10 Years Later: How the Intent to Deprive Changed Sanctions Analysis with the 2015 Amendments to the Federal Rules of Civil Procedure

In the days before the 2015 Amendments to the Federal Rules of Civil Procedure, Federal courts were the Wild West across the country on how to handle lost electronically stored information. Litigants raced to the courthouse at the first sign that a litigation hold was not executed, resulting in motion practice that often skipped the question of whether that data was even relevant to the lawsuit. The 2015 Amendments changed Rule 37(e) to add uniformity to spoliation and sanctions analysis across the country to end such practices. The then new (and now current) Rule 37(e) states [emphasis added]:

If electronically stored information that should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery, the court:

(1) Upon finding prejudice to another party from loss of the information, may order measures no greater than necessary to cure the prejudice; or

(2) Only upon finding that the party acted with the intent to deprive another party of the information's use in the litigation may:

(A) Presume that the lost information was unfavorable to the party;

(B) Instruct the jury that it may or must presume the information was unfavorable to the party; or

(C) Dismiss the action or enter a default judgment.

USCS Fed Rules Civ Proc R 37(e).

The Committee Notes to the 2015 Amendments drove home the intent of the new Rules on eliminating "inherent authority" or reliance on state law standards for lost ESI:¹

"New Rule 37(e) replaces the 2006 rule. It authorizes and specifies measures a court may employ if information that should have been preserved is lost, and specifies the findings necessary to justify these measures. It therefore forecloses reliance on inherent authority or state law to determine when certain measures should be used."

Lawsuits before the 2015 Amendments had litigants charging to the courthouse seeking catastrophic sanctions at the first hint that ESI was lost. Motion practice from that era included:

• Holding it was gross negligence for a party to fail to issue a litigation hold to preserve relevant ESI after the duty to preserve was triggered.²
• Seeking sanctions for the failure to back-up hard drives or issue a litigation hold without first determining when the non-moving party had a duty to preserve.³
• Tortious spoliation of evidence motion practice for the alleged destruction of a native file report after the duty to preserve triggered.⁴
• Bringing a motion for default judgment over the failure to preserve back-up tapes used for disaster recovery.⁵

The 2015 Amendments put the breaks on the intense motion practice that erupted after the 2006 Amendments. The analysis over sanctions for lost ESI under the new Rule 37(e) was summarized as a six-part test from Living Color Enters. v. New Era Aquaculture Ltd.:⁶

1. Did the Party lose ESI?
2. Was the ESI subject to the duty to preserve?
3. Did the Party Fail to take reasonable steps to preserve the ESI?
4. Can the "lost" ESI be restored or replaced?
5. Is the requesting party prejudiced by the loss?
6. If Yes to any of the above: Was there specific intent to deprive?

Courts have followed this six-part test (or abridged versions of it) in motion practice over lost ESI. While there were some courts that also relied on "inherit authority," such arguments are now left in the past.⁷ Consider the following case examples:

Applying The Rule 37(e) Six-Part Test to Determine if ESI was Lost with the Intent to Deprive

In a case between two home security companies with claims of pouching customers, U.S. District Judge Sharon L. Gleason decided whether call center audio recordings met the sanctions requirements under Rule 37(e) following the six-part test:⁸

Did the Party lose ESI?

Yes. The litigation was ongoing and the call center audio recordings were included in the party's initial disclosures. The responding party had actually warned employees not to disparage the adverse party on the phone.

Was the ESI subject to the duty to preserve?

Yes. The duty to preserve arose at the time the responding party warned their employees about language on the phone.

Did the Party Fail to take reasonable steps to preserve the ESI?

No. The responding party failed to suspend their data destruction policy after they had a duty to preserve.

Can the "lost" ESI be restored or replaced?

No.

Is the requesting party prejudiced by the loss?

Yes. There was no way to know how much of the audio recordings were relevant.

Was there an intent to deprive?

No. The audio recordings were lost because of an inadequate litigation hold. There was no showing of an intent to deprive. The responding party was sanctioned with:

• Attorneys fees and costs from the motion;
• Precluded from using 150 recordings they did preserve; and
• Jury instruction the responding party was under a duty to preserve and failed to do so.

