Posted: March 16, 2017
Proposal to Amend URCP 37(e) – Discussion Period Closes May 8, 2017
The Utah Supreme Court’s Advisory Committee on the Rules of Civil Procedure invites discussion on a proposal to amend Rule 37(e) of the Utah Rules of Civil Procedure in conformity with its federal counterpart. The 2015 amendments to Rule 37(e) of the Federal Rules of Civil Procedure address failure to preserve electronically stored information (ESI). The committee invites public discussion on this issue to inform whether or in what form a proposed rule amendment should go to the Utah Supreme Court. The proposal has not been approved by the Utah Supreme Court.
Included with proposed Rule 37(e) is a memorandum that details some of the discussions the committee has already engaged in on this topic as well as Federal Rule 37.
URCP037(e). Failure to Preserve Electronically Stored Information.
Rule 37(e) Discussion Memorandum
Federal Rule of Civil Procedure 37
Please use the comment box below to participate in the discussion of this issue.
Regarding Committee member #1’s first point: Under the FRCP the good faith operation of an information system under a document retention policy, in absence of a reasonable expectation of litigation, is a safe harbor to spoliation, as long as the destruction of the ESI pursuant to the retention policy was done prior to the rise of conditions preceding litigation. This should address the first hypothetical regarding negative comments.
If removing “may” and leaving “must” in place ends in forcing juries to make inferences, I’m not in favor. The federal language of “may or must” allows the judge discretion to instruct the jury regarding the inference, and allows juries flexibility based on facts.
I disagree with Committee member #1’s statement that “ESI … is …vastly easier to secure from loss than hard copies.” This may be true in certain contexts but with modern cloud computing services and content distribution networks built to proliferate data for high availability purposes, it can be excruciating, and admittedly infrequent, to preserve and collect ESI from such environments. “Inexpensive cloud-based storage” referring to unstructured data like email messages, word documents, spreadsheets, etc. are easier preserve and collect. The structured data contained in databases in the cloud is another, more difficult e-discovery use case entirely.
I am in agreement with Committee Member #2’s response.
I am unconvinced by Committee Member #1 that the proposed e.1.D is necessary.
I want to thank the Utah Supreme Court and the Advisory Committee on the Rules of Civil Procedure (Committee) for the opportunity to comment on the proposed amendments to Utah Rule of Civil Procedure 37(e) (URCP 37(e)). The proliferation of electronically stored information (ESI), together with the difficulties associated with preserving, collecting, and producing such information, amply justify the Committee’s efforts to amend URCP 37(e).
As presently drafted, proposed URCP 37(e) offers constructive methods for addressing some of the problems associated with a party’s failure to preserve relevant ESI. Nevertheless, I wish to recommend various changes to the proposed rule. These recommended changes are based on observations I have made about Federal Rule of Civil Procedure 37(e), my experience with discovery, and my legal scholarship on the confluence of litigation and technology.
1. Eliminate the “Safe Harbor” Provision in Proposed URCP 37(e)(1)(C)
The Committee should follow FRCP 37(e) and eliminate the “safe harbor” provision in proposed URCP 37(e)(1)(C). The danger in retaining URCP 37(e)(1)(C) is twofold. First, it would provide a different “safe harbor” from sanctions that would be separate and apart from the “reasonable steps” standard delineated under proposed URCP 37(e)(1). This would result in the creation of separate analyses for determining the application of sanctions that would unnecessarily complicate the sanctions framework for courts and counsel. Worse, the provision – standing alone and isolated from the “reasonable steps” standard – would essentially create an escape clause that encourages litigants not to intervene and stop the destruction of relevant ESI under the ordinary operation of an electronic information system.
URCP 37(e)(1)(C) should be stricken since, in purpose, it is superfluous of the “reasonable steps” protection encompassed within proposed URCP 37(e)(1). The federal rules advisory committee recognized as much and felt the overall language of FRCP 37(e) should be simplified to prevent confusion in the application of the rule. The advisory committee note to FRCP 37(e) now provides as follows: “the routine, good-faith operation of an electronic information system would be a relevant factor for the court to consider in evaluating whether a party failed to take reasonable steps to preserve lost information.” A similar, explanatory discussion would also merit inclusion in any Committee note accompanying URCP 37(e).
2. Track the Numbering and Language of FRCP 37(e) with Two Exceptions
I agree with Committee Member No. 2 that proposed URCP 37(e) should generally track the numbering and language of FRCP 37(e). The federal rules advisory committee has done an excellent job balancing the equities between requesting and responding parties in FRCP 37(e). On the one hand, FRCP 37(e) provides responding parties with protections from unreasonable preservation requirements and sanctions demands. And yet, it enables requesting parties to seek redress for legitimate preservation grievances. Finally, it empowers the judiciary with sufficient discretion to fashion resolutions to fact-specific and complex preservation questions.
Following the federal model will allow courts and counsel to take advantage of the rapidly growing FRCP 37(e) jurisprudence being developed by federal district courts around the country. This is a particularly significant consideration since there will likely be only a few state appellate court opinions interpreting URCP 37(e) that can provide guidance on the issues. Any such opinions likely will not be issued until several years after an amended URCP 37(e) is enacted.
