Court Rules that Rule 37(e) Forecloses Reliance on Inherent Authority in Denying Sanctions Request: eDiscovery Case Law

This case is one I missed, but since it involves potential sanctions, Rule 37(e) and the chair of the Rules Committee which approved the changes to the Federal Rules in 2015, how could I not go back and cover it?

In Alsadi v. Intel Corp., No. CV-16-03738-PHX-DGC (D. Ariz. July 17, 2020), Arizona District Judge David G. Campbell, among other rulings, denied the plaintiff’s motion for a negative inference for failing to collect data from a gas detector regarding hazardous emissions, citing Small v. Univ. Med. Ctr. in stating “The 2015 amendment to Rule 37(e) now ‘forecloses reliance on inherent authority’ to determine whether and what sanctions are appropriate for a party’s loss of discoverable ESI.”

Case Background

In this case involving a hydrogen sulfide (H2S) leak from an industrial wastewater system owned by the defendant where the plaintiff worked, the plaintiffs (the alleged injured party and his wife) filed a motion for negative inference (based on the Court’s inherent authority to make appropriate rulings in response to the spoliation of non-ESI evidence)  The plaintiffs claimed that the defendant failed to collect and preserve data from the Altair gas detector showing actual levels of hazardous emissions and it was to blame for the lack of adequate data because it had no early warning detection systems in place at the time of the incident.  The plaintiffs also argued that the data recorded on the Altair detector is not ESI within the meaning of Rule 37(e) because it was not stored on a computer system.

In turn, the defendant argued that it had no duty to preserve evidence before it received notice that litigation was probable, that it had no duty to create evidence of hazardous emission levels, and that the plaintiffs ignored Federal Rule of Civil Procedure 37(e), which governs negative inference sanctions for the loss of ESI.

Judge’s Ruling

With regard to the plaintiffs claim that the data from the Altair gas detector was not ESI because it wasn’t stored on a computer system, Judge Campbell stated: “this is too narrow a reading of the phrase ‘electronically stored information.’ That phrase was first added to the Federal Rules of Civil Procedure in 2006 and is used in a number of rules…Rule 34 states that ESI includes ‘writings, drawings, graphs, charts, photographs, sound recordings, images, and other data or data compilations – stored in any medium from which information can be obtained either directly or, if necessary, after translation by the responding party into a reasonably usable form.’…The 2006 advisory committee note to Rule 34 explains that the meaning of ESI ‘is expansive and includes any type of information that is stored electronically.’”

With regard to the plaintiffs reliance on the Court’s inherent authority, Judge Campbell stated that it was “not persuasive.”  He also stated: “The drafters of Rule 37(e) specifically ‘intended to preempt use of other sources of sanctions – such state law or the long-established ‘inherent power’ doctrine – and require findings consistent with Rule 37(e) as the only path to remedying the loss of [ESI].’…They did so because they were seeking to bring uniformity to an area of the law that had been badly splintered by various courts’ reliance on inherent authority.”

Judge Campbell also noted that “spoliation sanctions apply when a party has lost or destroyed evidence, not when it has failed to create evidence…’When determining whether to impose discovery sanctions for spoliation, the threshold question that the court must decide is whether relevant evidence existed. If no relevant evidence existed, then the motion for spoliation is moot.’”

As a result, Judge Campbell denied the plaintiffs motion for a negative inference, but also noted: “This ruling does not preclude Plaintiffs from presenting admissible evidence concerning Intel’s alleged failure to collect data of hazardous emission levels.”

So, what do you think?  Should inherent authority ever apply anymore for sanctions requests in Federal civil cases?  Please share any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of eDiscovery Assistant.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by my employer, my partners or my clients. eDiscovery Today is made available solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Today should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

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