Showing Prejudice with Plausible, Concrete Suggestions on What ESI was Lost

In a business dispute that included allegations of unauthorized access to a Dropbox account, the plaintiff sought sanctions for the loss of laptop, data on an external hard drive, and iPhone after the plaintiff sent a preservation notice.⁹ The opinion further helps define how to show prejudice to a party from the spoliation, which requires offering "plausible, concrete suggestions as to what [the destroyed] evidence might have been."¹⁰

The defendant claimed he discarded his laptop because it was "malfunctioning." The defendant admitted that he used the laptop to access the plaintiffs' data stored on Dropbox. The court found the defendant had acted with the "intent to deprive" the plaintiff of the electronically stored information on the computer, because the defendant discarded the laptop after receiving a preservation notice.¹¹

The defendant admitted he copied the data from the plaintiff's Dropbox account to his external hard drive. The court held that because the defendant deleted the data on the external hard drive, he acted with the intent to deprive the Plaintiff of that data. Furthermore, the court found the plaintiff had "plausibly" suggested that the external hard drive "might have" contained relevant records from Dropbox, because the defendant admitted that he copied the plaintiffs' confidential business records from Dropbox to the hard drive.¹² Magistrate Judge Bruce J. McGiverin ordered a forensic examination of the defendant's external hard drive at the defendant's cost to limit the prejudice caused by the deleted data.¹³

The lost iPhone was in a different category from the discarded laptop and external hard drive. The court found the plaintiff had not sufficient evidence that the defendant's phone was not inadvertently lost or the timing of the loss. As such, sanctions were not supported by the evidence on the record.¹⁴ However, Judge McGiverin did order an adverse inference instruction for the willful loss of the laptop and external hard drive as sanctions.

An Agreement to Not Communicate Can Show the Intent to Deprive

In a lawsuit for intentional interference with contract and related violations of California's Unfair Competition Law, the plaintiff claimed the defendant induced nearly 1,400 sales contractors to join the defendant.¹⁵ Motion practice erupted over deleted text messages. Magistrate Judge Howard Llyod held there was "an intent to deprive" text messages that had been lost, where one individual told the others, "[T]his is going to be a lawsuit. So you've got to be careful."¹⁶ The court found that "an explicit agreement to avoid communicating electronically suggests a shared intent to keep incriminating facts out of evidence."¹⁷ The court issued adverse inference instructions as a sanction for the deleted text messages.¹⁸

Switching Messaging Apps Can Show Intent to Deprive

Individual Defendants in an FTC investigation switched from using WhatsApp and iOS to Signal and ProtonMail the day AFTER the individual defendants learned of the investigation.¹⁹ U.S. District Judge Dominic W. Lanza held the timing of switching to Signal and ProtonMail was the "most divisive factor" in finding the Individual Defendants acted with the intent to deprive.²⁰ The Individual Defendants were sanctioned with a general adverse inference instruction.²¹

A Party Cannot Speculate that Relevant ESI was Lost

In a discrimination lawsuit, the defendant sought terminating sanctions against the plaintiff and their attorney for lost ESI. The deleted messages that fueled the motion practice came to light during the plaintiff's deposition. The defendant only offered speculation that the deleted messages were relevant or if the prejudicial effect of the loss.²² Furthermore, the defendant did not prove the ESI was lost with the intent to deprive.²³ A party seeking sanctions must demonstrate that the deleted ESI is at least probative in order to show any prejudice. As such, the sanctions motion was denied.²⁴

Negligence or Gross Negligence Does Not Prove the Intent to Deprive

In a trade secret misappropriation over software development, the plaintiff sent the defendants a litigation hold letter that outlined the allegations in the lawsuit. Seven months later, one of the defendants deleted the data on the lead product developer's email and laptop after they left the defendant's employment.²⁵ U.S. District Judge Sarah E. Pitlyk declined to issue adverse inference sanctions for the lost ESI, because there was no evidence of the intent to deprive.²⁶ Even if the ESI was lost due to negligence or gross negligence for deleting the data after there was a duty to preserve, that negligence does not mean the destruction was intentional.²⁷

Denial of Motion for Summary Judgment as Sanction for Lost Survivance Video

In a slip and fall case in a department store, the plaintiff claimed she tripped over a hanger left on the floor. The defendant had an employee review security camera footage and claimed there was no footage of a fall. The footage was later recorded over, per the defendant's data retention policy.²⁸ The defendant brought a motion for summary judgment, where the video had a starring role as a disputed fact.

In District Judge Travis R. McDonough's six-step analysis, the issue was the prejudice the plaintiff suffered from the lost video. The court did not find an intent to deprive, which would have presumed prejudice.²⁹ However, the court found that the plaintiff would never have the benefit of knowing what was on the videos; the videos at least showed the store conditions immediately before and after the plaintiff's fall. As such, the court sanctioned the defendant under Rule 37(e)(1) for the lost ESI. The court found the appropriate sanction was to cure the prejudice from the deleted video, because the video would have created a genuine issue of material fact as to whether the defendant had actual or constructive knowledge of a hanger on the floor or if an employee had caused a hanger to be on the ground.³⁰

Intent to Deprive Requires an Intent, Not Just Deleted ESI

In a fraudulent-transfer action, the plaintiff sought sanctions against the defendants for deleted emails and text messages.³¹ The key ESI were spousal communications that the husband deleted. The relevant requests for production sought non-privileged communications. The relevant communications between the husband and wife were protected from production under the spousal privilege.

