Proving Intent to Deprive Under Rule 37(e)(2) — Or, More Often, Not

Proving Intent to Deprive Under Rule 37(e)(2) — Or, More Often, Not

Continuing our coverage of “the end of sanctions” and new barriers to sanctions created by the 2015 amendments to Federal Rule of Civil Procedure 37(e), today we’re taking a look at one of the most significant barriers to spoliation sanctions—Rule 37(e)(2)’s intent requirement.

Rule 37(e)(2) requires a finding that a spoliating party “acted with the intent to deprive another party of the information’s use in the litigation.” Only upon such a showing can a court impose the most severe sanctions, such as adverse inferences, dismissal, or default judgment.

And while spoliation sanctions are declining dramatically across the board—original research by Logikcull shows that courts are issuing such sanctions 35 percent less frequently than when sanctions peaked in 2014—sanctions under 37(e)(2) have seen the steepest decline. In 2018, for example, motions for the remedies reserved to 37(e)(2) were denied in whole or in part in more than 80 percent of all cases.

Rule 37e Sanctions Outcomes 2018

To phrase that differently, courts were 43 percent more likely to grant the remedial measures available under 37(e)(1) than those reserved to subsection (e)(2).

Locking Sanctions Behind the Wall of Intent

The introduction of (e)(2)’s intent requirement has likely played a major role in these trends. Prior to the 2015 amendments, some circuits had adopted divergent approaches to spoliation sanctions and intent. The Third, Seventh, Eighth, and Tenth Circuits, for example, required a showing of bad faith before harsh sanctions could be imposed.

The Second Circuit and the D.C. Circuit, however, did not. The Second Circuit, in particular, operated under permissive precedents like Residential Funding Corp. v. DeGeorge Financial, 306 F.3d 99 (2d Cir. 2002). Under Residential Funding, severe sanctions for eDiscovery wrongdoings could be applied when a party acted with gross negligence or even, potentially, mere ordinary negligence.

The Advisory Committee specifically sought to put an end to the use of the severest sanctions for anything less than clearly-proven bad faith, citing Residential Funding directly. In the Notes to the 2015 amendments to FRCP 37(e), the Committee writes:

This subdivision authorizes courts to use specified and very severe measures to address or deter failures to preserve electronically stored information, but only on finding that the party that lost the information acted with the intent to deprive another party of the information’s use in the litigation. It is designed to provide a uniform standard in federal court for use of these serious measures when addressing failure to preserve electronically stored information. It rejects cases such as Residential Funding Corp. v. DeGeorge Financial Corp. that authorize the giving of adverse-inference instructions on a finding of negligence or gross negligence.

Not only were terminating sanctions expressly limited, but the lesser, yet still severe, adverse jury instructions were circumscribed as well:

Adverse-inference instructions were developed on the premise that a party’s intentional loss or destruction of evidence to prevent its use in litigation gives rise to a reasonable inference that the evidence was unfavorable to the party responsible for loss or destruction of the evidence. Negligent or even grossly negligent behavior does not logically support that inference.

With the 2015 revisions, the harshest spoliation sanctions were now locked behind the wall of intent. Yet, the Rule and the Notes conspicuously fail to define one key point: what, exactly, is “intent?”

Thus, while the new Rule does create the uniform standard sought by the Advisory Committee, the question remains as to what that standard actually means. As Craig Ball, an attorney, frequent special master, and a leading eDiscovery expert, has pointed out, intent is a difficult issue to prove:

Craig Ball Portrait
Proving intent is one of the harder things trial lawyers do. Short of the rare Perry Mason moment when a party confesses intent ..., lawyers must resort to evidence that illuminates the intent of a specific person or corporation or that of a reasonable person or corporation similarly situated in terms of what he, she or it would have thought, anticipated or known.

Because such “Perry Mason” confessions rarely occur in real life, some of the courts that have had to answer the question of what is sufficient to show intent have instead turned to rather circumstantial forms of proof—sometimes admittedly so.

Finding Intent in Circumstantial Forms of Proof

Key Cases:

  • O’Berry v. Turner, Archer Daniels Midland, Nos. 7:15-cv-00064-HL, (M.D. Ga., April 27, 2016)
  • Alabama Aircraft Industries, Inc. v. Boeing Co., No. 2:11-cv-03577 (N.D. Ala. Mar. 9, 2017)
  • Decker v. Target Corp., No. 1:16-cv-00171 (D. Utah Oct. 10, 2018)

When it comes to finding intent to deprive under for the purposes of Rule 37(e)(2), a minority of courts are willing to infer bad faith from circumstantial evidence, as the following cases illustrate.

In O’Berry v. Turner, Archer Daniels Midland, Nos. 7:15-cv-00064-HL (M.D. Ga., April 27, 2016), for example, a seemingly run-of-the-mill traffic accident case ran into a series of mistakes in properly preserving the defendant’s driver’s log about the accident. That log turned out to be a critical piece of ESI for the plaintiff’s case. Defendant’s former loss control manager testified as to the many steps he took to preserve the log—and the many missteps that followed.

Yet, despite the long list of mistakes made, the plaintiff could not show any intentional act to deprive it of the log. That didn’t dissuade the court from finding intent all the same:

All of these facts, when considered together, lead the Court to conclude that the loss of the at-issue ESI was beyond the result of mere negligence. Such irresponsible and shiftless behavior can only lead to one conclusion—that ADM… acted with the intent to deprive Plaintiff of the use of this information at trial.

In Alabama Aircraft Industries, Inc. v. Boeing Co., No. 2:11-cv-03577 (N.D. Ala. Mar. 9, 2017), a joint venture deal between a small, local corporate plaintiff and the global aircraft manufacturing giant went south. Boeing was subsequently accused of using the plaintiff’s own proprietary information to compete against it in a solo bid.

