eDiscovery Daily Blog

• April 10, 2017

A lot has been discussed about the most recent changes to the Federal Rules, especially with regard to Rule 37(e) and the requirement of the intent to deprive standard to apply more serious sanctions.  But, what activities constitute intent to deprive?  Should failing to issue a litigation hold be considered intent to deprive a party of potentially responsive ESI when that ESI is not preserved?

Rule 37(e)(2) says the following:

(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.

{emphasis added}

Since the rules – including 37(e) – were implemented in December 1, 2015, there have been several cases where a request for sanctions were not granted because the court ruled a lack of bad faith or intent to deprive.  In one case, Nuvasive v. Madsen Medical, the court (in October 2015) had granted the defendants’ motion for adverse inference sanctions against the plaintiff for failure to preserve text messages from four employees suspected of secret coordination with the plaintiff.  However, after the 2015 Rules changes were adopted, the plaintiff sought relief under Rule 60(b) based on the amendment to Rule 37(e).  California Chief District Judge Barry Ted Moskowitz, having previously found the plaintiff did not intentionally fail to preserve the text messages, reversed the previous ruling and granted the plaintiff’s motion for an order vacating the Court’s previous order that granted the defendants’ Motion for Sanctions.  So, the ruling changed as a result of the Rules changes.

Here are four other cases since the beginning of 2016 where sanctions were denied because of a lack of bad faith or intent to deprive.  Of course, sanctions do still happen and they can still be severe — here are two cases with examples of severe sanctions.

In the Pension Committee case in 2010, New York District Court Judge Shira Scheindlin defined negligence, gross negligence, and willfulness from an eDiscovery standpoint and she stated: “[O]nce a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a ‘litigation hold’ to ensure the preservation of relevant documents.”  Judge Scheindlin also noted that by July 2004, when the final relevant Zubulake opinion was issued, “the failure to issue a written litigation hold constitutes gross negligence because that failure is likely to result in the destruction of relevant information.”

Granted, gross negligence and intent to deprive are not the same thing.  But, it’s 2017 now, not 2010 (much less 2004).  Given what most attorneys know today (or should know) about the requirement to issue a written litigation hold, should failure to do so be considered bad faith?

Not only that, but it’s possible to automate a good portion of the litigation hold issuance and tracking process, so it’s easier than ever to demonstrate due diligence in the litigation hold process.  There’s less excuse than ever to manage an effective litigation hold and meet your duty to preserve.

So, what do you think?  Should failing to issue a litigation hold be considered intent to deprive?  Please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.