Thursday, June 11, 2009

2009-06-11 Spoliation Determinations, Sanctions, Meet and Confer Requirements

Four spoliation decisions this week. The first, from the U.S. District Court for the District of Colorado, involves the Tenth Circuit’s approach to spoliation sanctions determination (application and type) but check the number of out-of-circuit citations relied upon by the Court. The second decision, from the Ninth Circuit, examines spoliation sanctions imposition under California law. The third decision finds the federal court for the District of Connecticut determining whether Oregon common law allows causes of action alleging intentional or negligent spoliation. The fourth case, again from the U.S. District Court for the District of Connecticut finds the Court imposing severe evidentiary sanctions, and hints at the effects of a spoliation finding on summary judgment determinations. Last but certainly not least, the Ford Motor Company decision finds the U.S. District Court for the District of New Jersey which painstakingly (with emphasis on “pain”) examining the consequences for failing (or refusing) to meet and confer to resolve issues concerning form and format of production, search and collection. Want to know how easy it can be to waive rights to Burger King (“have it your way”) discovery? Read the Ford Motor Company decision.



Asher Associates, LLC v. Baker Hughes Oilfield Operations, Inc., 2009 WL 1328483 (D. Colo. 2009)
Kearney v. Foley & Lardner, LLP, --- F.3d ----, 2009 WL 1297656 (9th Cir. 2009)
In re Helicopter Crash Near Wendle Creek, British Columbia, On August 8, 2002, 2009 WL 1391422 (D. Conn. 2009)
Ford Motor Company, et al., v. Edgewood Properties, Inc., ---F. Supp. 2d ---, 2009 WL 1416223 (D. N.J. 2009)
Innis Arden Golf Club v. Pitney Bowes, Inc., --- F.Supp.2d ----, 2009 WL 1416169 (D. Conn. 2009)

Case: Asher Associates, LLC v. Baker Hughes Oilfield Operations, Inc.

Citation: 2009 WL 1391422 (D. Colo. 2009)
Date: 2009-05-12T
opics: Preclusion of testimony for spoliation, Tenth Circuit spoliation analysis - determination of occurrence and determination of sanctions type, failure to request preservation does not excuse duty to preserve or failure to preserve

This decision from the U.S. Court for the District of Colorado involves spoliation of a physical object, rather than electronically stored information (ESI) but U.S. Magistrate Judge Shaffer’s analysis both invokes Zubulake IV, much Second Circuit decisional authority and a good analysis of 10th Circuit sanctions litigation (determination of spoliation as well as type of sanction warranted).

Preventing Discovery from Becoming a Futile Exercise, Reasonable Foreseeability, and Imminence

The Court starts out with an interesting articulation of Zubulake IV, and continues with an approving reference to the Second Circuit’s “reasonably foreseeable” (negligence) spoliation standard in West v Goodyear (both cited below within excerpts).

“To ensure that the discovery permitted by Rule 26(b)(1) does not become a futile exercise, putative litigants have a duty to preserve documents or materials that may be relevant to potential future litigation. See Zubulake v. UBS Warburg, LLC, 220 F.R.D. 212, 216 (S.D.N.Y.2003) (“the obligation to preserve evidence arises when the party has notice that the evidence is relevant to litigation or when a party should have known that the evidence may be relevant to future litigation”).” Asher Associates, LLC v. Baker Hughes Oilfield Operations, Inc., 2009 WL 1328483, 5 (D. Colo. 2009)

While the Court does pay homage to the Zubulake/West line of cases, it is important to understand that the Tenth Circuit qualifies (or limits) the temporal range for what is foreseeable to that of “imminence,” and the Court so states in this decision. Other courts (most notably those in the Second and Ninth Circuits) view the temporal range as fact-determinative, and do not impose an “impending” condition on the issue of foreseeability:

“Spoliation” has been 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.” See, e.g., West v. Goodyear Tire & Rubber Co., 167 F.3d 776, 779 (2d Cir.1999). See also United States v. Koch Industries, Inc., 197 F.R.D. 463, 482 (N.D.Okl.1998) (acknowledging a litigant's duty “to preserve evidence that it knows or should know is relevant to imminent or ongoing litigation”). Id.

Court’s Inherent Power to Impose Sanctions for Destruction of Evidence

Here, the Court undertakes an analysis of its inherent powers to impose sanctions for spoliation in pursuant to both Tenth Circuit decisional authority as well as the Fed. R. Civ. P. Rule 37(b)(2), qualified, however, but the Tenth Circuit’s requirement that foreseeability of litigation must be near in time to the onset of litigation itself:

“The court has inherent power to impose sanctions for the destruction or loss of evidence. See, e.g., Millsap v. McDonnell Douglas Corp., 162 F.Supp.2d 1262, 1309 (N.D.Okla.2001). See also Procter & Gamble Co. v. Haugen, 179 F.R.D. 622, 631 (D.Utah 1998) (recognizing a court's inherent power and authority under Fed.R.Civ.P. 37(b)(2) to sanction a litigant “who is on notice that documents and information in its possession are relevant to litigation, or potential litigation, or are reasonably calculated to lead to the discovery of admissible evidence, and destroys such documents and information”), judgment aff'd in part and rev'd in part on other grounds, 222 F.3d 1262 (10th Cir.2000).” Id.

