FRCP Rule 37(e): Sanctions for Spoliation of ESI

Under Federal Rule of Civil Procedure 37(e), a federal court can sanction a party that loses electronically stored information it had a duty to preserve, and the severity depends on the party’s state of mind. If the loss caused prejudice, the court may order curative measures no greater than necessary to fix the harm. If the party acted with intent to deprive the other side of the information, the court may go further and presume the data was unfavorable, instruct the jury to do the same, or dismiss the case or enter default judgment. The rule covers only ESI and only in federal court, and it forecloses reliance on a judge’s inherent authority or on state law to reach the same outcomes by another route.1Legal Information Institute. Federal Rules of Civil Procedure Rule 37 – Failure to Make Disclosures or to Cooperate in Discovery; Sanctions

Four Threshold Requirements Before Any Sanction

Rule 37(e) is a gatekeeping rule. All four of the following must be true before a court can order anything at all, and if any one is missing, there is no remedy under the rule no matter how damaging the loss turns out to be.

First, the missing material must be electronically stored information. That category is read broadly and includes emails, text messages, social media content, metadata, server logs, cloud files, and data on phones and other devices.1Legal Information Institute. Federal Rules of Civil Procedure Rule 37 – Failure to Make Disclosures or to Cooperate in Discovery; Sanctions Paper documents and physical objects fall outside the rule.

Second, the party must have had a duty to preserve the data when it was lost, because litigation was pending or reasonably foreseeable. The rule does not define when that duty starts; courts apply the common-law test.

Third, the party must have failed to take reasonable steps to preserve the information. Reasonable steps are not perfect ones, and the Advisory Committee Notes instruct courts to weigh proportionality, party resources, and the sophistication of the party and its counsel.1Legal Information Institute. Federal Rules of Civil Procedure Rule 37 – Failure to Make Disclosures or to Cooperate in Discovery; Sanctions A small business with one IT employee is not judged against a multinational with a dedicated legal technology team, and a less expensive preservation method is acceptable if it is substantially as effective as a costlier one.

Fourth, the data cannot be restored or replaced through additional discovery. If the same emails sit in another custodian’s inbox, or a backup or third party has the files, the court will not impose any remedy. Recovery efforts themselves must be proportional to the apparent importance of what was lost.1Legal Information Institute. Federal Rules of Civil Procedure Rule 37 – Failure to Make Disclosures or to Cooperate in Discovery; Sanctions

When the Duty to Preserve Kicks In

The duty attaches when litigation becomes reasonably foreseeable, which can be well before a complaint is filed. A demand letter, a cease-and-desist notice, a formal preservation request, or a government investigation notice will typically trigger it. So can a serious incident where anyone involved should expect a lawsuit. On the plaintiff’s side, hiring a lawyer, consulting an expert, or starting to document losses can be enough.

Once the duty attaches, the standard response is a litigation hold: an internal directive suspending routine deletion of relevant files, pausing auto-delete on email systems, halting recycling of backup tapes, and notifying custodians who may hold relevant data. Zubulake v. UBS Warburg established that expectation, and a timely, documented hold remains the baseline courts look for when deciding whether a party took reasonable steps.

Curative Measures Under Rule 37(e)(1)

If the four thresholds are met and the loss has prejudiced the other side, the court may impose measures “no greater than necessary to cure the prejudice.” Prejudice here means real damage to a party’s ability to prove or defend a claim, not mere inconvenience. Courts have a menu of tools:

  • Letting witnesses who saw the missing evidence testify about its contents, subject to cross-examination
  • Barring the party that lost the data from introducing evidence the missing files would have contradicted
  • Allowing the parties to present evidence and argument about the loss so the jury can weigh it in assessing credibility
  • Ordering additional discovery, paid for by the party that failed to preserve
  • Treating specified facts as established for purposes of the case

There is a hard limit on this track. A court cannot use (e)(1) to impose what is really an (e)(2) sanction in disguise. The Advisory Committee Notes warn, for example, against striking pleadings tied to the central claim under (e)(1), because doing so would effectively end the case the same way dismissal would.1Legal Information Institute. Federal Rules of Civil Procedure Rule 37 – Failure to Make Disclosures or to Cooperate in Discovery; Sanctions If the case warrants a remedy that severe, the court must satisfy the intent standard in (e)(2).

Sanctions for Intentional Destruction Under Rule 37(e)(2)

The harshest sanctions are reserved for a party that acted with the intent to deprive another party of the information’s use in the litigation.1Legal Information Institute. Federal Rules of Civil Procedure Rule 37 – Failure to Make Disclosures or to Cooperate in Discovery; Sanctions Negligence does not qualify. Gross negligence does not qualify. The court must find that the party deliberately destroyed or withheld data for strategic advantage. That was the central choice the 2015 amendment made: adverse inference instructions and case-ending sanctions are off the table without proof of intent.

When a court finds intent, it may impose one of three sanctions:

Under (e)(2) the court does not have to make a separate finding of prejudice. The reasoning: if a party intentionally destroyed evidence, both that the evidence was unfavorable and that its loss hurt the other side can be inferred from the destruction itself.1Legal Information Institute. Federal Rules of Civil Procedure Rule 37 – Failure to Make Disclosures or to Cooperate in Discovery; Sanctions People do not destroy evidence that helps them.

How Intent Gets Proved

A written admission of intent is rare. Courts look at circumstantial signs: the timing of deletions in relation to a preservation demand or the filing of a lawsuit; selective preservation of some files and destruction of others; internal communications about the data or its removal; and whether the party’s explanation for the loss holds up. A pattern of keeping helpful documents while losing damaging ones is among the strongest signals.

Attorney Fees Are Possible but Not Guaranteed

Rule 37(e) does not mention attorney fees, and courts have divided on whether to award them. Some judges have required the spoliating party to reimburse the innocent side’s costs of investigating the loss and bringing the motion. Others have declined because the rule text does not authorize it.

When fees are awarded, courts sometimes lean on Rule 37(a)(5)(A), which allows fee-shifting when a discovery motion is granted and produces additional material. Some invoke inherent authority to sanction bad-faith conduct, though that path is narrower after 2015. The realistic expectation is that fees may come with a spoliation ruling but should not be assumed.

How to Avoid a Sanctions Fight in the First Place

The best position on a Rule 37(e) motion is not needing to respond to one. Rule 26(f) requires the parties to confer early about ESI, and that conference is the place to identify relevant data sources, agreed preservation methods, and production formats.

Many litigants go further and negotiate a written ESI protocol. Once the court enters it as a stipulated order, it defines what reasonable steps mean in that case, and a party that follows it stands in a much stronger position if data is later lost despite the effort.

A separate but related move worth making early is a Federal Rule of Evidence 502(d) order. It protects against inadvertent waiver of attorney-client privilege during large ESI productions, both in the pending case and in later proceedings. With that protection in place, review can use more efficient methods rather than exhaustive manual passes driven by fear of a single misdirected document.