The plaintiff's arguments failed because 1) the defendant wife still had the communications on her phone and 2) the husband's communications could have been backed up to cloud storage. Simply put, the plaintiff did not prove the ESI was actually lost. Moreover, the plaintiff's claimed prejudice was just speculation. Furthermore, there was no evidence of an intent to deprive the plaintiff of the communications. The court found there was no intent to deprive, bad faith, or failure to comply with discovery, thus denied awarding any sanctions.³²

Changing Slack Retention Time Can Show Intent to Deprive

In a trademark infringement dispute, the defendant changed their Slack message retention time from unlimited to seven days after learning of the potential infringement.³³ District Judge John R. Adams accepted the Magistrate Judge's recommendation that the defendants intentionally failed to preserve Slack data with the intent to deprive and REJECTED the recommendation of a lesser sanction. Judge Adams instead held that a mandatory adverse-inference instruction was warranted as a sanction.³⁴

The defendants claimed they switched to a seven day retention policy to be in compliance with California Consumer Privacy Act of 2018 ("CCPA") and the International Standard of Operation Compliance ("ISO").³⁵ However, the defendants admitted they did not seek a lawyer's advice on complying with either the CCPA or ISO.³⁶

Courts can infer intent from a defendant's actions, which can include the timing of changing a data deletion policy, or if there is a credible explanation for not persevering ESI.³⁷ Judge Adams highlighted that the defendants changed their Slack settings after learning of the litigation for trademark infringement and related claims.³⁸

Based upon the defendant's conduct with the retention of Slack data, Judge Adams held that the defendant acted with the intent to deprive the plaintiff of the Slack data and that mandatory adverse-inference instructions were warranted.³⁹

What Have Litigators Learned Over the Last 10-Years on the Intent to Deprive?

The lesson of the 2015 Amendments is clear: Judges regularly follow a six-part test to determine if 1) ESI was lost by a party; 2) if the ESI was subject to the duty to preserve; 3) if a party failed to take reasonable steps to preserve ESI; 4) if the ESI could be restored or replaced; 5) whether the requesting party was prejudiced by the lost ESI; and 6) if ESI was lost, there there a specific intent to deprive.

The key to issuing sanctions for adverse inference instructions or a default judgment is proving there was an intent to deprive. Judges have found this intent based on agreements to use messaging apps or to intentionally change document retention settings to not retain data. As there often is not a smoking gun showing the intent to deprive (because there rarely is such evidence in any lawsuit), judges infer the intent from the facts of the case.

A party seeking sanctions must make a plausible showing that the lost ESI was relevant to the lawsuit. The issue of sanctions for lost ESI is not one of strict liability over a failure to execute a litigation hold, but giving a credible argument that the data was relevant to the case.

Prejudice is presumed if ESI was lost with the intent to deprive. However, if seeking relief under Rule 37(e)(1), a court can order measures to cure the prejudicial effect of lost ESI. A party must make a credible showing of what was lost and that it was relevant to the case. Relief in such situations can include forensic examination of computers to find the lost ESI or denying motions for summary judgment over disputed facts.

We are beyond the days when the issue of failing to issue a litigation hold could be gross negligence per se and a gateway to possible sanctions for lost data. Instead we have a uniform standard for Federal judges across the country to follow under Rule 37(e) for actions if ESI was lost and the appropriate remedy.

As a practice point for lawyers, identifying a triggering event for the duty to preserve is still a fact intensive exercise. The next step is defining the scope of the duty to preserve, which includes identifying time periods, key individuals, subject matter, and a client's communication methods. Sources of information can become complex data mapping, from identifying laptops, smartphones, whether email is stored locally or on the cloud, social media, and other accounts that have relevant information. Conducting interviews with key players, learning from IT how data is retained, interfacing with HR for help executing a litigation hold to employees, and engaging computer forensic experts are standard operating procedures for persevering ESI. This all can become inherently complicated. Rule 37(e) gives a method for correcting a situation where an ESI source was missed and a remedy if data was intentionally destroyed.

