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Other Limitations on Sanctions, Spoliation Sanctions Part 5

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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 “Courts’ Inherent Authority to Sanction,” we discussed courts’ inherent authority to sanction spoliation.  In this final Part, we review some other limitations on sanctions.


So far, we have discussed the major questions of what qualifies as reasonable steps to preserve, what it is a sufficient showing of intent to deprive, and whether courts can opt for inherent authority in place of relying on FRCP 37(e).  Beyond those major questions, there are others, of which practitioners should be aware, that affect whether and what sanctions are imposed, including: whether there has been irretrievable loss, whether there has been prejudice, and other factors.

Whether There Has Been Irretrievable Loss

The language of amended FRCP 37(e) specifies that, in order to apply sanctions under the rule, “electronically stored information that should have been preserved . . . [was] lost . . . and [] cannot be restored or replaced through additional discovery” [emphasis added].  So, even in cases where reasonable steps to preserve weren’t taken, sanctions may not apply if no ESI was lost or if any lost ESI can be recovered or replaced.  The availability of alternate forms of the lost evidence (e.g., screen captures of lost posts) or alternate sources of lost evidence (e.g., third parties or service providers) may be sufficient to preclude a finding of loss:

Given the plain language of the Rule, Plaintiffs’ motion borders on frivolous, for the simple reason that they cannot even show that the evidence at issue was “lost.”  Several of the Images are still hosted on CMG’s websites.  And the record makes clear that Plaintiffs themselves possess copies of the other Webpages – in the form of screen captures taken when they displayed the Images (the “Screenshots”).  In fact, Plaintiffs themselves list the Screenshots as trial exhibits.  Given that (plus the fact that Defendant does not dispute the authenticity of the Screenshots or deny that it hosted and displayed the Images), there is no foundation to impose sanctions under Rule 37(e).  [internal citations omitted; emphasis added]

In sum, the Port Authority has not shown that any ESI, let alone any relevant ESI, was actually destroyed.  I therefore recommend denying the Port Authority’s motion for sanctions relating to ESI.”  [emphasis added]

Volvo Car USA LLC concedes that it has not subpoenaed any records from CDK Drive. It has not attempted to retrieve the information from any other third-parties. 

Volvo Car USA LLC also has not demonstrated that it is not in possession or does not otherwise have access to any information due to its own use of the Electronic Dealer Management System. 

Rule 37(e) sanctions are not available when the information may be sought from third-parties and Volvo Car USA LLC has not demonstrated that the information is irretrievable. 

. . . 

Defendant has not sought any e-mails or discovery directly from Google and cannot demonstrate that the e-mails are otherwise lost.  [emphasis added]

Whether There Has Been Prejudice

The language of amended FRCP 37(e) also specifies that, in order to apply even curative measures under the rule, the court must find “prejudice to another party from loss of the information.”  So, even in cases where reasonable steps to preserve weren’t taken and ESI was irretrievably lost, sanctions may not apply if no prejudice from the loss can be shown:

. . . Eshelman has failed to make a sufficient showing of prejudice to support relief under Rule 37(e)(1).  In order to impose a sanction under Rule 37(e)(1), the court must have some evidence regarding the particular  nature of the missing ESI in order to evaluate the prejudice it is being requested to mitigate. . . .  Based on what has been presented to the court at this point, it is difficult to gauge the amount of prejudice to Eshelman due to the lost ESI and what type of remedy would be no greater than necessary to cure that prejudice. Similar to other cases, further discovery may inform the extent of the prejudice if any.  [internal citations omitted]

  • Hernandez v. Tulare County Correction Center No. 16-CV-00413 (E.D. Cal. Feb. 8, 2018) – in this case, because certain facts were undisputed, other documents and photos were available, and an eye-witness was available, the court concluded that [t]hese factors ameliorate[d] the prejudice suffered by Plaintiff as a result of the loss of the information at issue” [emphasis added] and that requested sanctions should not be awarded because:

Even if there were still some remaining prejudice to Plaintiff after evaluation of these factors, the Court finds any remaining prejudice was sufficiently cured by the Court’s January 31, 2018 Order directing the defendants to produce additional information to Plaintiff . . . .  [emphasis added]

In sum, Sinclair violated Rule 37 by failing to preserve her text messages.  The deletion of the text messages between Sinclair and her former co-workers prejudiced Defendants because the text messages were relevant to the litigation and because Defendants offer a plausible, good-faith explanation of what the missing text messages may have contained.  Therefore, sanctions are appropriate in this case.  [emphasis added]

Other Factors

Finally, there are other factors to bear in mind.  First, it is important to remember that discovery sanctions need to be pegged to the prejudice they are curing or the conduct they are deterring rather than to the value of the overall case:

