Over the past five years, spoliation sanctions have disappeared from federal courts almost entirely. Since 2015, when amendments to Federal Rule of Civil Procedure 37(e) took effect, spoliation sanctions in federal cases have declined dramatically. In 2014, motions for sanctions for the spoliation of electronically stored information in federal courts were granted more than half the time, research by Logikcull shows. By 2018, that number had dropped to 24 percent.
Indeed, it’s not too much of a stretch to say that spoliation sanctions are an endangered species in today’s courts—and they may be inching their way towards extinction.
But what are legal professionals to make of these changes? Are they a shield that encourages, as former federal Judge Shira Scheindlin put it, “sloppy” discovery practices by frequent defendants? Are they a necessary corrective against a previously unpredictable and overly burdensome sanctions regime? Are they shift away from a punitive approach to discovery errors that has created fear among law firms, vendors, and corporate litigants? Or, maybe, all of the above?
On Monday, ProPublica, the Pulitzer Prize-winning newsroom known for its investigative journalism, published a new report on the decline in spoliation sanctions, in part with the assistance of research from Logikcull.
ProPublica’s stance on the decline in spoliation sanctions and the push to revise Rule 37(e) is clear from the article’s title: “How Corporate Lawyers Made It Harder to Punish Companies That Destroy Electronic Evidence.” Written by reporter Will Young, the article pulls together interviews with judges and practitioners who were at the forefront of the changes to argue that the decline in sanctions has created a new barrier to corporate accountability.
We propose, alternatively, that these changes have led to a “de-risking” of eDiscovery, which has both empowered legal teams to do more work themselves without fear of being penalized for inadvertent mistakes and reduced the cost associated with discovery by removing overly restrictive preservation standards.
Whatever you think of the revisions to Rule 37(e), there’s no question that the new approach to sanctions has drastically reduced the imposition of ESI spoliation sanctions in federal courts. Last year, Logikcull reviewed every federal case citing Rule 37(e) published between 2016 and 2019, plus hundreds of cases decided under the prior sanctions regime. The findings were published in a report entitled “The End of Sanctions?”—though the question mark might have been unnecessary.
Our research showed a significant and undeniable decline in spoliation sanctions after the 2015 revisions. The imposition of spoliation sanctions had grown quickly in the late oughts and early 2010s. Between 2010 and 2012, nearly 60 percent of spoliation motions resulted in sanctions. That growth reached its crescendo in 2014, when 63 percent of sanctions motions were granted.
By 2018, only 36 percent of motions for spoliation sanctions were granted. Last year, that number plummeted further, to 19 percent, according to ProPublica’s analysis. When you break those results down further, separating the “corrective measures” allowable under Rule 37(e)(1) from the harshest sanctions reserved to Rule 37(e)(2), including dismissal, default judgment, and adverse inferences, the decline is even more striking. In 2018, motions for Rule 37(e)(2) sanctions were denied in 83 percent of cases.
The decline in spoliation sanctions is by design. The revised rule creates significant barriers movants have to overcome before sanctions become available. Even the simplest of these, such as showing that ESI has been lost, can be deceptively difficult to meet. As the chart below shows, there are many more paths to a denial of sanctions than to their issuance.
In the early days of eDiscovery, there was far less certainty around when sanctions would, and would not, be issued. Indeed, as eDiscovery emerged as a practice area, the adoption of best practices was largely motivated by the carrot of evidentiary insights and the stick of sanctions.
For many legal professionals, the threat of sanctions loomed large. Severe sanctions in massive cases, such as the series of decisions in Zubulake v. UBS, Coleman v. Morgan Stanely, and Qualcomm v. Broadcom had an outsized impact on practitioners’ view of sanctions.
Worried that million-dollar sanctions lurked around every corner, many attorneys and corporate legal departments began taking the most conservative approaches possible. That fear fueled the growth of the vendor-driven eDiscovery industry and contributed to discovery’s soaring expenses.
As Young writes in ProPublica:
"Corporate advocates argued that they were being penalized too much for inadvertently losing materials, that it was too costly to preserve vast quantities of electronic evidence and that federal judges had too much discretion in determining the penalties. The latter resulted in different standards in different parts of the country. 'The burden of over-preservation grows heavier by the day,' contended a letter written by Microsoft’s in-house attorneys in 2011 that was viewed as a rallying cry by corporate lawyers. 'Explicit standards and limitations will address the problem.'"
The rules changes that followed have ushered in a significant, and predictable, decline in spoliation sanctions. But whether that decline is a positive or negative development is up for debate. As Young characterizes it, the new rule shields “evidence-destroyers” from accountability. (To be clear, the intentional destruction of ESI is sanctionable under 37(e), including with the most severe sanctions. Unintentional destruction, as through the routine deletion of company data, is redressible as well, with “curative measures” to be determined by the court.)
To others, though, it brings much-needed certainty to a sanctions regime that left many litigants preparing for the worst in every possible scenario—and expending significant resources to do so—all for fear that “mere negligence” would result in case-ending (and sometimes career-ending) sanctions.
Indeed, those changes, we argue in “The End of Sanctions?” have combined with growing expertise among the bar and the proliferation of intuitive, easy-to-use discovery software to create a general “de-risking” of eDiscovery. It’s a shift that allows practitioners, whether in corporate legal departments, small law firms, or the biggest of Big Law, to bring more of the discovery process in house, without the fear that has long accompanied eDiscovery practice.
Those implications have not been lost on practitioners. As Mira Edelman, Senior Corporate Counsel for DISH Network and former head of discovery for Facebook and Google, told Logikcull, “When the amendments were approved, in-house lawyers were ecstatic.” As Edelman explains:
“The new Rule gave us power to influence outside counsel who were more conservative in their approach to preservation. It gave in-house lawyers the legal authority to make decisions that weren’t driven by uncertainty, to focus on creating defensible workflows, and to begin thinking about corporate information governance. It was freeing.”