The imminence qualifier:

“A spoliation sanction is proper where (1) a party has a duty to preserve evidence because it knew, or should have known, that litigation was imminent, and (2) the adverse party was prejudiced by the destruction of the evidence.” Burlington Northern and Santa Fe Railway Co. v. Grant,, 505 F.3d 1013, 1032 (10th Cir.2007), citing 103 Investors I, L.P. v. Square D. Co., 470 F.3d 985, 989 (10th Cir.2006).” Id.

Fashioning and Appropriate Sanction for Spoliation

The Court then continues with its spoliation analysis and discusses the factors it is required to consider in exercising its discretion to fashion an appropriate sanction…” In the many decisions digested here, it appears that the distinction between a court’s determination that spoliation has occurred and its determination of the type of sanction to impose is sometimes blurry, in large part because much of the same analysis for determining whether spoliation has occurred is used to determine the severity of the sanction once a spoliation has been found. This decision is no exception. That sad, what the Court appears to be determining at this stage is not whether a sanction should be imposed, but what manner of sanction it may “fashion.”

Here, the Court begins with the requirements of culpability and relevance, and relies upon a three step analysis approach utilized by…the Ninth Circuit. Note again, that while the Court’s language is couched in the language of “fashioning” an appropriate sanction, the failure to establish elements such as relevance or culpability result in a hard stop finding of no spoliation:

In exercising its discretion to fashion an appropriate sanction, the court must consider the culpability of the responsible party and whether the evidence was relevant to prove an issue at trial. See Estate of Trentadue ex rel. Aguilar v. United States, 397 F.3d 840, 862-63 (10th Cir.2005) (citing Aramburu v. Boeing Co., 112 F.3d 1398, 1407 (10th Cir.1997)). To that end, this court will apply a three-step analysis. First, the court must determine whether the missing second ESP would be relevant to an issue at trial. See United States v. $40,955.00 in United States Currency, 554 F.3d 752, 758 (9th Cir.2009) (“A party does not engage in spoliation when, without notice of the evidence's potential relevance, it destroys the evidence according to its policy or in the normal course of its business.”). If that question is answered in the negative, the court's analysis stops there. If the missing evidence would be relevant, the court must then decide whether Centrilift was under an obligation to preserve the second ESP. Finally, if such a duty existed, the court must consider what sanction, if any, is appropriate given the non-moving party's degree of culpability, the degree of any prejudice to the moving party, and the purposes to be served by exercising the court's power to sanction.” Id.

Author’s Note: In the opinion cited above The Ninth Circuit employs some curious language that appears to expand the coverage of the safe harbor provisions of Fed. R. Civ. P. Rule 37(e). Rule 37(e) provides:

“Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as the result of the routine, good faith operation of an electronic information system.”

The Ninth Circuit appears to graft the alternative of ESI “in the normal course of its business” in addition to ESI losses “according to policy.” Not sure where this goes, but I’m almost certain we’ll see this cited again in an argument in favor of more expansive safe harbor coverage.

Ok, back to the decision.

Tenth Circuit: Three Step Spoliation Analysis, Three Step Sanctions Type Determination

The Court states that culpability and relevancy are determined according to a three-step analysis. Upon closer examination, if one includes a determination of the degree of culpability, what the Court describes is a six step test, with the third step (determination that sanctions will be imposed) itself comprised of three sub-steps (type of sanction to impose). Clear, eh what? This might be better set forth in a logic-tree (I’ll put that on the back burner for now) but here’s the analysis sequence:

Step 1: Determine if missing evidence is relevant. If missing date is not relevant there can be no spoliation. If relevant, proceed to step two.
Step 2: If relevant, was there a duty to preserve evidence? If not, there can be no spoliation. If a duty to preserve is determined to have existed, however, spoliation occurs and proceed to step three.
Step 3: If spoliation is determined to have occurred, impose sanction based on determination using the following sub-steps:
Step 3a: Degree of culpability
Step 3b: Degree of prejudice to non-spoliating party
Step 3c: Purposes to be served by exercising the court’s power to sanction

Step One: Relevance of the Missing Evidence

The Court begins with a good relevance analysis, in large part relying on Second Circuit authority and the Federal Rules of Evidence. The Court begins with the traditional definition of relevance as set forth in Fed. R. Evid. Rule 401:

