Article by Gregory P. Joseph, Gregory P. Joseph Law Offices LLC, May 15, 2007:

I.  Electronic Spoliation

A.  Negligence Standard: Residential Funding & Sequelae

The lasting legal legacy of the current era of electronic discovery likely will lie in the area of spoliation and sanctions. Lawyers know how to review, shepherd and maintain paper. Electronic data are another matter. Mere negligence in preserving or promptly producing electronic information is sanctionable, and even hiring and heeding electronic data experts is no guarantee that sanctions will be avoided.

That is the teaching of the Second Circuit’s decision in Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99 (2d Cir. 2002). Residential Funding holds that negligent delay — not destruction, merely delay — in producing electronic data is sanctionable, and that, on the facts, the non-producing party’s reliance on an outside expert firm (hired to retrieve the data that was sought) was not necessarily a defense to sanctions. A notable aspect of this decision lies in the evident need the Court felt to set strict parameters to govern behavior in this area. It applied a negligence standard without even addressing a key Federal Rule of Civil Procedure that had been triggered and would have contemplated the imposition of sanctions for negligence. The Court relied instead on a power that requires a showing of bad faith — yet, under the Court’s holding, bad faith need not be shown….

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