Spoliation in a digital world: proposing a new standard of culpability in Massachusetts for an adverse inference instruction.

Author:Farrell, Ben
  1. INTRODUCTION

    Since the advent of the computer, electronic discovery has been an integral part of litigation. (1) Only recently have the Federal Rules of Civil Procedure incorporated the use of "electronically stored information" ("ESI"). (2) The courts, however, have addressed electronic discovery issues for many years, with the first comprehensive discussion in 2003. (3) The amendments to the Federal Rules of Civil Procedure (the "Rules") were a response to the comprehensive discussions of the issue in both the court cases and the guidelines developed by professional conferences. (4) Accordingly, the issues surrounding the growth of electronic discovery are continuously developing in the courts and are a source of increasing controversy. (5)

    An important discovery issue that is not exclusive to electronic discovery is spoliation of evidence and the appropriate sanctions that should be applied to spoliating parties. (6) Spoliation is defined as "the destruction, significant alteration, or non-preservation of evidence relevant to pending or reasonably foreseeable litigation." (7) The most used and controversial sanction for the spoliation of evidence is an adverse inference instruction to the jury, also known as a spoliation inference. (8) Throughout the country, the circuit courts and federal district courts remain split as to what level of culpability is required for a spoliation inference--mere negligence or bad faith. (9)

    Part II of this Note will discuss the history and development of electronically stored information and digital databases, and its relation to the practice of litigation. (10) Part III will examine the circuit split regarding the requisite level of culpability for a spoliation inference, and will further analyze the state of the law in Massachusetts. (11) Finally, Part IV will propose a new standard of negligence for a spoliation inference in Massachusetts courts. (12)

    DISCOVERABILITY OF ELECTRONIC INFORMATION AND DIGITAL DATABASES

    Courts have been forced to address electronic discovery issues since corporations and individuals began storing information on computers. (13) While the courts treat electronically stored information no differently than paper documents in terms of its discoverability, electronic discovery presents many issues that are fundamentally different than those associated with traditional discovery. (14)

    1. A Brief Overview of Digital Databases

      In today's increasingly electronic world, more than ninety percent of all business records are digital, and oftentimes are never committed to paper. (15) Almost all of those records are stored on digital databases, which are organized to facilitate the rapid search and retrieval of data. (16) These databases contain not only the business documents traditionally kept by companies, such as spreadsheets and reports, but also other forms of communication--most importantly, e-mails. (17) There are five traditional categories of data: (1)active, online data; (2) near-line data; (3) offline storage/archives; (4) backup tapes; and (5) erased, fragmented or damaged data. (18) With such an enormous amount of data stored in these databases every day, companies must implement comprehensive retention policies so as not to run afoul of any legal obligation to retain documents. (19) Without such a policy, important electronic records could be in danger of being recycled or destroyed, leaving the company legally liable. (20)

    2. The Response to Electronic Discovery--2006 Amendments to the Federal Rules of Civil Procedure and the Zubulake Decisions

      Despite the existence of ESI for many years, the Federal Rules of Civil Procedure have been slow to adapt to technological advancements. (21) The Rules have only been amended twice to reflect the development of electronic discovery, first in 1970 and, most recently in 2006. (22) In 1970, the term "data compilations" was added to the list of discoverable items. (23) In 2006, that term was replaced with the current wording, "electronically stored information." (24) The amendments to the Rules in 2006 also laid out procedures to follow during discovery regarding ESI. (25)

      Zubulake v. UBS Warburg, (26) a series of five decisions by Judge Shiendeli, is the seminal case about discovery of electronically stored information. (27) This case concerned the discoverability of certain e-mails that were stored on UBS employees' computers or stored on back-up tapes in a gender discrimination suit. (28) In Zubulake I, UBS contended that producing the e-mails would be cost-prohibitive, and therefore not subject to discovery. (29) Judge Scheindlin first discussed the types of data that a back-up system contains, dividing them into five categories: (1) active, online data; (2) near-line data; (3) offline, storage/archives; (4) back-up tapes; and (5) erased, fragmented or damaged data. (30) The first three categories are considered "available" data, while the last two are considered "unavailable" data. (31) The court ruled that available data is automatically discoverable, and developed a seven-part test to determine whether certain unavailable data is discoverable. (32)

