Experience, not logic: adapting spoliation doctrine to the brave new world of digital documents.

• Author: Elias, Roni A.

1. INTRODUCTION

   The adversarial system requires full discovery as an essential element of a fair and accurate litigation process. (1) The parties to litigation must be able to review the entire universe of relevant, and potentially relevant, evidence. (2) Not surprisingly, spoliation--the destruction of evidence with a culpable state of mind--is an anathema to the most fundamental principles governing litigation procedure and in turn may warrant harsh sanctions. (3)

   The doctrines governing how courts respond to spoliation are well established. (4) But these venerable rules were mostly devised for a discovery process that involved the production of paper documents. (5) Given these origins, the rules defining when the destruction of documents reflected culpable conduct were based on presumptions of how paper documents would be preserved and produced when a litigation matter arose. (6)

   The information revolution that accompanied the dramatic expansion of computers to produce and store every kind of document forever transformed the discovery process. (7) As computer use increased, the volume of information produced, stored, and made readily available in discovery has improved exponentially. (8) Although advances in technology have made what used to be unimaginable amounts of data relatively cheap and easy to compile today, these same advances also have their drawbacks. (9) Part of the information revolution also included the development of systems for the routine destruction of stored data. (10)

   As data destruction became a necessary part of managing any form of digitized information, the rules governing spoliation had to change. (11) Specifically, the rules had to be adapted so courts could distinguish between the innocent destruction of data as an ordinary incident of maintaining a computer system and the culpable destruction of data to evade a discovery obligation in litigation. (12) In 2006, the Federal Rules of Civil Procedure (Federal Rules) were amended to facilitate this distinction, but the effect of these amendments was mixed. (13) Ambiguities in the revised rules made it difficult for courts to reach reasonable, uniform conclusions about what kind of conduct constituted the culpable destruction of documents. (14) Courts diverged on whether failing to take the most effective measures to preserve documents reflected the same culpability that had always been the object of the rules prohibiting spoliation and imposing sanctions for it. (15)

   This Article examines the continuing effort by the drafters of the Federal Rules and the courts to determine how to regulate document destruction in the digital age. Part I of this Article reviews the basic problem of preserving digitized information. (16) Part II considers how the courts traditionally treated breaches of the duty to preserve documents. (17) In Part III, this Article examines how the Federal Rules were first amended to modify the method for imposing sanctions regarding the spoliation of digitized information. (18) Part IV discusses cases in which courts struggled to implement the 2006 amendments to the rules against spoliation consistently. (19) Finally, Part V reviews recently proposed modifications to the 2006 amendments, anticipating some of the problems that may arise with these proposed changes. (20) This Article concludes that the difficulty courts and drafters face in defining culpable destruction is an inevitable consequence of the constantly shifting technological circumstances surrounding the creation and storage of information. Although it may be unsatisfying to live with significant uncertainty about the rules governing spoliation, it may be a necessity, and developing a comprehensive, consistent body of case law may be more a matter of measured evolution than that of brilliant insight or invention.

2. THE PROBLEM OF PRESERVING ELECTRONICALLY STORED INFORMATION (ESI)

   The digital revolution has transformed how individuals and entities create, collect, and store information. (21) Computers make it possible to create and retain numerous versions of any kind of document as well as virtually all electronic communications, from e-mails to telephone calls. (22) The digital age has fundamentally changed the ability to share and store large amounts of electronic information. (23) For example, inter-office communications, such as emails, are available for access at any computer within a company's network regardless of the physical location of the author or recipient. (24) This electronic storage allows information to be saved in multiple locations instead of filling up filing cabinets in hardcopy form. (25) Any event or transaction implicated in a litigation matter can be associated with an enormous and often overwhelming volume of this ESI. (26)

