1 The Duty to Preserve Evidence

• Library: Spoliation of Evidence: Sanctions & Remedies for Destruction of Evidence in Civil Litigation (ABA) (2013 Ed.)

Aside perhaps from perjury, no act serves to threaten the integrity of the judicial process more than the spoliation of evidence. Our adversarial process is designed to tolerate human failings—erring judges can be reversed, uncooperative counsel can be shepherded, and recalcitrant witnesses compelled to testfy. But, when critical documents go missing, judges and litigants alike descend into a world of ad hocery and half measures—and our civil justice system suffers.¹

Gathering factual information is at the "core of our civil discovery system."² Consequently, there are rules regarding how information is to be preserved and produced in civil disputes. Courts first consider whether a duty to preserve evidence exists. To assess whether a duty exists, courts may consider: the conduct, event or information that may trigger a preservation obligation, to whom the preservation duty may extend, and the scope of the preservation obligation.

Answering these questions is critical to parties and their counsel in making timely decisions to safeguard data, documents, and tangible evidence when litigation is filed, threatened, or is reasonably anticipated. Likewise, attorneys bringing or defending claims in litigation must appropriately supervise the preservation of evidence because the potential exposure to sanctions or tort claims for the loss of relevant data, documents or physical evidence can be substantial.

The duty to preserve documents, electronically stored information, or tangible evidence based on the existence of pending, threatened, or reasonably foreseeable litigation arises under the common law. It also can arise from a number of other sources, including a contract, a voluntarily assumed duty, a statute or regulation, an ethical code, or another special circumstance.³ Yet, the duty to preserve is not explicitly defined in the Federal Rules of Civil Procedure or in most state rules of civil practice.⁴

APPLICABLE LAW

To determine whether and when a duty to preserve exists, a party must determine what law applies to spoliation issues that arise during pending litigation or in the context of an independent tort claim for spoliation. The forum in which spoliation occurs may have a substantial impact on the remedies available to the non-spoliating party since the duty to preserve arises from independent sources of law and depends on the substantive law in a particular jurisdiction.⁵ State and federal courts disagree on the substantive law of spoliation and in some instances on which law applies.

State courts apply the substantive and procedural law of their state to spoliation that occurs in litigation pending within that state. Federal courts sitting in diversity must first consider whether spoliation that occurs during pending litigation is a substantive matter, to be governed by state law, or a procedural matter, subject to federal law.⁶ A court analyzing the issue initially must determine whether the result would differ under federal or state law.⁷ If the result would be the same, there is only a "false conflict" and the choice of law analysis ends. If the result would differ, the court must then determine which law applies.⁸

Federal courts have split regarding whether state or federal law governs sanctions for spoliation in a diversity suit.⁹ But the majority of circuits have held that federal law applies.¹⁰ These courts note that the authority to impose sanctions for destruction of evidence arises not from substantive law, but rather "from a court's inherent power to control the judicial process."¹¹ They also consider a spoliation ruling evidentiary in nature, to which federal courts generally apply federal evidentiary rules in both federal question and diversity matters.¹²

The question of whether a duty to preserve evidence exists is a question of law for the court, but courts reviewing decisions sanctioning spoliation have applied several standards of review to the question of sanctions for failure to preserve evidence.¹³ For instance, the Federal Circuit explained in Hynix Semiconductor Inc. v. Rambus Inc., that it reviewed "the district court's spoliation decision under the law of the regional circuit as follows: de novo for the legal standard, clear error for the underlying facts, and abuse of discretion for the propriety of the remedy."¹⁴

There are a handful of states that recognize an independent tort claim for spoliation of evidence, which allows a plaintiff who can establish the requisite elements of this tort to recover money dam-ages.¹⁵ Most states, however, do not recognize either the tort of intentional or negligent spoliation. Therefore, if spoliation occurs in these states, the non-spoliating party's remedies are limited to non-tort remedies, including civil or evidentiary sanctions.

