Failing to preserve documents can lead to costly sanctions in the event of litigation. However, the amount of data many businesses must track and store is reaching epic proportions.
To help lessen the load, several of the country’s largest corporations are lobbying for changes to the federal rules governing record retention. The proposed amendments to the Federal Rules of Civil Procedure would specifically amend the standard for preserving electronically stored evidence.
While storing electronic records can be a hassle, the failure to produce requested documents during litigation can seriously impact your case. When a party causes “the destruction or significant alteration of evidence, or [] fail[s] to preserve property for another’s use as evidence in pending or reasonably foreseeable litigation,” they can be found guilty of spoliation. Reilly v. Natwest Mkts. Group, Inc., 181 F.3d 253, 267 (2d Cir. 1999).
In addition to imposing financial penalties for improper document retention or destruction, courts may also instruct the jury that because you failed to produce requested documents, the jury can infer that those documents could have been harmful to your case, which is commonly known as an “adverse inference.” However, not all federal circuits follow the same legal standard for assessing the level of culpability needed to impose sanctions.
In testimony before the Judicial Conference Advisory Committee on the Civil Rules, companies like Exxon Mobil Corp. and Microsoft Inc. argued that the lack of uniformity and predictability forces them to hoard thousands of documents. They further highlighted that the preservation of electronically stored information costs tens of millions of dollars and countless hours in employee labor.
The proposed amendments to F.R.C.P. 37 (e) could help bring greater clarity. Under the proposed rule changes, a court could only issue sanctions if it finds that the failure to preserve electronically-stored information “(i) caused substantial prejudice in the litigation and w[as] willful or in bad faith; or (ii) irreparably deprived a party of any meaningful opportunity to present or defend against the claims in the litigation.” Thus, sanctions would generally not be imposed based on a company’s negligence alone.
Additional hearings are scheduled over the next several months, and the public comment period expires in February 2014. We will be closely tracking the status of the federal rule amendment and will provide updates as soon as new information becomes available.
If you have any questions about the proposed changes to the Federal Rules of Civil Procedure or would like to discuss how they may impact your New york or New Jersey litigation, please contact me, Robert Levy, or the Scarinci Hollenbeck attorney with whom you work.
Why Every Business Should Conduct an Annual Insurance Coverage Review
Most New Jersey business owners purchase insurance policies, file them away, and assume they are protected if a claim arises. Without a regular insurance coverage review, many companies discover gaps only after a lawsuit, cyberattack, property loss, or other significant event occurs. An annual insurance coverage review can help businesses identify potential risks, ensure their […]
Demand Letters & Cease and Desist Letters: When to Send One (and When Not To)
Businesses and individuals often encounter situations where another party breaches a contract, fails to pay a debt, or continues harmful conduct. In many such disputes, a precisely drafted demand letter or cease-and-desist letter serves as a powerful legal tool. It can frequently resolve the dispute and avoid litigation. While demand or cease-and-desist letters can resolve […]
Key provisions in your contracts, including those relating to indemnification, insurance, and defense, are essential to contract risk management. While sometimes considered “boilerplate,” these provisions play a pivotal role when determining which party is responsible for certain costs and liabilities. They must always be negotiated and drafted carefully. Indemnification Clauses Businesses should never overlook the […]
Portability of estate and gift tax enables a surviving spouse to inherit any unused portion of their deceased spouse’s federal estate and gift tax exemption. So, if one spouse doesn’t utilize their full exemption, the surviving spouse can effectively double their exemption amount with regard to estate tax liability. For married couples, portability offers a […]
Pet Trusts in New Jersey and New York: A Practical Estate Planning Tool
For many of us, pets are more than companions—they are members of the family. Yet they are often overlooked or inadequately provided for when it comes to estate planning. A pet trust offers a legally enforceable way to ensure that your animal continues to receive proper care if you become incapacitated or pass away. As […]
For many New Jersey business owners, a closely held company represents decades of work, financial investment, and personal sacrifice. Trusts in business succession planning are one of the most effective tools for protecting that value, allowing founders to control how and when the business passes to the next generation while reducing the risk of disputes, […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