3. Exception No. 1 – Apply URCP 37(e) to All Forms of Evidence
Proposed URCP 37(e) should be amended to apply to all forms of evidence. The reasons for this suggested change are twofold. First, there is increasing confusion in federal court regarding the nature of what constitutes ESI for purposes of FRCP 37(e). Like Utah Rule of Civil Procedure 34, Federal Rule of Civil Procedure 34 allows for the discovery of relevant electronically stored information including data “stored in any medium.” However, federal courts in certain instances have declined to analyze the destruction of digital video files under FRCP 37(e). See, e.g., Wichansky v. Zowine, 2016 WL 6818945 (D. Ariz. Mar. 22, 2016) (explaining that Rule 37(e) did not apply because “the parties do not consent that the lost information constitutes electronically stored information.”); Pettit v. Smith, 2014 WL 4425779 (D. Ariz. Sept. 9, 2014) (holding that the “deletion of a digital video file . . . does not concern ESI in the sense addressed in [the proposed FRCP 37(e) amendments].”). If courts are forced to guess whether a particular form of electronic data (video, audio, etc.) constitutes ESI, this will lead to separate analyses and differing frameworks for imposing sanctions resulting from certain ESI preservation failures. This will create confusion rather than clarity under URCP 37(e) for clients, counsel, and the courts.
Second, Utah risks creating confusion through differing sanctions standards for the destruction of ESI versus the destruction of the devices that house the ESI. Consider the following questions:
* Does ESI include a mobile phone?
* ESI certainly includes the data on the phone, but what about the device itself?
* Should the destruction of a phone, tablet, thumb drive, automobile, or other hardware be treated with a different standard than the destruction of the information stored on the device or hardware?
The last question is particularly significant for personal injury litigation involving automobiles. Automobiles now contain any number of categories of ESI including tracking devices, vehicle performance, mileage, entertainment, communication, and the like. While these categories of ESI may be separated from the actual vehicle (i.e., the chassis, wheels, struts, and brakes), the failure to properly preserve a vehicle after a car crash can result in the destruction of the vehicle’s ESI. Should there be different standards for addressing the destruction of the car as opposed to the ESI in the car?
Allowing differing preservation standards could create mischief in discovery and offer certain litigants a perverse incentive to not keep relevant information in certain circumstances.
4. Exception No. 2 – Specifically Require a Showing of “Bad Faith” to Establish an “Intent to Deprive” under proposed URCP 37(e)(1)(B)
I recommend that URCP 37(e)(1)(B) or its accompanying committee note be clarified to require that a showing of bad faith to establish an “intent to deprive.” This recommendation is based on ambiguity in the guidance from the federal advisory committee on this particular issue.
The federal advisory committee report issued in connection with the FRCP 37(e) amendment explains that the “intent requirement is akin to bad faith.” Despite this straightforward explanation, the federal advisory committee note does not take such a restrictive view. Instead, the note indicates that sanctions under FRCP 37(e)(2) are limited “to instances of intentional loss or destruction.”
Conduct that is “intentional” and which results in the spoliation of ESI is not necessarily tantamount to bad faith. This was confirmed by the United States Court of Appeal for the Seventh Circuit many years ago when it observed the following distinction between bad faith and intentional conduct: “[t]hat the documents were destroyed intentionally no one can doubt, but ‘bad faith’ means destruction for the purpose of hiding adverse information.” Mathis v. John Morden Buick, Inc., 136 F.3d 1153, 1155 (7th Cir. 1998); see also Micron Tech., Inc. v. Rambus Inc., 645 F.3d 1311, 1327 (Fed. Cir. 2011) (“In determining that a spoliator acted in bad faith, a district court must do more than state the conclusion of spoliation and note that the document destruction was intentional.”). For further information, see Philip J. Favro, The New ESI Sanctions Framework Under the Proposed Rule 37(e) Amendments, 21 Rich. J.L. & Tech. 8, 14-16 (2015), http://jolt.richmond.edu/v21i3/article8.pdf.
The ambiguity in FRCP 37(e) has now led to federal courts issuing opinions that have found an “intent to deprive” on what appears to be a lesser showing akin to recklessness or even gross negligence. See, e.g., TLS Management v. Rodriguez-Toledo, 2017 WL 1155743 (D.P.R. Mar. 27, 2017); O’Berry v. Turner, 2016 WL 1700403 (M.D. Ga. Apr. 27, 2016).
To create greater clarity and less ambiguity and confusion on this issue, URCP 37(e)(1)(B) or its accompanying committee should unequivocally state that a showing of bad faith is required to establish an “intent to deprive.”
5. Create a Robust Committee Note
URCP 37(e) is a complex rule filled with important nuances and subtle distinctions. To help all parties to the litigation process better understand the rule’s intent, the Committee should develop a robust explanatory note. Without such a note, lawyers and judges will be left groping for guidance on the issues. This will particularly be the case if URCP 37(e) does not generally track the language and numbering of its federal analogue.