Citing Newly-Amended Rule 37(e), Court Vacates Prior Order Imposing Adverse Inference

Nuvasive, Inc. v. Madsen Med. Inc., No. 13cv2077 BTM(RBB), 2016 WL 305096 (S.D. Cal. Jan. 26, 2016)

In this case, the court granted Plaintiff’s motion to reconsider a prior order imposing an adverse inference for Plaintiff’s failure to preserve text messages, in light of new standards imposed under recently amended Federal Rule of Civil Procedure 37(e).

Plaintiff sought to vacate the court’s prior order imposing an adverse inference for the loss of text messages, citing recent amendments to Fed. R. Civ. P. 37(e).  Specifically, the rule now permits an adverse inference for failure to preserve ESI “only upon finding that the [spoliating] party acted with the intent to deprive another party of the information’s use in the litigation.” Citing the relevant language of the new rule and the instruction provided in the Committee Notes, the court concluded that “it would not be proper for the Court to give the adverse instruction” where the court previously found that “[Plaintiff] was at fault for not enforcing compliance with the litigation hold” but made no finding that the failure to preserve was intentional and where “[t]he record does not support a finding of intentional spoliation by [Plaintiff].”

Regarding application of the new rule to a prior order, the court acknowledged that “’[g]enerally a new procedural rule applies to the uncompleted portions of suits pending when the rule became effective . . . .’” (citation omitted) and reasoned that although the rule was not in effect at the time of its prior ruling, the court had not yet given the adverse inference, because trial had not taken place.  The court therefore concluded that “the new rule applies to the trial proceedings.”

Defendants argued, among other things, that it was “neither ‘just’ nor ‘practicable’ to apply the new rule” because “application of the amended rule would cause substantial prejudice to [Defendant], which took discovery and filed its spoliation motion under the standard applicable at the time.” Rejecting that argument, the court noted that even under the prior standard intent was relevant, reasoning that “the importance of intent, if it can be proved, is not new” and that “Defendants probably did not ask the witnesses whether they intentionally destroyed the text messages because in all likelihood, they would have denied it.”

Finally, addressing Defendants’ claim that no alternative sanction could remedy the prejudice they suffered, the court reasoned that it was “not accurate to say that Defendants have no remedy or recourse” citing the Committee Notes which explain that the new rule “would not prohibit a court from allowing the parties to present evidence to the jury concerning the loss and likely relevance of information and instructing the jury that it may consider that evidence, along with all the other evidence in the case, in making its decision.”

Accordingly, the court indicated that it would allow Plaintiff and Defendants to “to present evidence to the jury regarding the loss of electronically stored information and will instruct the jury that the jury may consider such evidence along with all other evidence in the case in making its decision.”  Notably, the court had previously indicated that both parties would be allowed to present evidence of the other side’s failure to preserve, where Plaintiff had also alleged spoliation against Defendants, but could not establish that it was entitled to an adverse inference (under the pre-amendment standard).

A copy of the court’s full order is available here.

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