Once again, the big corporate defendant lost key ESI through a series of acts that could easily be called negligent, though perhaps grossly so. While these were troubling examples of misfeasance, they did not appear to be, even taken all together, actual malfeasance showing “intent.”

Yet the judge had “little trouble” finding that the defendant acted in bad faith and determined that this “unexplained, blatantly irresponsible behavior” led him to conclude that the defendant acted with intent to deprive.

In Moody v. CSX Transportation, 271 F.Supp.3d 410 (W.D.N.Y. 2017), a personal injury case brought by a pedestrian injured in a train yard, the “black box” recorder of the movements of and the warnings issued (or not) from the locomotive involved became critical ESI.

Preserving that blackbox ESI required downloading three files from the device to a laptop and then uploading it to a central archive. Unfortunately, one of the files was missing, making the ESI on the archive unreadable.

The defendant compounded this problem by failing to quality control check the archive and to preserve the original laptop with the files when the custodian left the company.

Again, while all of these actions were inarguably negligent, even taken together they don’t show signs of intent. Despite this, the judge, citing to Alabama Aircraft Industries v. Boeing, refused to believe that intent was not present:

...this Court still concludes that defendants’ actions presented sufficient circumstantial evidence from which to infer that they intended to deprive [plaintiff] of the relevant data.

Even in some more recent cases, courts seem willing to infer intent, particularly when defendants fail to follow their own preservation rules. And when employees act questionably, some courts are willing to impute those actions onto corporate defendants and infer intent.

For example, in Decker v. Target Corp., No. 1:16-cv- 00171 (D. Utah Oct. 10, 2018), a personal injury case by a plaintiff who tripped and fell over an allegedly unattended stocking cart, the defendant’s employees failed to properly preserve the complete video of the area of the store because they did not think that it was “relevant.”

While Target had a policy that required the employees to preserve 20 minutes of tape from before and after such incidents, here the employees testified that they did not know of any such policy before they deleted the video.

The court evaluated the actions of the employees, not as individuals, but as agents of the corporation:

Were the court to evaluate their actions individually, the court would not conclude they acted in bad faith. But these employees were not acting as individuals, they acted as agents of Target, and the court concludes that Target has acted in bad faith in regards to the evidence.

Refusing to Infer Intent

The willingness of courts to infer intent and bad faith from circumstantial evidence appears to be, in general, abating.

A more recent case involving Target illustrates this point. In Freidig v. Target Corp., No. 17-cv-827 (W.D. Wis. Dec. 19, 2018), the court faced a fact pattern and claims of spoliation strikingly similar to Decker—and came to opposite conclusions.

Here, the plaintiff alleged that she fell as a result of a water puddle near the checkout register, which required her to prove under the applicable state law that the hazard had been present for some time beforehand. Once again, Target failed to preserve the video recording of the area for the 20 minutes beforehand in accordance with company policy.

Were those acts enough to show intent? Not this time.

Even though the court found that “Target’s decision [not to preserve the video] is especially baffling because it was in direct violation of its preservation policy,” and despite citing to four prior cases showing similar problems, including Decker, the court could not find any intent to deprive. While the court was willing to limit certain testimony by Target’s employees under Rule 37(e)(1), it refused to enter severe sanctions under (e)(2).

In fact, the dominant approach now is for courts to require clear proof of actual intent to deprive. The courts also seem particularly willing to question any failures by the deprived party to obtain such proof through direct questioning of the spoliating party or its agents.

The following cases provide a brief overview of how federal courts are treating these issues today:

  • Jackson v. Haynes & Haynes, No. 2:16-cv-01297 (N.D. Ala. Jul. 26, 2017): being “negligent and irresponsible in maintaining the information” is “not sufficient to show an intent to deprive.”
  • Basra v. Ecklund Logistics, Inc., No. 8:16-cv-832017 (D. Neb. Mar. 31, 2017): “although [the] defendant’s record-keeping [was] less than meticulous,” the plaintiffs did not establish that the defendant had destroyed evidence with specific intent to deprive.
  • Goldrich v. City of Jersey City, No. 15-885 (D.N.J. July 25, 2018): “To make this finding that a Captain in the Jersey City Police Department lied repeatedly under oath requires some degree of affirmative evidence of the same that defendants have not proffered. Defendants were given the opportunity to depose those close to the plaintiff, such as his wife, who could have provided direct evidence of spoliation if she were aware of any but did not.”
  • Porter v. City of San Francisco, No. 16-cv-03771 (N.D. Cal. Sept. 05, 2018): The court refused to infer that a critical phone recording was erased with intent by defendants because it was destroyed under a regular records policy and not “under pressure to produce.”
  • Worldpay, US, Inc. v. Haydon, No. 17-cv-4179 (N.D. Ill. Nov. 14, 2018): “It is not obvious, however, that an intent to shut down an e-mail account equates to an intent to ensure that the information on it is permanently deleted, such that it would never be accessible to anyone again. Nor is it clear, even assuming that [defendant’s employee] intended to delete the information permanently, that she did so for the purpose of hiding adverse information.”

The End of Sanctions?

As this diverging case law shows, courts are still not uniform in their treatment of Rule 37(e)(2). Yet despite occasional contrasting outcomes, as in the two Target cases above, the clear trend is away from sanctions, particularly when a movant seeks severe remedies under Rule 37(e)(2).

The result is a general “de-risking” of discovery—and legal professionals are adapting their litigation strategies in response. To learn more about these trends and obtain a comprehensive index of post-amendment Rule 37(e) case law, download Logikcull’s new report on “The End of Sanctions” today.

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