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When It Comes to Spoliation Sanctions, It’s Still 2014 in Some Courts

May 22, 2017  |  5 min read

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Looking back, 2014 was a pretty good year. Barack Obama was president, the “Lego Movie” was a box office hit, and everyone was dumping buckets of ice on their head for charity. But if you’re feeling nostalgic for those good old days, rest assured that they live on — at least when it comes to sanctions for spoliation.

In several courts, the pre-2015 amendment version of Rule 37(e) is very much alive, well, and deciding how spoliation sanctions should apply, as a recent decision from the District Court for the Eastern District of New York reminds us.

First, some recent history. In response to concerns that harsh discovery sanctions were leading to burdensome and expensive over preservation of ESI, the 2015 amendments to Rule 37(e) narrowed circumstances in which a court could issue the harshest sanctions, such as an adverse inference or judgement by default. Under the amended Rule 37(e), for the harshest spoliation sanctions to apply, courts would now need to find that a spoliator “acted with the intent to deprive another party of the information’s use”. In so changing the rule, Advisory Committee explicitly rejected the more demanding standard established by the Second Circuit in Residential Funding Corp v. DeGeorge Financial Corp., which allowed harsh sanctions for spoliation that was merely negligent.

That amendment was meant to, in the words of the Supreme Court, “govern in all proceedings in civil cases thereafter commenced and, insofar as just and practicable, all proceedings then pending.”

Thus, when the amended Federal Rules of Civil Procedure took effect on December 1st, 2015, the previous Rule 37(e) regime was largely relegated to the ash heap of history.

Largely, but not entirely.

Turning Back the Clock on Rule 37(e)

Take, for example, Magistrate Judge A. Kathleen Tomlinson’s recent memorandum and order in DiStefano v. Katsos. The case involves an attorney-client relationship gone very sour and some pretty surprising preservation failures. Michael Distefano and Nicole Distefano retained Barbara Katsos to represent them during bankruptcy proceedings for their three ice cream stores — a bankruptcy caused in part by an unfortunate, extended blackout.

Things didn’t go smoothly and the DiStefanos eventually sued Katsos for malpractice. At issue in Judge Tomlinson’s May 11th order was the destruction of potential evidence relating to Katsos’s representation.

Katsos, it turns out, did not keep on the cutting edge of legal technology. She had an office manager who could not type, an AOL email address from which she printed out and stored only “substantive” emails, no access to her paralegal or interns’ emails, no records of when or how her computers were serviced, no knowledge of what type of computers she had, and no backup system for preserving ESI.

As litigation over her representation of the DiStefanos was looming, Katsos’s computer crashed, succumbing to the “blue screen of death.” When “changing the components” didn’t work, Katsos’s IT professional took a drill to the hard drive, then tossed it in the trash. Four other computer hard drives met a similar fate.

Anything that wasn’t printed out previously was lost.

The DiStefanos moved for sanctions. In deciding which version of Rule 37(e) to apply, Judge Tomlinson turned to her colleague to the west of the East River, Magistrate Judge James Francis of the S.D.N.Y.

In his CAT3 v. Black Lineage decision, Judge Francis reviewed the history of the Rule 37(e) amendments, surveying the Supreme Court’s order transmitting the changes to Congress and the federal statute granting the Court the ability to “fix the extent to which such rule [of procedure or evidence] shall apply to proceedings then pending”. The conclusion: so long as application of the new rule is not unjust or impracticable, it should govern.

Judge Francis, then, went with the updated Rule 37(e). Judge Tomlinson did not.

Timing Matters

What caused the Judge Tomlinson to decide that application of the amended Rule 37(e) would be neither just nor practicable? The court gave three reasons:

  • First, the parties briefed the sanction motion under Rule 37.
  • Second, the evidentiary hearing was conducted under the tenets of that pre-amendment rule.
  • Finally, the relevant conduct took place years before the new Rule 37 took effect.

That third point appears to be particularly significant, as many current cases involving spoliation will center on conduct that occurred prior to December 1st, 2015.

Judge Tomlinson also surveyed other courts that had similarly decided to apply the pre-Amendment rule. In Charles v. City of New York the court applied Residential Funding, though it did explicitly discuss why post-Amendment Rule 37(e) would not apply. In Learning Care Group, Inc. v. Armetta, the court declined to apply the new rule “because the parties first raised this issue in September 2015”. Finally, in Thomas v. Butkiewicus, the court applied “the traditional standard” as the action “was filed more than two-and-a-half-years before” the new Rule 37 took effect.

These inquiries, Judge Tomlinson emphasized, are specific to the facts of the case. That spoliation was raised before December, 2015, then, is no guarantee that the new Rule 37(e) will not apply. But the decision from Judge Tomlinson, as well as those she surveys, remind us that the pre-amendment spoliation rules are far from gone. Rule 37(e) circa 2014, Residential Funding, and their related doctrines will continue to live on, at least for awhile longer.

As for Katsos, she fared reasonably well under the old standard. Finding that the attorney had “acted with ‘a pure heart and an empty head,’” Judge Tomlinson declined to grant a default judgement or adverse inference, instead awarding attorney’s fees and costs incurred in bringing the sanction motion — a remedy that would have been available under the current version of Rule 37(e) as well.

This post was authored by Casey C. Sullivan, Esq., who leads education and awareness efforts at Logikcull. You can reach him at casey.sullivan@logikcull.com or on Twitter at @caseycsull.