John K. Rabiej: How Shallow Is the Rule 37(e) Safe Harbor?

John K. Rabiej: How Shallow Is the Rule 37(e) Safe Harbor?


In Nucor Corp. v. Bell, 2008 U.S. Dist. LEXIS 52808 (D.S.C. Feb. 1, 2008), the court sanctioned a party for continuing to operate its laptop computer after litigation commenced, which may have destroyed relevant, residual/deleted electronically stored information (ESI) on the computer's hard drive. In sanctioning the party, the court refused to apply Rule 37(e)’s limited protection for the loss of relevant ESI resulting from the routine, good-faith operation of a computer. John K. Rabiej, Chief of the Rules Committee Support Office, which staffs the Judicial Conference's Standing and Advisory Rules Committees, discusses the implications of the court's ruling and suggests strategies to deal with it. He writes:
 
     Rule 37(e) balances the rights of litigants to have relevant evidence preserved and the needs of businesses to continue normal operations. Requiring a party at the start of all litigation to suspend, for example, the auto-delete function that eliminates email stored after a certain number of days or the recycling of backup tapes would cripple most businesses. In addition, preventing a business from turning on its computers in an effort to preserve all relevant ESI would provide a too-lopsided advantage to one side. On balance, the costs of significant business interruptions caused by the suspension of routine computer operations would be heavy and widespread, while the potential benefits of preserving critical ESI that was not available from other sources would be relatively marginal and infrequent.
 
     Because relevant ESI might be lost, however, Rule 37(e)'s safe-harbor protection is circumscribed and applies only under specified conditions. First, the continued operation of an electronic information system must be done in good faith to secure the rule's protection. Determining the meaning of good faith and whether a party must take steps to prevent the loss of information on sources that it believes are not reasonably accessible depends on the circumstances of each case. One factor is whether the party reasonably believes that the information on such sources is likely to be discoverable and not available from reasonably accessible sources. Accordingly, a party may not deliberately continue computer operations knowing that relevant ESI, which is not available from another source, is being destroyed in the process.
 
     . . . .
 
     The court in Nucor Corp. held that Rule 37(e) by its plain language did not apply to sanctions under the court's inherent powers. Of course, the court may have implicitly relied on the good faith and exceptional circumstances conditions when it sanctioned the defendant. But the court's opinion leaves open the question whether Rule 37(e)'s conditions apply in all cases. The court's reluctance to apply Rule 37(e), which provides protection if the party acts in good faith, may be explained by its finding that the defendant's actions did not manifest bad faith because the defendant did not deliberately intend to bring about loss of evidence. Though the defendant's continued operation of the computer was intentional, the court did not find that the defendant deliberately intended to destroy evidence. The rule, of course, does not require a showing of bad faith or that the party acted intentionally or recklessly to forfeit the safe-harbor protection. Indeed, the rule recognizes a culpability standard lower than bad faith, which the defendant in Nucor Corp. exceeded, forfeiting his eligibility for the safe-harbor protection.
 
(citations omitted)