Rather, the changes to Rule 37(e), which went into effect December 1, 2015, provide a much stronger platform from which you can make sound — and more educated — business decisions regarding how to proceed with reasonable ESI preservation functions, without pressure from the unpredictable fear of sanctions.
Take These Steps Now to Preserve Your ESI
The most significant change to Rule 37(e) is the creation of a safe harbor for preserving ESI. Now, remedies can be imposed only when reasonable steps to preserve the information that should have been preserved were not taken. The changes are intended to avoid “litigants expend[ing] excessive effort and money on preservation in order to avoid the risk of severe sanctions if a court finds they did not do enough.” (Advisory Committee Notes to Rule 37 Amendments) Here are five concrete steps you can take to develop an effective preservation plan:
Notes accompanying the rule address the question of when the duty to preserve arises: “Many court decisions hold that potential litigants have a duty to preserve relevant information when litigation is reasonably foreseeable. Rule 37(e) is based on this common law duty to preserve. The rule does not apply when information is lost before a duty to preserve arises.” The notes offer three factors that courts should consider:
When exactly a party is expected to preserve ESI is a fact-specific inquiry. The filing of a lawsuit certainly puts a party on notice of impending litigation, but courts have found a variety of events before filing that may create reasonable anticipation and trigger the duty to preserve evidence. The notes urge a common sense approach, including that courts consider what is known at the time a duty to preserve might arise and not be “blinded to this reality by hindsight arising from familiarity with an action as it is actually filed.” The notes also caution that “the fact that a party failed to observe some other preservation obligation does not itself prove that its efforts to preserve were not reasonable with respect to a particular case.”
The new Rule 37(e) establishes a “reasonable steps” standard; “perfection in preserving all relevant electronically stored information is often impossible.” (Advisory Committee Notes) Among the factors to consider are the sophistication of the party; a party’s resources; and the costs of various preservation alternatives. Further, reasonableness also addresses the notion that “[a] party may act reasonably by choosing a less costly form of information preservation, if it is substantially as effective as more costly forms.” Id.
However, Rule 37(e) does not apply when information is lost despite reasonable steps taken to preserve it; rather, the rule applies only if the loss is because a party did not act reasonably. Even when such a loss occurs, the initial focus is now on whether the lost information can be restored or replaced through additional discovery.
Because the threshold question is whether reasonable measures were taken to preserve ESI, ensuring that your record retention policies and practices are reasonable establishes a solid foundation for avoiding sanctions if ESI is lost. The best practices for preserving ESI have not changed. Written legal hold notices sent to appropriate personnel — with periodic follow-up reminders — remain the standard.
Legal News is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our clients and our colleagues. If you have any questions about this update or would like to discuss this topic further, please contact your Foley attorney or the following:
Mary K. Braza
Thomas R. Dreblow