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The Illusory Safe Harbor of Rule 37(F)

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The Illusory Safe Harbor of Rule 37(F)

November 30, 2006

By: George B. Murr, Martin D. Beirne and David Pluchinsky

The American Lawyer, Corporate Counsel

and effectively addressing e-discovery issues will be as critical after the effective date of the Rule 37(f) as it is now In navigating the e-discovery waters, do not be lulled by the siren song that comes from the soon to be enacted Federal Rule of Civil Procedure 37(f) ("Rule 37") – the so-called "safe harbor" – into believing that you can be any less diligent than you are now in policing electronic information preservation or discovery issues. The need for vigilance in preserving electronic information. In fact, a review of the rule-making process demonstrates that the protection offered by Rule 37(f) is hollow and that procedures currently used to ensure the preservation of electronic data cannot be relaxed after the effective date of the new e-discovery amendments.

At first blush, Rule 37(f) appears to afford protection from the woes that tend to befall a party when it has failed to preserve electronic information. The rule provides:

Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of electronic information system.

Fed. R. Civ. P. 37(f) (proposed July 25, 2005).1 However, to come within the protection of Rule 37(f), a responding party would have to show that: (1) the information was lost due to the routine operation of an electronic information system, and (2) the routine operation of the information system was operated in good faith. See Fed.R. Civ. P. 37 advisory committee note (proposed July 25, 2005). Rule 37(f) does not afford any protection if the information is lost outside the routine operation of an electronic information system. Also, in "exceptional circumstances" (an undefined phrase) a court can impose sanctions for data lost even as a result of "routine, good-faith operation" (also undefined) of an electronic information system.2

To understand the limitations on the protection ostensibly provided by Rule 37(f), it is necessary to know what is (or is not) good faith and how the Committee Notes to the e-discovery amendments address a responding party's duty to preserve information. A review of the July Advisory Committee Report as well as the Committee Notes to the new amendments reveals that Rule 37(f) is a "safe" harbor in name only.

In giving context to "good faith" in Rule 37(f), the Committee Notes provide that "good faith" in the routine operation of an information system may require a responding party to modify or suspend certain features of the routine operation of its electronic information system to prevent the loss of information, if the information is subject to a preservation obligation." Fed. R. Civ. P. 37 advisory committee note (proposed July 25, 2005) (emphasis added). The July Advisory Committee Report notes that "[s]uch intervention is often called a 'litigation hold.'" (July Advisory Committee Report at 83.) The steps taken to implement an effective litigation hold likewise bear on a responding party's good faith. Id. In addition, the steps that a responding party takes to comply with a court order or an agreement requiring preservation also relates to the responding party's good faith. Rule 37(f) does not permit a party to exploit the routine operation of an information system to avoid discovery obligations by allowing the routine operation to continue to destroy specific stored information that the party is required to preserve. Fed. R. Civ. P. 37 advisory committee note (proposed July 25, 2005).

Importantly, neither Rule 37(f) nor the other e-discovery amendments change from existing law a responding party's duty to preserve information. Id.; July Advisory Committee Report at p. 83. The July Advisory Committee Report specifically states with regard to Rule 37(f) that "[t]he rule itself does not purport to create or affect such preservation obligations, but recognizes they may arise from many sources, including common law, statutes, and regulations." July Advisory Committee Report at p. 85; see also July 25, 2005). The duty to preserve information extends to information designated as "not reasonably accessible" by a responding party pursuant to Federal Rule of Civil Procedure 26(b)(2) ("Rule 26").3 See Fed. R. Civ. P. 26(b)(2) (proposed July 25, 2005).

The Committee Notes to Rule 26 provide that "[a] party's identification of sources of electronically stored information as not reasonably accessible does not relieve the party of its common-law or statutory duties to preserve evidence." Id. advisory committee note. The July Advisory Committee Report highlights the fact that Committee Note to Rule 26 was "revised to clarify that the rule does not undermine or reduce common-law or statutory preservation obligations." July Advisory Committee Report at 42. In further defining what is good faith under Rule 37(f) in connection with "not reasonably accessible" electronic information, the Committee Note to Rule 37 specifically states "[w]hether good faith would call for steps to prevent the loss of information on sources that the party believes are not reasonably accessible under Rule 26(b)(2) depends on the circumstances of each case." July 25, 2005). Consequently, if a party fails to intervene to suspend a routine operation of its information system that deletes or overwrites data, even data that it believes is not reasonably accessible (such as backup tapes), the party may be subject to sanctions if a court determines that the information should be produced and that the failure to maintain the data was not done in good faith.

Finally, even if good faith does exist, a court may find that "exceptional circumstances" trump the responding party's good faith such that the imposition of some sanction may be justified. As the July Advisory Committee Report notes, the rule includes this provision to permit sanctions "even when information is lost because of a party's good faith routine operation of a computer system." July Advisory Committee Report at 83. The exceptional circumstances provision adds flexibility not included in the earlier drafts of Rule 37. See id. Another limitation on the protections of Rule 37(f) is that it only applies to sanctions under the Federal Rules of Civil Procedure. It does not affect other sources of authority to impose sanctions or rules of professional responsibility. See Fed. R. Civ. P. 37 advisory committee note (proposed July 25, 2005). Rule 37(f) also does not prohibit a court from making adjustments in managing discovery. For example, the court could order additional depositions, interrogatories or other methods to provide substitutes or alternatives for the lost information. Id.

After considering the lack of protection and clarity provided by Rule 37(f), a litigant is well served to use the procedures currently recognized by the courts as adequate steps for the preservation of electronic data. A close reading of the commentary on the rule amendments tells us that a party may be still subject to sanctions, regardless of the "safe harbor" purportedly provided by Rule 37(f), if the party fails to preserve information when an obligation exists. The breadth of this obligation, particularly with regard to information that is designated as "not reasonably accessible," in all likelihood will not be known until the court rules on whether the information sought is relevant to the litigation. At this point, for information destroyed as part of the routine operation of an electronic information system, a court will consider factors similar to those identified in the commentary: (1) suspension of automatic features that delete or overwrite data, (2) the effective implementation of a litigation hold to preserve data from automatic destruction, and (3) compliance with any court order or agreement of the parties to preserve evidence. Thus, in the final analysis, the precautions that were wise to take before the effective date of Rule 37(f) will still be wise to use after the effective date.

1See Letter from Lee H. Rosenthal, Chair, Advisory Committee on Federal Rules of Civil Procedure, to Honorable David F. Levi, Chair, Standing Committee on Rules of Practice and Procedure (May 27, 2005, revised July 25, 2005), available at (hereinafter referred to as "July Advisory Committee Report").

2Originally, two alternate versions of Rule 37(f) were disseminated. The printed version of Rule 37(f) essentially contained a negligence standard, while a footnoted version of Rule 37(f) provided a higher reckless or intentional conduct standard. (See Report of the Civil Rules Advisory Committee Regarding Proposed Electronic Discovery Rules at 81.) In the end, the committee selected the current intermediate ("good-faith") standard. Id. at 82-83, 86.

3Amended 26(b)(2) provides that a party is not required to provide discovery of electronically stored information from sources that it identifies as "not reasonably accessible because of undue burden or cost." However, the party seeking the discovery can move to compel the production of this data.

Copyright © 2006 Martin D. Beirne, David A. Pluchinsky, and George B. Murr. All rights reserved.