   The volume of ESI routinely created presents significant challenges in data management. (27) Although computerized storage is extensive, it does have its limits. (28) For companies that produce massive amounts of ESI, keeping all of these documents can be burdensome on a system. (29) As a result, most organizations have processes for cleaning up these files periodically, overwriting documents that are considered old, and making space for cases needed in the immediate future. (30)

   The process of creating backup copies and deleting old or unwanted data is often automated. (31) These computer systems include a program or function that destroys "old" data while creating new backup copies. (32) The information retained is often stored in an unorganized and unwieldy manner, sometimes making retrieval difficult. (33) In litigation, a significant risk is that of unintentional errors that lead to the destruction of evidence or--perhaps more accurately--failing to preserve evidence that could be relevant and discoverable. (34)

   Under the standards developed for document retention in a pre digital world, the automated destruction of ESI could lead to discovery sanctions. (35) If document retention standards are not adapted to the realities of the digital world, a large company regularly threatened with litigation will be required to "constantly review its backup tapes for documents that could, at some later point in the litigation process, be deemed relevant; and if the enterprise predicted incorrectly, it would risk imposition of severe sanctions." (36) The expense of such a process could easily prove prohibitive because a careful review of unorganized backup tapes would require that knowledgeable individuals devote an enormous and unending number of hours to review processes. (37) Additionally, total and indefinite retention of ESI would result in significantly increased costs for the equipment necessary to store such information and the physical space allocated to that equipment. (38)

   Because of the perils of applying outdated document retention rules, there have been repeated efforts to amend the Federal Rules, particularly Rule 37, to create a more flexible imperative that accounts for the difficulties of preserving ESI. (39) These efforts have attempted to identify what constitutes culpable conduct in document retention policies and practices. (40) But the identification of what is wrongful has not proven to be easy. (41)

3. SPOLIATION SANCTIONS AND THE REGULATION OF DISCOVERY

   Courts have broad authority to regulate how parties preserve and produce evidence. (42) "A federal court has three sources for its power to sanction breaches of the duty to preserve" documents for discovery: first, the specific provisions of the Federal Rules, including Rules 26(g), 37(b)(2), and 37(c)(1); second, 28 U.S.C. [section] 1927; and finally, the court's inherent power. (43) Under these provisions court sanctions include fines, attorney's fees and costs, defaults, case dismissal, exclusion of witnesses, and fact establishment. (44)

   "Spoliation" is the term describing the wrongful destruction of documents that relate to a litigation matter. Through court rules and its own inherent authority to assure fair litigation, a court may impose sanctions upon parties responsible for spoliation. (45) A court can impose sanctions when discoverable material was destroyed and "the party or its counsel knew or should have known [the material] was relevant to pending, imminent, or reasonably foreseeable litigation." (46) Such sanctions may take several forms, from an award of attorney's fees to a default judgment in favor of the innocent party. (47) But the most commonly imposed spoliation sanction is the spoliation inference, "'the oldest and most venerable remedy' for the spoliation of evidence." (48)

   The spoliation inference allows an unfavorable inference of fact "against a litigant who has destroyed documents relevant to a legal dispute." (49) This rule can be characterized either as a regulation of discovery practice or as a rule of evidence. (50) Regardless of how it is characterized, the spoliation inference is a powerful instrument for assuring litigants' full and fair access to all relevant evidence.

   As a general rule, imposing the spoliation sanction requires finding the party who destroyed the evidence possessed a culpable state of mind. (51) In the context of spoliation, culpable states of mind can range from negligence to recklessness to intentional conduct; sometimes, courts hold a party strictly liable for spoliation. (52) Usually, however, spoliation sanctions require some level of intentional conduct. (53) Writing before the dawn of the digital age, prominent commentators noted that most authorities required some level of intentional destruction prior to issuing a spoliation inference. (54)

   Negligence is ordinarily the minimal level of culpability. When a party is "subjectively unaware" that a relevant document will be routinely destroyed according to a standard document retention policy, the destruction of the document is often viewed as negligence in the spoliation context. 55 This state of mind describes a...