the orderly and expeditious disposition of cases.” That authority includes “the ability to fashion an appropriate sanction for conduct which abuses the judicial process.” [internal citations omitted; emphasis added]
The Court has inherent power to impose terminating sanctions “when a party has engaged deliberately in deceptive practices that undermine the integrity of judicial proceedings” because this power permits dismissal “when a party has willfully deceived the court and engaged in conduct utterly inconsistent with the orderly administration of justice.” [citation omitted; emphasis added]
The failure to preserve ESI is addressed by Federal Rule of Civil Procedure 37(e). Measures to address the loss of physical evidence e are available pursuant to a court’s “broad discretion” to manage discovery.
. . .
A different standard for imposing sanctions, set by Rule 37(e), applies when the lost information is in electronic form. This separate standard addresses the ways in which electronic information differs from physical evidence. [internal citations omitted; emphasis added]
As an initial matter, the parties disagree as to whether sanctions, if they are appropriate, would flow from the Court’s inherent power to sanction or pursuant to rule 37 of the Federal Rules of Civil Procedure. . . . The Rule, however, does not speak to the current dispute. The Rule, by its very terms, only applies when a party has “failed to take reasonable steps to preserve” electronically stored information and “it cannot be restored.” The facts of this case are much more serious. We deal, here, with the intentional manipulation of emails and contracts in order to gain an advantage in litigation. Thus, the Court’s inherent power to sanction is a more appropriate rubric to analyze this matter. [citation omitted; emphasis added]
Defendants argue that there can be no sanctions under Rule 37 because the production of FleetMatics data will have been made in its entirety prior to trial. Defendants cite Moody v CSX Transportation, Inc., 271 F. Supp. 3d 410, 425 (W.D.N.Y. 2017), as holding that changes to Rule 37 with respect to electronic evidence rejected sanctions for negligent or grossly negligent behavior. That argument misses the point. First, the case addresses the spoliation presumption, which has been eliminated here. Sanctions are still available for intentional acts to deprive a party of discovery. And as the Court has made clear, Defendants’ acts were intentional, willful, in bad faith, and contumacious. [emphasis added]
These decisions considering “inherent authority” show more variation than the decisions we reviewed considering “reasonable steps” or even than those we reviewed considering “intent to deprive.” Some courts view amended FRCP 37(e) as their only option, while most seem to believe that inherent authority remains an alternative in at least some situations.
Some courts seem to think that the inherent authority alternative is available whenever the result dictated by FRCP 37(e) would be inadequate, while others seem to think that the inherent authority alternative is available only in cases of egregious, bad-faith behavior. Other courts think that certain types of intentional misconduct – particularly the fabrication of evidence – exist beyond the bounds of FRCP 37(e) and can only be addressed using inherent authority.
Upcoming in this Series
Up next, in the final Part of this series, we will conclude our review of ESI spoliation with discussions of prejudice, loss, and more.