Ninth Circuit Ruling Puts Inherent Authority and Rule 37(e) Further Into Focus
In the evolving landscape of ediscovery, the preservation of ESI and the sanctions for its spoliation remain pivotal. Rule 37(e) of the Federal Rules of Civil Procedure sets clear parameters for addressing the loss of ESI, but there are still questions about when courts may rely on their inherent authority instead.
Rule 37(e) was added to the Federal Rules of Civil Procedure in 2015 with the hopes of bringing clarity to what had been seen as a disparate and unpredictable regime for spoliation sanctions. However, even before the rule was fully established, some courts began asserting their inherent authority to impose sanctions for misconduct that led to the destruction of electronic evidence.
In his CAT3 decision, U.S. Magistrate Judge James C. Francis asserted that courts’ inherent authority to bring spoliation sanctions survived the 2015 amendments to Rule 37(e), contrary to the Advisory Committee's indications.
The Ninth Circuit Court of Appeals recently weighed in on this critical issue in Gregory v. State, No. 22-35674 (9th Cir. Sept. 27, 2024), addressing the boundaries between Rule 37(e) and a court’s inherent authority to sanction. This decision was issued September 26th, 2024, and came to our attention via recent pieces from Ediscovery Today and Law.com.
This ruling serves as a key moment for understanding how inherent authority interacts with the procedural rules governing ediscovery.
The Ruling
The case began when Daniel Gregory was arrested by officers from the Montana Probations and Parole Office for parole violations. An altercation took place in the parking lot of the office between Daniel Gregory’s mother, Carrie Gregory, and Probation Officer Tomeka Williams, who allegedly used excessive force during the altercation, causing her to suffer from a fractured elbow and sprained wrist.
The encounter between Gregory and Officer Williams was recorded by an external surveillance camera that was operated by the probation office, and monitored the parking lot.
Gregory filed a claim for civil rights violations under 42 U.S.C. §1983. Although the footage only had to be retained for 17 days, the attorney for Gregory contacted the State of Montana multiple times soon after the incident occurred to ensure the footage was preserved. The footage was ultimately recorded on a cell phone, and deleted from the system.
After the cell phone recording was deemed too poor quality to use, Gregory’s counsel filed a motion for sanctions against the State for the loss of the recording. However, instead of asking the court to grant a default judgement under Rule 37, Gregory’s attorney asked the court to do so pursuant to the court’s inherent authority.
“The trial court correctly stated in its Amended Order Regarding Sanctions that 'a district court possesses inherent powers to control litigation, including the levying of sanctions for the spoliation of evidence.' [1-ER-175 (citing Leon v. IDX Sys. Corp., 464 F.3d at . 958)]” the appeal read. “Relying on Glover v. BIC Corp., 6 F.3d 1318, 1329 (9th Cir. 1993), the trial court correctly determined that a 'court may levy sanctions when a party knew, or should have known, that the spoliated evidence could prove relevant to a claim.' [1-ER-175–176]. In addition, the imposition of sanctions requires no showing of bad faith by the offending party. [1-ER-176].”
The court rejected the request to enter a default judgement, but also imposed sanctions on the State. The court invoked its inherent authority, and instructed the jury “that it was established that ‘Officer Tomeka Williams used unreasonable force in the seizure of Carrie Gregory,’” according to the decision. It would also block testimony related to the lost parking lot footage.
Once the trial began, witnesses were unable to stay within the court’s testimony guidelines, Gregory’s counsel was granted the right to play the cell phone video of the incident for the jury, despite the State of Montana’s objections. Prior to viewing the video, the court instructed the jury that, because the State had failed to preserve the video, the jury was permitted, but not required, to infer “that the lost surveillance [footage] would have been favorable to [Gregory].”
The court’s subsequent jury instructions told the jury that “it has been established as a matter of law that [the State] used excessive force against [Gregory]…”, and the jury awarded $75,000 in damages for the excessive-force claim.
Appeal to the Ninth Circuit
The State appealed the decision to the Ninth Circuit, arguing that “Rule 37(e) exclusively governs the availability of the sort of sanctions that were imposed for the loss of evidence that occurred here and that, as a result, the district court erred by relying on its inherent authority.”
The Ninth Circuit acknowledged the debate surrounding Rule 37(e) and the role of inherent authority in its decision, stating “well before the promulgation of the Federal Rules of Civil Procedure in 1937, the Supreme Court had recognized that federal courts have inherent authority to ‘impose ... submission to their lawful mandates,’” and that “this inherent authority often remains available as an alternative source of sanctioning power even when there are statutes or rules that also provide for sanctions.”
The Ninth Circuit Ruling
In this case, the court found that the sanctions from the district court “fall within the scope of paragraph (2) of Rule 37(e). The district court's order instructing the jury to take as established that [the State] had used excessive force in violation of the Fourth Amendment was simply a more severe form of the sort of presumptions covered by Rule 37(e)(2).”
The Ninth Circuit concluded that the district court erred in using its inherent authority to rule on the case, and that the issue at hand was sufficiently covered under Rule 37(e).
Their decision stated that “the district court committed legal error by relying on its inherent authority in imposing the sanctions that it did rather than applying the provisions of Rule 37(e). We further conclude that, in light of the district court's factual findings, which are not clearly erroneous, the requirements for imposing such sanctions under Rule 37 were not met. And because the sanctions imposed were obviously prejudicial to [the State], we reverse the adverse judgment against her on the § 1983 excessive-force claim and remand for a new trial on that claim.”
The Debate Over Inherent Authority
The Ninth Circuit’s ruling is important because it directly addresses the perennial question of inherent authority, and makes clear that courts should defer to the explicit requirements of Rule 37(e) when possible.
By finding that Rule 37(e) precludes a court from relying on its inherent authority, this decision highlights the need for legal professionals to understand the limits of the court’s boundaries in this area when seeking or defending against sanctions.
While this issue may continue to arise, it’s becoming increasingly true that inherent authority does not hold the position it once did.
