eDiscovery Daily Blog

Changes in Federal Rules Result in Reversal of Adverse Inference Sanction: eDiscovery Case Law

In Nuvasive, Inc. v. Madsen Med. Inc., No. 13cv2077 BTM(RBB) (S.D. Cal. Jan. 26, 2016), California Chief District Judge Barry Ted Moskowitz, considering new standards imposed under recently amended Federal Rule of Civil Procedure 37(e), granted the plaintiff’s motion for an order vacating the Court’s previous order granting (in part) the defendants’ Motion for Sanctions for Spoliation of Evidence.

Case Background

In a previous ruling (which we covered here), Judge Moskowitz granted the defendants’ motion for adverse inference sanctions for failure to preserve text messages from four custodial employees that were key to the case.  The plaintiff sought relief under Rule 60(b) based on an amendment to Federal Rule of Civil Procedure 37(e), which went into effect on December 1, 2015.

The defendants opposed the motion, arguing that it was untimely and also argued that it was neither “just” nor “practicable” to apply the new rule because: (1) the mere fact that trial was postponed to February 2016 due to the Court’s schedule should not have the effect of absolving the plaintiff of its discovery misconduct; (2) application of the amended rule would cause substantial prejudice to the defendant, which took discovery and filed its spoliation motion under the standard applicable at the time; and (3) there is no alternative sanction that would remedy the prejudice to the defendants caused by the plaintiff’s destruction of evidence.

Judge’s Ruling

In assessing the new Rule 37(e) language, Judge Moskowitz stated that “It is clear from the language of (e)(2) as well as the Committee Notes that the adverse inference instruction that the Court was going to give falls within the measures that are not permissible absent a finding of intent. The Committee Notes explain: ‘Subdivision (e)(2) applies to jury instructions that permit or require the jury to presume or infer that lost information was unfavorable to the party that lost it. Thus, it covers any instruction that directs or permits the jury to infer from the loss of information that it was in fact unfavorable to the party that lost it.’”

Continuing, Judge Moskowitz observed that “In its prior orders, the Court did not make any finding that NuVasive intentionally failed to preserve the text messages so that Defendants could not use them in this litigation. Instead, the Court found that NuVasive was at fault for not enforcing compliance with the litigation hold. The record does not support a finding of intentional spoliation by NuVasive. Therefore, under Rule 37(e), as amended, it would not be proper for the Court to give the adverse inference instruction.”

Judge Moskowitz rejected the defendants’argument that the motion was untimely, noting that the plaintiff brought its motion on December 10, 2015, just nine days after the new rule went into effect.  While acknowledging that “NuVasive has had a bit of good luck in that trial is scheduled for February, after the effective date of the new rule”, Judge Moskowitz indicated that he was “not convinced that there is any prejudice” to the defendant, noting that, “even under the standard applied by the Court in initially ruling upon Defendants’ motion for sanctions, intent was relevant”.

Judge Moskowitz did indicate he would allow both parties “to present evidence to the jury regarding the loss of electronically stored information and will instruct the jury that the jury may consider such evidence along with all other evidence in the case in making its decision.”

So, what do you think?  Should sanction orders be vacated because of the amendment to Rule 37(e)?  Will this create a wave of motions requesting that courts vacate similar orders in other cases?  Please share any comments you might have or if you’d like to know more about a particular topic.

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