In our last blog, we discussed the memorandum decision dated June 10, 2013 in Sekisui America Corp. v. Hart, 2013 WL 2951924 (S.D.N.Y.). In this case, the court noted that in the Second Circuit, “mere” negligence fulfills the second requirement of “culpable state of mind,” as required for spoliation sanctions. This rule stems from the Second Circuit case Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99 (2nd Cir. 2002).
In a footnote worth discussing from the Sekisui case, the court noted that the Standing Committee on Rules and Procedure of the Judicial Conference has approved for public comment an amended Fed.R.Civ.P. 37(e), which now reads: “Failure to Provide Electronically Stored Information. 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 an electronic information system.”
The proposed rules can be found in full here. The new Rule 37(e) would allow a court to order sanctions or an adverse jury instruction if the party’s actions:
- Caused substantial prejudice in the litigation and was willful or in bad faith; or
- Irreparably deprived a party of any meaningful opportunity to present or defend against the claims.
As the Sekisui court noted in Footnote 3, this will overrule the Second Circuit in Residential Funding, and mere negligence will no longer suffice if the party does not demonstrate it was irreparably deprived of the meaningful opportunity to present or defend claims. If this is not shown, the party will have to show it was substantially prejudiced AND the destruction was willful or in bad faith. This is a much higher standard, obviously, than “mere” or even “gross” negligence.