  • Klipsch Group, Inc. v. ePRO E-Commerce Ltd., Case No. 16-3637 (2d Cir. Jan. 25, 2018) – in this case, the Second Circuit approved discovery sanctions – including a $2.7 million award of fees and costs in a case with a value of around $20,000 – over the Defendant’s objection that such sanctions were “impermissibly punitive, primarily because they are disproportionate to the likely value of the case,” because as the court explained:

. . . discovery sanctions should be commensurate with the costs unnecessarily created by the sanctionable behavior.  A monetary sanction in the amount of the cost of discovery efforts that appeared to be reasonable to undertake ex ante does not become impermissibly punitive simply because those efforts did not ultimately uncover more significant spoliation and fraud, or increase the likely damages in the underlying case.  [emphasis added]

Second, it is important to raise spoliation concerns promptly to avoid having the motion denied as untimely filed:

  • Travelers Prop. Cas. Ins. Co. of Am. v. Mountaineer Gas Co., No. 2:15-cv-0959 (S.D.W. Va. Mar. 16, 2018) – in this case, one party tried to raise spoliation as an issue more than four years after the underlying incident and more than six months after the end of discovery, shortly before the start of trial, but since the issue had never been raised during discovery and no motion to compel had been filed, the Court denied the motion as untimely filed and opined that it would be suspicious of “any spoliation motion raised on the eve of trial” where the facts had been known for years

Third, it is important to remember that courts have great discretion in fashioning appropriate remedies and sanctions, particularly when acting based on inherent authority rather on the terms of FRCP 37(e).  For example, in combination with more common sanctions like fee awards and adverse inference instructions, a court might also shift a burden of proof or preclude the calling of specific witnesses:

The next available sanction in order of severity is the switching of the burden of proof.  While this is not a common sanction in case law, it is not as harsh as other more common sanctions, such as stipulating that a fact is established or striking a defense in its entirety. . .  So while Defendants complain of the punitive effect of this sanction, it is not on the severe side of the spectrum, considering the conduct here. 

. . . There must be consequences for the type of conduct evidenced in this case. It is inconsistent with the dignity of judicial proceedings to suggest that the recovery of highly relevant data after the failure to produce it has any deterrent effect.  That would signal to litigants that if they want to interfere with discovery, it is worth a try – there is nothing to lose.  The shifting of the burden of proof on the issue to which the discovery applies is the least severe of the effective options available to the Court.  [internal citation omitted; emphasis added]

  • Wilmoth v. Deputy Austin Murphy, No. 5:16-CV-5244 (W.D. Ark. Aug. 7, 2019) – in this case, defendant and defendant’s attorney allowed the spoliation of relevant ESI and also engaged in “conduct which might readily be viewed as intentional deception,” leading the court to impose not only a permissive adverse inference sanction but also witness preclusion sanctions:

Given his direct involvement in viewing and in failing to ensure preservation of these photographs, the Court finds that his actions demonstrate bad faith and that it would be appropriate to prevent the defendant from calling him as a witness in his case.  The same sanction will also apply to Deputy Hale. . . .  Although the Court recognizes that this sanction at first blush may seem harsh, it would be against the interests of justice to allow an official to testify about pictures which were not preserved, in part, because of that same official’s failure to follow county policy. 

Second, under Rule 37(e)(2)(B) and in light of the Court’s earlier finding that defendant and his counsel have willfully acted to prevent Wilmoth from accessing this documentary evidence that he claims would support his case, the Court will instruct the jury that it may, but is not required to, presume . . .

Takeaways

Beyond the major questions of reasonable steps, intent to deprive, and inherent authority, there are others that affect whether and what sanctions are imposed, including: whether there has been irretrievable loss, whether there has been prejudice, and other factors:

  • Even in cases where reasonable steps to preserve weren’t taken, sanctions may not apply if no ESI was lost, or if any lost ESI can be recovered from alternate sources or replaced with alternate forms.
  • Even in cases where reasonable steps to preserve weren’t taken and ESI was irretrievably lost, sanctions still may not apply if no prejudice from the loss can be shown based on what the contents of the missing ESI would have been.
  • Finally, there are other factors to bear in mind: sanctions are pegged to the prejudice or the misconduct rather than to the value of the case, spoliation concerns should be raised promptly to avoid untimeliness, and courts have great discretion in fashioning remedies and sanctions, particularly when acting on inherent authority rather than FRCP 37(e).

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About the Author

Matthew Verga

Director, Education and Content Marketing

Matthew Verga is an electronic discovery expert proficient at leveraging his legal experience as an attorney, his technical knowledge as a practitioner, and his skills as a communicator to make complex eDiscovery topics accessible to diverse audiences. An twelve-year industry veteran, Matthew has worked across every phase of the EDRM and at every level from the project trenches to enterprise program design. He leverages this background to produce engaging educational content to empower practitioners at all levels with knowledge they can use to improve their projects, their careers, and their organizations.

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