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Citations

1. Cat3, Ltd. Liab. Co. v. Black Lineage, Inc., 164 F. Supp. 3d 488 (S.D.N.Y. 2016), citing the Committee Notes.
2. Sjs Distribution Sys. v. Sam's E., Inc., No. 11 CV 1229 (WFK)(RML), 2013 U.S. Dist. LEXIS 147549, at *10 (E.D.N.Y. Oct. 11, 2013).
3. Magnuson v. Newman, 2013 U.S. Dist. LEXIS 138595, at *44 (S.D.N.Y. Sept. 25, 2013).
4. Raines v. Coll. Now Greater Cleveland, Inc., No. 1:14-CV-00003, 2014 U.S. Dist. LEXIS 75373 (N.D. Ohio June 3, 2014).
5. Gaalla v. Citizens Med. Ctr., 2011 U.S. Dist. LEXIS 57317, 2-3 (S.D. Tex. May 27, 2011).
6. Living Color Enters. v. New Era Aquaculture Ltd., No. 14-cv-62216-MARRA/MATTHEWMAN, 2016 U.S. Dist. LEXIS 39113 (S.D. Fla. Mar. 22, 2016).
7. A court decided that a digital audio recording that was intentionally destroyed was not electronically stored information and applied its own inherent authority on sanctions analysis. Hsueh v. N.Y. State Dep't of Fin. Servs., 2017 U.S. Dist. LEXIS 49568 (S.D.N.Y. Mar. 31, 2017).
8. Sec. Alarm Fin. Enters., Ltd. P'ship v. Alarm Prot. Tech., Ltd. Liab. Co., No. 3:13-cv-00102-SLG, 2016 U.S. Dist. LEXIS 168311 (D. Alaska Dec. 6, 2016).
9. TLS Mgmt. & Mktg. Servs. LLC v. Rodriguez-Toledo, No. 15-2121 (BJM), 2017 U.S. Dist. LEXIS 46772 (D.P.R. Mar. 27, 2017).
10. TLS Mgmt. & Mktg. Servs. LLC, at 3, citing, Micron Tech., Inc. v. Rambus Inc., 645 F.3d 1311, 1328 (Fed. Cir. 2011) (quoting Schmid v. Milwaukee Elec. Tool Corp., 13 F.3d 76, 79 (3d Cir. 1994) (emphases added)).
11. TLS Mgmt. & Mktg. Servs. LLC, at *5.
12. TLS Mgmt. & Mktg. Servs. LLC, at *5-6.
13. TLS Mgmt. & Mktg. Servs. LLC, at *6.
14. TLS Mgmt. & Mktg. Servs. LLC, at *8.
15. First Fin. Sec., Inc. v. Freedom Equity Grp., LLC, No. 15-cv-1893-HRL, 2016 U.S. Dist. LEXIS 140087, at *1 (N.D. Cal. Oct. 7, 2016).
16. First Fin. Sec., Inc., at *9.
17. First Fin. Sec., Inc., at *10.
18. First Fin. Sec., Inc., at *21.
19. FTC v. Noland, No. CV-20-00047-PHX-DWL, 2021 U.S. Dist. LEXIS 163918, at *2 (D. Ariz. Aug. 30, 2021).
20. Noland, at *36-37.
21. Noland, at *43.
22. Ellis v. PB Ventilating Sys., Inc., No. 23-cv-04629 (NCM) (JAM), 2024 U.S. Dist. LEXIS 156717, at *8 (E.D.N.Y. Aug. 30, 2024).
23. Id.
24. Ellis, at *9.
25. Lifescience Techs., LLC v. Mercy Health, No. 4:21-cv-01279-SEP, 2025 U.S. Dist. LEXIS 62788 (E.D. Mo. Mar. 31, 2025).
26. Lifescience Techs., LLC, at *13-14.
27. Id.
28. Guess v. TJX Co., Inc., No. 4:24-cv-30, 2025 U.S. Dist. LEXIS 81094, at *2-3 (E.D. Tenn. Apr. 29, 2025).
29. Id., at *6.
30. Id., at 10-11.
31. Welsh v. Martinez, No. 2:22-cv-216-JLB-NPM, 2025 U.S. Dist. LEXIS 69756 (M.D. Fla. Apr. 11, 2025).
32. Welsh, at *8-10.
33. Drips Holdings, LLC v. Teledrip, LLC, No. 5:19-cv-2789, 2022 U.S. Dist. LEXIS 178233, at *6 (N.D. Ohio Sep. 29, 2022).
34. Drips, at *16-17.
35. Drips, at *8.
36. Drips, at *9.
37. Drips, at *9.
38. Drips, at *10.
39. Drips, at *16.