Crane on Law by James Crane

In United Med. Supply Co., Inc. v. United States, the United States Court of Federal Claims imposed sanctions against the United States based upon its “reckless disregard” of its duty to preserve relevant evidence. The court found that over an extended period of time, the government regularly destroyed documents, and mischaracterized the extent of its efforts to locate responsive documents and prevent spoliation.

The government argued that bad faith was required before spoliation sanctions could be imposed, presumably based on F.R.C.P. 37’s “safe harbor” provision. Rule 37 provides that “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.”

The court rejected the argument that bad faith was required and instead focused on the spoliation conduct and the harm it caused. It noted that “repeated acts of gross negligence, particularly if accompanied by inaccurate representations to the court that serve to mask and perpetuate the spoliation, can be met with the same or a more severe sanction than a single act of bad faith.”

This case can serve as an object lesson for us all: corporate clients and their partner attorneys must maintain thorough and up-to-date awareness of what is happening with their electronic information systems, and must make sure that all litigation holds are being properly executed at the user level. The affirmative burden is going to be on counsel to possess a deep understanding of and control over the client’s relevant data. Of course, at Altep, we encourage our partners to be proactive prior to and at the onset of litigation. Nothing is more reassuring than knowing where all of the necessary data resides, having meaningful collaboration with the key personnel required to preserve the data, and going into the meet and confer with all of the answers.