Know When to Hold Em: Duty to Preserve and the Federal Rules

In our last post, we began a new blog series discussing best practices for modern legal holds and preservation of ESI with an overview of the basics of ESI preservation.

Preserving evidence has always been a cornerstone of fairness in litigation, but the explosion of electronically stored information (ESI) over the past two decades has made it one of the most complex and contentious aspects of discovery. The Federal Rules of Civil Procedure (FRCP) set the standards for when and how parties must preserve ESI, as well as the potential consequences when they fail to do so.

However, before we discuss the expectations of the current rules, it’s important to understand the relevant history. Prior to the landmark 2015 amendments to the FRCP, courts across the country applied inconsistent standards for sanctions, creating uncertainty and the potential for over-preservation. The 2015 revisions – particularly to Rules 26, 34, and 37 – brought long-awaited uniformity and proportionality to preservation obligations, helping parties strike a better balance between defensibility and practicality.

The Pre-2015 Preservation Landscape

Before the 2015 amendments, FRCP Rule 37(e) had a more limited version that included a “safe harbor” clause. This safe harbor stated that courts could not impose sanctions for lost electronically stored information (ESI) if it was lost due to the routine, good-faith operation of an electronic system, absent exceptional circumstances. As digital data proliferated, courts were forced to fill in the gaps in the procedural rules through case law, and their approaches varied dramatically.

Some jurisdictions, such as the Second Circuit (home to the influential Zubulake decisions), took an aggressive stance, imposing sanctions – including adverse inference instructions – if a party negligently failed to preserve relevant evidence once litigation was “reasonably anticipated.” Other courts required a showing of bad faith before imposing similar penalties. This inconsistency created troublesome uncertainty: organizations often preserved vast volumes of data “just in case,” leading to excessive costs, operational strain, and a detrimental effect on information governance efforts.

Two cases illustrated the challenges associated with the varied application of sanctions for spoliation of ESI:

• Zubulake v. UBS Warburg (2003–2005): While the landmark rulings in these opinions written by Southern District of New York Judge Shira Scheindlin established that the duty to preserve arises when litigation is reasonably anticipated, failure to meet that duty could warrant severe sanctions, even for negligent conduct.
• Pension Committee of the University of Montreal Pension Plan v. Banc of America Securities (2010): In this case, Judge Scheindlin went further, holding that negligent failure to preserve evidence constituted gross negligence and justified sanctions.

While these were important rulings in the evolution of eDiscovery best practices, they incentivized over-preservation. Organizations were caught between the risk of sanctions and the impracticalities of retaining all of their data, especially as modern data sources began to proliferate.

The 2015 FRCP Amendments

Recognizing the confusion and disproportionate costs that the prior regime had caused, the Advisory Committee on Civil Rules undertook a major reform effort culminating in the 2015 amendments. These changes aimed to promote cooperation, proportionality, and uniformity – especially in the context of ESI preservation and sanctions.

Three rules were central to this transformation: Rule 26, Rule 34, and Rule 37(e).

Rule 26(b)(1): Greater Emphasis on Proportionality

The language “reasonably calculated to lead to the discovery of admissible evidence” was removed from FRCP rule 26(b)(1). In its place, the proportionality standard was relocated from Rule 26(b)(2)(C) to elevate the importance of proportionality in discovery.

The revised rule today states as follows:

“Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.”

This proportionality framework now informs preservation decisions as well. The message is clear: organizations are not expected to preserve everything. Instead, they should focus on information that is potentially relevant, unique, and reasonably accessible. The rule change encouraged a shift from a “save everything” mindset to a reasoned, defensible approach that balances legal risk with practicality.

Rule 34: Clarifying ESI Requests and Forms of Production

Although Rule 34 primarily governs the production of ESI, its 2015 revisions indirectly influence preservation practices. The rule now requires requesting parties to be specific about the form of production they seek and encourages early dialogue between parties about ESI scope, formats, and limitations.

This emphasis on transparency and collaboration helps define the boundaries of what must be preserved. By discussing potential sources, file types, and accessibility issues early in the process, parties can narrow the scope of preservation and avoid unnecessary disputes down the discovery road.

Rule 37(e): The Heart of the Reform

The most consequential change came with the overhaul of Rule 37(e), which now provides a uniform national standard for sanctions related to lost ESI. Before 2015, courts relied on inherent authority and inconsistent case law; after the amendment, Rule 37(e) became the definitive guide for addressing spoliation of ESI. Here is the current form of the rule:

(e) Failure to Preserve Electronically Stored Information. 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:

(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.

Today, Rule 37(e) establishes clear requirements for sanctions due to the loss of ESI, and for a showing of “intent to deprive” for significant sanctions like adverse instruction sanctions or terminating sanctions.

Conclusion

The 2015 amendments to the FRCP marked a turning point in the evolution of discovery. By replacing fear-driven over-preservation with proportionality, reasonableness, and uniform standards for sanctions, the rules have made discovery more efficient, fair, and predictable.

However, while these changes enable organizations to take a more reasonable approach to preservation of ESI, the interpretation of “intent to deprive” can vary widely across courts. Organizations must still take their preservation obligations seriously: there’s a fine line between gross negligence and intent to deprive and it is a very fact specific determination.

In our next post, we’ll provide a historical perspective on how preservation practices have evolved with changing data sources over the years from paper to email to cloud-based sources and GenAI content. Stay tuned!

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