Letting the Jury Decide about the Consequences of Loss of ESI

The loss of electronically stored information (ESI) can lead to remedial measures (otherwise known as sanctions) under Federal Rule of Civil Procedure 37(e) as amended effective December 1, 2015. The severity of the measure is, at least in part, dependent on the state of mind of the party that “lost” the ESI. A finding that ESI was lost with “intent to deprive another party of the information’s use” can lead to “case-terminating” sanctions under Rule 37(e)(2). Presumably lesser measures can be imposed for negligent or grossly negligent loss under Rule 37(e)(1) when a party has been prejudiced by loss of ESI. However, the Committee Note to Rule 37(e) allows for what might be the equivalent of a case-terminating measure under (e)(1):

In an appropriate case, it may be that serious measures are necessary to cure prejudice found by the court, such as forbidding the party that failed to preserve information from putting on certain evidence, permitting the parties to present evidence and argument to the jury regarding the loss of information, or giving the jury instructions to assist in its evaluation of such evidence or argument, other than instructions to which subdivision (e)(2) applies. Care must be taken, however, to ensure that curative measures under subdivision (e)(1) do not have the effect of measures that are permitted under subdivision (e)(2) only on a finding of intent to deprive another party of the lost information’s use in the litigation. An example of an inappropriate (e)(1) measure might be an order striking pleadings related to, or precluding a party from offering any evidence in support of, the central or only claim or defense in the case. On the other hand, it may be appropriate to exclude a specific item of evidence to offset prejudice caused by failure to preserve other evidence that might contradict the excluded item of evidence.

Two recent decisions illustrate what courts may allow juries to hear about the loss of ESI.

In McQueen v. Aramark Corp., 15-CV-492-DAK-PMW (D. Utah Nov. 29, 2016), the defendant conceded that ESI (and paper records) had been lost because it “failed to relay necessary preservation instructions.” The magistrate judge to whom a motion for sanctions had been referred found that the ESI had been lost due to the defendant’s gross negligence although he could not determine the relevance of the lost ESI because of its loss. He therefore allowed the parties to “present evidence to the jury regarding the spoliation *** and to argue any inferences they want the jury to find” subject to the trial judge’s determination of the “appropriate mechanism for permitting the presentation of the evidence and argument at trial.”

Cahill v. Dart, 13-cv-361 (N.D. Ill. Dec. 3, 2016), took a different approach to the loss of ESI. The plaintiff had been arrested for driving with a suspended license. He was taken to a county lockup where he allegedly dropped a package of cocaine. Surveillance video footage that would have conclusively established whether he did so was not preserved. A magistrate judge found that the defendants were grossly negligent and that the loss of the footage was extreme. She recommended that the defendants be barred from presenting evidence that the lost footage would have shown that the plaintiff dropped the package. On review of the magistrate judge’s recommendation, the district judge found that the question of intentional loss was a “close one” and decided that the “best course is for the jury to decide the question of intent.”

McQueen and Cahill demonstrate the scope of judicial discretion in allowing parties to present evidence and argue about the loss of ESI. Such evidence and argument can be highly persuasive to a jury even absent intentional conduct. Attorneys representing parties that have lost ESI should strive to avoid the imposition of jury-related remedial measures against their clients by showing that the prerequisites for such measures have not been established. In the alternative, attorneys should adjust their trial strategies to persuade juries that the loss of ESI is of little or no consequence to the merits.

_{Ronald Hedges is with Dentons in New York, New York.}

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