A Modest Proposal on Preservation

William Hubbard, Preservation Under the Federal Rules: Accounting for the Fog, the Pyramid, and the Sombrero, available at Lawyers for Civil Justice.

William Hubbard’s Preservation Under the Federal Rules: Accounting for the Fog, the Pyramid, and the Sombrero is an elegant, important, and provocative argument about what the Federal Rules of Civil Procedure should say about duties to preserve documents and electronically stored information. And it could not be timelier. The Judicial Conference’s Civil Rules Advisory Committee is actively considering rules that, for the first time, would expressly address preservation obligations and the consequences of not doing so. This effort is driven by a perception that—at least for a small percentage of the federal caseload—preservation burdens have contributed to spiraling costs in civil cases. Hubbard joins a distinguished list of authors who have written about preservation issues, but his paper seemed to attract the attention of a number of rulemakers at the Civil Rules Advisory Committee’s most recent meeting in November 2011.

Many have argued that the current Federal Rules, which are mostly silent on preservation obligations, need to be revised to expressly address preservation issues. As for what a federal preservation rule would look like, discussions have largely centered on three main questions: trigger (when does the duty to preserve arise), scope (what types and sources of information should be subject to preservation) and sanctions (what are the consequences of failing to preserve). Hubbard offers policy suggestions for all three.

Hubbard begins by pointing to a familiar reality about preservation duties: when they arise before a lawsuit has been brought, they are being imposed in the “fog of litigation,” which is to say that they are imposed at a time of great uncertainty. Will the dispute result in a lawsuit and, if so, when? Who will bring it, against whom, and what claims and subject matter will it concern? It is very hard, Hubbard observes, to anticipate what documents ultimately may be relevant to a later-filed case. Additionally, he points out that before litigation has commenced there is no judge to tell the relevant parties you should keep this or you don’t need to preserve that. Of course, litigation-related judgment calls often must be made before suit based on incomplete information. For Hubbard, though, the lack of pre-litigation judicial guidance carries a particular consequence as it pertains to preservation duties. Because what is relevant isn’t clear—at least not entirely clear—before litigation has commenced, Hubbard argues that the unavoidable result of pre-litigation preservation obligations is that those with potentially relevant documents in their possession feel compelled to over-preserve, fearing that hindsight sanctions may result.

Hubbard argues that over-preservation is generally a bad thing because most documents that are preserved do not end up being relevant in litigation. This is both an empirical assertion, for which there is some supporting prior data (Hubbard is separately engaged in a project to gather additional data), and a normative claim, which he largely bases on efficiency. Given these concerns, Hubbard argues that a federal rule should trigger the duty to preserve only after federal litigation has commenced. Hubbard argues that comity considerations provide an additional reason why federal rulemakers should not try to regulate pre-litigation conduct. Although others have argued that the Rules Enabling Act does not allow for a Federal Rule that would govern pre-litigation conduct, Hubbard assiduously avoids taking a position on that question. His point, instead, is that even if federal courts have the power to impose pre-litigation preservation obligations, the better course for federal rulemakers is not to overreach; otherwise, prospective parties will feel compelled to follow a federal pre-litigation preservation rule even though the odds are slim that the dispute will end up in federal court.

Hubbard recognizes that some may object that triggering the preservation obligation at the commencement of federal litigation will entice bad actors to destroy relevant evidence during the period before filing. He responds by distinguishing between the duty to preserve and the duty not to spoliate. The duty to preserve is an affirmative duty, Hubbard argues, that requires parties to deviate from their usual practices in order to preserve evidence—much of which will not be material or relevant. The duty not to spoliate, on the other hand, is a negative command—don’t destroy a particular piece of relevant evidence. Unlike the affirmative duty to preserve, where costs and benefits usually run in opposite directions, “the genius of the duty not to spoliate is that rather than pitting cost savings against fact-finding benefits, it aligns the interest in cost savings with the interest in fact finding: it calls on individuals and companies not to change their usual activities.” (P. 18.)

Hubbard’s second prescription is that a rule ought to provide that no adverse inferences should be drawn merely from the failure to preserve. Under current case law, an intent to spoliate sometimes can be inferred merely from the fact that preservation was not done before litigation. Hubbard favors a rule that would only impose sanctions “upon proof of a guilty state of mind.” (P. 26.) He distinguishes between mens rea in fact and an inference of bad faith merely from the decision not to preserve data in the ordinary course of business.

Hubbard’s third recommendation concerns the scope of the preservation obligation. He argues that as long as the default condition is over-preservation—which is to say, keep anything that could possibly be relevant to a future case—the party seeking preservation of documents in someone else’s possession has little incentive to negotiate. This is most true, Hubbard points out, when there is an imbalance in information between the parties (where one side bears most of the preservation burdens). Given how current rules disincentivize negotiation, Hubbard would restrict the scope of preservation by imposing a presumptive limit on the number of custodians subject to a preservation obligation. With this presumptive limit in place, parties would then have incentive to negotiate if they think it should be more or less

Overall, Hubbard’s normative claims are bold, and my guess is that readers are likely to either strongly agree or strongly disagree with his analysis and policy prescriptions. Supporters will see this paper as the kind of thoughtful and persuasive analysis that could convince rulemakers to limit preservation obligations regarding trigger, sanctions, and scope along the lines he lays out. Critics are likely to question his concerns about over-preservation, especially as compared to the consequences of under-preservation—the loss of evidence and the resulting effect on the ability of aggrieved parties to obtain judicial redress. The need for preservation may be particularly important with respect to corporations and other non-natural entities. One can access all of a person’s memory—through a deposition, say—but there is no comparable access to corporate memory. Even with the ability to depose corporate representatives, a document preservation requirement arguably has a role to play as to organizational entities that is important and unique. Some may also challenge Hubbard’s assertions about how uncertainty impacts pretrial preservation decisions. More centrally, concern may be raised over his reliance on spoliation rules that punish only the willful destruction of relevant evidence. Such a sanctions regime would provide no remedy for negligent failures to preserve relevant information, not even curative orders designed not to punish but rather to restore the other party to the position they might have been in had the negligent act not occurred.

Still, while Hubbard’s argument is not likely to convince everyone, it is an elegant, important, and provocative argument. In other words, Preservation Under the Federal Rules is a “must read” for anyone interested in civil justice reform.