What Protection Does Rule 37(f) Provide?

Is it meant to be a 'safe harbor' or a 'lighthouse'?

Rule 37(f) is a new rule added by the amendments to the Federal Rules of Civil Procedure that became effective Dec. 1, 2006. It's been described by commentators in many different ways, including "safe harbor," "lighthouse" and "minefield." One of the judges who sat on the rules committee that proposed Rule 37(f), said that it's meant to be more like a "bubble bath" than a "safe harbor" -- something to make companies feel good about handling electronically stored information in litigation.

The rule is meant to give companies limited protection with respect to that critical time when information relevant to pending or threatened litigation or governmental investigation needs to be preserved. The rule is directed at a distinctive and necessary feature of a computer system -- the recycling, overwriting and alteration of ESI (which can happen without human involvement) that's a part of the normal use of the computer.

On its face, the rule appears to provide protection for what many companies fear regarding e-discovery -- the failure to preserve relevant information related to pending or threatened litigation. But does it do that? And if it does, how much protection is available? Does Rule 37(f) create a mechanism for companies to destroy ESI as part of its routine information operations without any adverse consequences? Should companies affirmatively seek out Rule 37(f) protection like "safe harbor" or should they treat it like a "lighthouse" and steer clear of it?

THE RULE'S LANGUAGE

Rule 37(f) states: "Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system." So in order to come within the protection of the rule, a company needs to show the following two things:

* The ESI was lost due to the routine operation of its electronic information systems; and

* The company operated the electronic information system in good faith.

But it's important for companies to look carefully at the language of the rule, and in particular what's defined in the commentary to the rule (which is very helpful in understanding the scope of the rule) and what's left undefined. The phrase "[a]bsent exceptional circumstances" means that the court has wide discretion in the application of Rule 37(f). The inclusion of this undefined phrase is generally considered to mean that the rule won't apply in those situations where the conduct of the party seeking protection under Rule 37(f) has resulted in a degree of prejudice that it would be unfair to restrict the power of the court to address that conduct.

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Source: law.com