When electronically stored information (ESI) is lost, the consequences a party faces under the Federal Rules turn on a disciplined analysis: whether preservation was owed, whether reasonable steps were taken, whether the loss is curable, and whether the party acted with intent to deprive. Rule 37(e) sets that framework, and Rule 26 shapes the preservation obligations that precede it. This article walks through the elements a litigation hold must address to withstand a Rule 37(e) challenge, drawing strictly from the text of the governing rules.
The Threshold Elements of Rule 37(e)
Rule 37(e) does not apply to every instance of lost data. Its remedies are available only when specific predicate conditions are satisfied. The rule reaches electronically stored information "that should have been preserved in the anticipation or conduct of litigation" and that "is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery."
This construction gives litigants a roadmap for a defensible hold. First, the duty attaches when litigation is anticipated or pending. Second, the party must take reasonable steps to preserve—the standard is reasonableness, not perfection. Third, even where steps fall short, no sanction analysis proceeds if the information can be restored or replaced through additional discovery. A hold that documents each of these elements narrows the ground on which an adversary can build a spoliation motion.
Curative Measures Under Rule 37(e)(1)
Where the predicate conditions are met and information is genuinely lost, the court's first inquiry is prejudice. Under Rule 37(e)(1), "upon finding prejudice to another party from loss of the information," the court "may order measures no greater than necessary to cure the prejudice."
This subdivision is deliberately proportionate. The remedy is calibrated to the harm—no more than necessary to cure prejudice—and does not require any showing of culpable intent. A party responding to a 37(e) challenge can therefore focus its argument on whether the opponent was actually prejudiced and, if so, on the narrowest measure that would address that prejudice.
The Intent Requirement for Severe Sanctions
The most serious sanctions are reserved for the most culpable conduct. Rule 37(e)(2) authorizes an adverse-inference presumption, a jury instruction to presume the lost information unfavorable, or dismissal or default "only upon finding that the party acted with the intent to deprive another party of the information's use in the litigation."
This is a demanding, intent-based threshold. Negligence—even a failure to take reasonable steps—supports at most the curative measures of subdivision (e)(1); it does not support the terminating or adverse-inference sanctions of (e)(2). A litigation hold that shows good-faith, contemporaneous preservation efforts directly rebuts the inference of intent that (e)(2) requires.
Anchoring the Hold to the Scope of Discovery
Preservation should be tethered to what is actually discoverable. Rule 26(b)(1) defines the scope of discovery as "any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case," measured against factors including the amount in controversy, the parties' relative access to relevant information, and "whether the burden or expense of the proposed discovery outweighs its likely benefit."
Rule 26 also recognizes that not all ESI is equally accessible. Under Rule 26(b)(2)(B), "a party need not provide discovery of electronically stored information from sources that the party identifies as not reasonably accessible because of undue burden or cost." Read together with Rule 37(e)'s reasonableness standard, these provisions support a hold scoped to relevant, proportional, and reasonably accessible sources, rather than an undifferentiated freeze of all data. Documenting these judgments contemporaneously strengthens the case that preservation steps were reasonable.
Practical Takeaways for a Defensible Hold
A hold designed to survive a Rule 37(e) challenge should memorialize four things: when the duty to preserve arose, what reasonable steps were taken, why the affected sources were within or outside the scope of preservation, and whether any lost information could be restored or replaced through additional discovery. Each maps to an element the court must evaluate.
Because the severe sanctions in Rule 37(e)(2) turn on a finding of intent to deprive, and the curative measures in Rule 37(e)(1) turn on prejudice and proportionality, the record a party builds during the hold—not after the loss is discovered—often determines which branch of the rule applies. Tying preservation decisions to the relevance and proportionality standards of Rule 26 provides a principled, documented basis for the reasonableness that Rule 37(e) requires.
This article is provided for general informational purposes only and does not constitute legal advice. Engagement of Daniel Garrie as a neutral is administered exclusively through JAMS.