Rule 37(e) of the Federal Rules of Civil Procedure supplies the framework federal courts use when electronically stored information (ESI) that should have been preserved is lost. The rule is deliberately tiered: it separates measures designed to cure prejudice from the most severe sanctions, which are reserved for cases involving an intent to deprive. This article summarizes the operative text of Rule 37(e) and the threshold findings a court must make before imposing sanctions, so that litigators and neutrals can approach preservation disputes with precision.
The Threshold Requirements Before Any Sanction
Rule 37(e) does not apply to every instance of lost data. Its opening clause imposes several predicate conditions that must all be satisfied before a court reaches the question of remedy. The information at issue must be electronically stored information that "should have been preserved in the anticipation or conduct of litigation," and it must have been "lost because a party failed to take reasonable steps to preserve it."
Even where a party failed to take reasonable steps, the rule applies only if the lost information "cannot be restored or replaced through additional discovery." If the data can be recovered or reconstructed from other sources, the predicate for sanctions is absent. These threshold findings frame every Rule 37(e) analysis and should be the first focus of any meet-and-confer or motion practice.
Curative Measures Under Rule 37(e)(1)
When the threshold conditions are met, the first tier of the rule is calibrated to actual harm. Under Rule 37(e)(1), the court may act only "upon finding prejudice to another party from loss of the information," and it may then "order measures no greater than necessary to cure the prejudice."
This standard is proportional by design. It ties the available relief to the degree of demonstrated prejudice rather than to the culpability of the party who lost the data. A neutral or court applying subsection (1) should focus on what remedy is sufficient to restore the requesting party to the position it would have occupied, without exceeding that measure.
Severe Sanctions Under Rule 37(e)(2) and the Intent Requirement
The most serious sanctions are confined to a separate track. Under Rule 37(e)(2), the court may impose them "only upon finding that the party acted with the intent to deprive another party of the information's use in the litigation." A finding of prejudice alone is not enough for these measures; intent is the gatekeeping element.
When that intent is found, the court may "presume that the lost information was unfavorable to the party," may "instruct the jury that it may or must presume the information was unfavorable to the party," or may "dismiss the action or enter a default judgment." Because these are the gravest sanctions available, the intent finding under subsection (2) is the decisive issue whenever an adverse-inference instruction, dismissal, or default is sought.
Practical Implications for Preservation Disputes
The structure of Rule 37(e) rewards early, documented attention to preservation. Because sanctions turn on whether a party "failed to take reasonable steps to preserve" ESI, contemporaneous evidence of preservation efforts—litigation holds, scope decisions, and vendor coordination—directly bears on the reasonableness inquiry.
The rule also channels disputes toward proportional resolution. Where information can be "restored or replaced through additional discovery," the more productive path is often supplemental discovery rather than sanctions litigation. Reserving the severe measures of Rule 37(e)(2) for cases of demonstrated intent keeps the focus, in the ordinary case, on curing prejudice with "measures no greater than necessary."
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.