Even then, disagreement exists about the proper analysis for spoliation tort claims and for sanctioning spoliation in ongoing litigation.¹⁶ Not only does this absence of consensus create questions regarding the scope of preservation obligations, it can contribute to the cost of litigation.¹⁷

No federal court has recognized an independent tort claim for spoliation under federal law.¹⁸ At least two federal courts have rejected an attempt to assert a federal independent tort claim of spoliation based on a federal regulation requiring retention of records.¹⁹ For example, in Lombard v. MCI Telecommunications Corporation,²⁰ an Ohio district court held failure to comply with 19 C.F.R. § 1601.14, a provision that requires an employer to retain records relevant to a charge of employment discrimination, was not "actionable per se" because the regulation does not provide the employee with the right to sue for damages. Rather, the court followed other decisions that establish the proper remedy for such a violation is imposition of a sanction, in these cases a rebuttable presumption "that the destroyed document would have bolstered [the plaintiff's] case."²¹

When available tort claims for spoliation are brought in federal court, they will be analyzed under applicable state law.²² Thus, it is essential that counsel facing a spoliation issue become familiar with the law governing spoliation in the applicable forum.

TRIGGERING THE DUTY TO PRESERVE EVIDENCE

There is no general duty to preserve evidence before litigation is filed, threatened, or reasonably foreseeable, unless the duty is voluntarily assumed or imposed by a statute, regulation, contract, or another special circumstance.²³ Absent notice of a governmental investigation, probable or pending litigation, or another source of a duty to preserve evidence, a company or individual generally has the right to dispose of its own property, including documents, electronically stored information, or tangible things, without liability.²⁴

Sometimes a party will receive its first notice that particular documents or things are relevant upon receipt of a complaint or document requests from an opposing party.²⁵ To effectively trigger an obligation to preserve, the complaint must allege facts describing the conduct that affords notice to the party in possession of evidence.²⁶ Of course, parties to litigation should promptly request relevant records and documents from the opposing party so that unexplained laxness does not undercut a claim of harm from a later failure to produce. In cases where "a party has had an opportunity to pursue discovery but has not aggressively done so, the courts have gone so far as to hold that the subsequent improper destruction of relevant evidence by the other side should not trigger any spoliation sanctions."²⁷

On the other hand, the duty to preserve potentially relevant evidence may arise before the commencement of a lawsuit if it is reasonably foreseeable that a lawsuit will be filed.²⁸ It matters not whether "an organization is the initiator or the target of litigation,"²⁹ the common law duty to preserve evidence arises at "the moment that litigation is reasonably anticipated."³⁰ The situation can arise, for example, if an individual or an organization plans to initiate litigation, a potential defendant receives a demand letter, a company learns that a former employee is seriously contemplating a lawsuit, or if an event or other circumstance would reasonably put an organization or an individual on notice that a lawsuit is likely to be filed.³¹

For example, in Ferrel v. Connetti Trailer Sales, Inc.,³² plaintiffs failed to bring a motor home to a service center for inspection and necessary repairs, as requested by the dealer. The dealer had offered to pick up the motor home, transport it to another state for inspection and return it to plaintiffs at no charge, but the plaintiffs refused. On at least four or five occasions the manufacturer had requested an opportunity to inspect and repair the vehicle while plaintiffs still owned it, but each time they refused the inspection requests.

The Ferrel court criticized plaintiffs for surrendering the vehicle to creditors when they were planning a lawsuit regarding the defective repairs and had threatened to file a lawsuit several times. The manufacturer and dealer pointed to Rhode Island law that gave them the right to inspect or test goods, a right that plaintiffs violated when by rebuffing their requests to inspect the vehicle. The court noted that plaintiffs were aware of the potential relevance of the motor home, yet refused to allow the manufacturer or the dealer to inspect it. As a result, the court precluded all evidence of defective repairs.

On appeal, the Rhode Island Supreme Court reversed, finding that the trial court had gone too far in precluding all evidence of the defective repairs. Instead, the court remanded the case for a new trial allowing plaintiffs to introduce evidence of defective repairs and permitting defendants to rebut this evidence "as best they can." The Rhode Island high court also instructed the trial court that because plaintiffs' conduct caused the motor home to be unavailable for...