      Zubulake III centered around the issue of who should pay for the restoration and production of electronic information stored on back-up tapes. (33) In Zubulake I, instead of making UBS produce all of the back-up tapes of emails, the court ordered the plaintiff to take a sample number of back-up tapes to determine whether the restoration would produce relevant evidence, and who should bear the cost of restoration for the rest of the tapes using the seven part test outlined in that decision. (34) After the sample e-mails were analyzed, the court in Zubulake III then allocated the cost of producing the remaining e-mails using the seven part test. (35) Zubulake IV and V, however, discussed what happens when those e-mails are not produced either by intentional destruction or as part of normal maintenance of files, known as spoliation. (36)

  2. SPOLIATION OF ELECTRONIC EVIDENCE

    Despite the vast amount of information stored in electronic databases, a company still has a duty to preserve any and all electronic evidence when that company either knows or should know that the evidence may be relevant to future litigation. (37) Once a future litigant is on notice that the evidence could be relevant, it is her duty to put a "litigation hold" on all of the relevant documents and preserve them. (38) This does not necessarily mean that these "held" documents must be produced, but only that they must be preserved during discovery. (39) When documents are not preserved, either by intentional destruction or through routine maintenance, the result is spoliation. (40)

    1. Spoliation and Remedies Available to the Non-Spoliating Party

      Spoliation is defined as "the destruction or significant alteration of evidence, or the failure to preserve property for another's use as evidence in pending or reasonably foreseeable litigation." (41) The elements of spoliation include an act of destruction, the intent of the party to destroy the evidence, the destruction of the evidence after the party was on notice to preserve it, and the relevance of the evidence destroyed. (42) Once these elements are satisfied, it is within the court's discretion to choose the appropriate remedy for the non-spoliating party. (43) Each jurisdiction applies its own unique method of determining the appropriate remedy, considering fairness to the parties and the seriousness of harm to the innocent party. (44) These remedies run the gamut from an adverse judgment against the spoliating party, to an adverse inference instruction, to a mere shifting of the burden of cost of discovery, and to other sanctions. (45) Some jurisdictions have chosen to develop criminal penalties for particularly serious instances of spoliation and a separate cause of action for the tort of spoliation. (46) The choice of remedy is often determined by the culpability of the spoliator--the more culpable the spoliator, the harsher the penalty. (47)

    2. Circuit Split Regarding Level of Culpability for Adverse Inference

      One of the most common and devastating remedies for spoliation is an adverse inference instruction. (48) This is a judicial instruction informing the jury that a piece of evidence was destroyed, and, as a result, the jury is allowed to infer that the evidence would have been adverse to the spoliating party. (49) Often, when an adverse inference instruction is given, litigation ceases because it is very difficult to recover from such an instruction. (50) In recent years, a circuit split has developed as to the level of culpability required by the spoliating party to warrant an adverse inference instruction. (51)

      In 2002, the Second Circuit decided the case of Residential Funding Corp. v. DeGeorge Financial Corp. (52) This was a breach of contract case in which the defendant, DeGeorge Financial Corp. ("DeGeorge"), sought an adverse inference instruction from the district court because the plaintiff, Residential Funding Corp. ("RFC"), failed to produce relevant emails in a timely manner. (53) The district court denied the motion because the delay in producing the emails was not the result of bad faith or gross negligence on the part of RFC. (54) The Second Circuit reversed, holding that mere negligence is sufficient for discovery sanctions, including an adverse inference instruction. (55) In subsequent cases, many district courts followed the Second Circuit in ruling that negligence is sufficient for an adverse inference instruction. (56)

      The Eighth Circuit, in Greyhound Lines, Inc. v. Wade, (57) disagreed with the Second Circuit's decision, and found that more than negligence was needed for an adverse inference instruction. (58) Greyhound Lines involved a negligence claim against a truck driver after an accident with a bus. (59) The bus in question had an electronic control module ("ECM") that stored information such as...

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