We have a new case applying Federal Rule of Civil Procedure Rule 37(e): Living Color Enterprises v New Era Aquaculture. My thanks to attorney Chris Dix from the law firm of Smith, Hulsey, & Busey for sending me this case. Chis joined me for a podcast to discuss the case, available below.
The case focuses on text messages that were not preserved by the Defendant, who failed to turn off auto-delete on his phone. Judge William Matthewman did excellent analysis applying the new rules to the facts of this case.
Judge Matthewman started the analysis with the text of the new Rule 37(e): if “electronically stored information that should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery, the court may take certain actions.” Rule 37(e) states:
(1) Upon finding prejudice to another party from loss of the information, may order measures no greater than necessary to cure the prejudice; or
(2) Only upon finding that the party acted with the intent to deprive another party of the information’s use in the litigation may:
(A) Presume that the lost information was unfavorable to the party;
(B) Instruct the jury that it may or must presume the information was unfavorable to the party; or
(C) Dismiss the action or enter a default judgment.
Living Color Enters. v. New Era Aquaculture Ltd. S.D.Fla. Mar. 22, 2016, No. 14-cv-62216-MARRA/MATTHEWMAN) 2016 U.S. Dist. LEXIS 39113, at *10.
The Court answered the following three questions “yes” in applying the new Rule as the preliminary step before the sanctions analysis:
1) Was the allegedly spoliated ESI evidence that should have been preserved?
(2) Was the allegedly spoliated ESI lost because a party failed to take reasonable steps to preserve it?
(3) Is the allegedly spoliated ESI evidence that cannot be restored or replaced through additional discovery?
Living Color Enters., at *12-15.
In applying both the (e)(1) and (e)(2) factors, the Court first found that there was no prejudice suffered by the Plaintiff, because the text messages between the Defendant and another individual were produced by that third party. Living Color Enters., at *17. Moreover, the Plaintiff’s claims of prejudice were simply the conclusory statement that they had been prejudiced. Id.
The Court also found there was no “intent to deprive” under Rule 37(e)(2). Judge Mathewman referenced the committee notes that explain this new standard is to reject prior cases issuing “adverse-inference instructions on a finding of negligence or gross negligence.” Fed. R. Civ. P. 37(e) advisory committee’s notes to 2015 amendment. Living Color Enters., at *19.