4-3 EVIDENCE PRESERVATION

• Jurisdiction: United States

4-3 Evidence Preservation

In Texas, the duty to preserve evidence begins once a party knows, or reasonably should know, of "a substantial chance that a claim will be filed and that evidence in its possession or control will be material and relevant to that claim."⁶ A "substantial chance" of litigation occurs where there is "more than merely an abstract possibility or unwarranted fear" of filing.⁷ Courts have emphasized that the duty to preserve evidence serves to protect the overall integrity of the judicial process.⁸

At the very least, upon receipt of a cease-and-desist letter (or other knowledge of a potential claim), a defendant should preserve potentially relevant evidence in anticipation of litigation. At the same time, the potential defendant should not do anything that might be construed as a "use" of the file; for instance, it is wise to avoid accessing those files or inserting a thumb drive with relevant evidence into a computer.

Of course, in addition to helping prosecute or defend ongoing trade secret claims, preserving relevant evidence also helps avoid discovery sanctions, including potentially harsh sanctions for evidence spoliation. Texas courts "enjoy wide latitude in remedying acts of discovery abuse, including evidence spoliation."⁹ Such sanctions can include a variety of harsh penalties, such as the potential for a default judgment.¹⁰

Obviously, the best practice is to ensure that your client preserves all relevant evidence as soon as he or she receives notice of a potential claim. But because such practices are not always followed by clients, and because questions of evidence spoliation arise fairly often in trade secret cases, below is a brief overview of the type of analysis in which courts engage when reviewing allegations of evidence spoliation.

For many years, the Texas Supreme Court had failed to craft a "complete analytical framework for determining whether an act of spoliation has occurred."¹¹ The Court remedied this problem in 2014 and established that "a spoliation analysis involves a two-step judicial process: (1) the trial court must determine, as a question of law, whether a party spoliated evidence, and (2) if spoliation occurred, the court must assess an appropriate remedy."¹² According to the Supreme Court, "[t]o conclude that a party spoliated evidence, the court must find that (1) the spoliating party had a duty to reasonably preserve evidence, and (2) the party intentionally or negligently breached that duty by failing to do so."¹³

Although a wide range of remedies is available for spoliation, to obtain a spoliation jury instruction as a remedy, the plaintiff must demonstrate that the defendant acted with specific intent. As the Texas Supreme Court explained, "[t]he harsh remedy of a spoliation instruction is warranted only when the trial court finds that the spoliating party acted with the specific intent of concealing discoverable evidence and that a less severe remedy would be insufficient to reduce the prejudice caused by the spoliation."¹⁴ When constructing a remedy for spoliation, a judge may adopt any remedy from the "wide array of remedies available to a trial court in...