“Given the claims asserted in this litigation, the relevance of the second ESP seems self-evident. See Fed.R.Evid. 401 (“ ‘relevant evidence’ means evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence”).” Id., at p. 6Relying on decisional authority from both the Second Circuit and the Southern District of New York, the Court notes that relevant evidence need not be conclusive, and that for spoliation analysis purposes, means that a trier of fact could find that the evidence would support the non-spoliating party’s claim(s) or defense(s):

“See also United States v. Schultz, 333 F.3d 393, 416 (2d Cir.2003) (“evidence need not be conclusive in order to be relevant”); Zubulake v. UBS Warburg LLC, 220 F.R.D. at 220 (destroyed evidence is “relevant” for purposes of a spoliation analysis where a reasonable trier of fact could find that the evidence would support a party's claim or defense). But see In re WRT Energy Securities Litigation, 246 F.R.D. 185, 197 (S.D.N.Y.2007) (“A moving party may obtain modest sanctions by showing only that the lost evidence was pertinent to its claims. However, where more severe sanctions are at issue, the movant must demonstrate that the lost information would have been favorable to it.”).” Id.

Author’s Note: What’ interesting in the excerpt from the In re WRT Energy Securities Litigation Case is the distinction between “pertinent” relevant evidence (deserving of only “modest sanctions”) and “favorable” relevant evidence, which at least in the Second Circuit, could warrant the imposition of more severe sanctions.

After conducting a hearing which involved expert testimony from both plaintiff and defendant, the Court determined that the condition of the physical object now missing was “directly relevant” (and would have been favorable) to the non-spoliating party’s claims.

Duty to Preserve: Foreseeability of Future Litigation must be More than a Possibility

Having determined that the missing evidence was relevant, the Court turns next to the second step, and determines whether the spoliating party in this instance had a duty to preserve evidence. The Court again relies on decisional authority from the Second Circuit and from the Eastern District of New York:

In most cases, the duty to preserve evidence is triggered by the filing of a lawsuit. However, the obligation to preserve evidence may arise even earlier if a party has notice that future litigation is likely. See, e.g., Kronisch v. United States, 150 F.3d 112, 126 (2d Cir.1998) (the obligation to preserve evidence arises when a party should have known that the evidence may be relevant to future litigation); Henkel Corp. v. Polyglass USA, Inc., 194 F.R .D. 454, 456 (E.D.N.Y.2000) (a party's obligation to preserve evidence arises when it has notice of the evidence's relevance to litigation “likely to be commenced”).” Id. at p. 7

Blognote: It is still unclear (to me, at least) how the Court can embrace both “imminence” of litigation and “likel[ihood]” of litigation in the same analysis. Imminent means very near term, and projects a sense of immediacy, while the term “likely” appears more temporally flexible. Of course, if one chose to be flip, one might assert that “imminent” is what the Court says it is…or perhaps because imminence is eminently a factually driven concept.

Here Magistrate Judge Shaffer considered all the information on the record, and determined that a duty to preserve had been triggered prior to the destruction of the evidence based upon an “emphatic letter sent by plaintiff’s counsel, which, referring to an earlier letter, described the former as a ‘failed attempt” to resolve the dispute ‘without litigation.’ Interestingly enough, the Court cites the Hynix v. Rambus decision from the Northern District of California for the proposition that foreseeability means more than a possibility:

“Here, the facts compel a different conclusion. Plaintiff's letter of September 8, 2006, came quickly on the heels of the Warranty Claim letter sent on September 1, 2008. While the earlier letter had not specifically threatened litigation, the September 8 correspondence adopted a decidedly different and emphatic tone. Plaintiff's outside counsel characterized the earlier letter as a “failed” attempt to resolve the dispute “without litigation.” Where Plaintiff's September 1st letter referred to “expenditures” incurred by Asher Associates in connection with Well Test Contracts, outside counsel now indicated that his client had been “significantly damaged,” provided Centrilift with an “interim damage calculation,” and claimed that “damages continue to accrue.” The September 8th letter demanded an “immediate payment” and imposed a five-day deadline for making that payment.FN9 Outside counsel went so far as to identify the specific claims for relief that Asher Associates would assert if it initiated “such legal or other action to enforce its rights.” FN10 Given the tenor of the September 8th letter, Centrilift should have understood that future litigation was reasonably foreseeable and substantially “more than a possibility.” See Hynix Semiconductor Inc. v. Rambus, Inc., 591 F.Supp.2d 1038, 1061 (N.D.Cal.2006).” Id. at p. 8

Blognote: Magistrate Judge Shaffer penned the landmark Colorado federal court preservation duty decision in Cache La Poudre Feeds, LLC v. Land O’ Lakes, Inc., 244 F.R.D. 614 (D. Colo. 2007) but distinguishes the series of communications between counsel in that decision as having been sufficiently “less than adamant” to preclude a finding that a duty to preserve had been triggered. It’s always interesting to have a judge provide an analysis distinguishing current and former decisions:

“Plaintiff cites my decision in Cache La Poudre Feeds, LLC v. Land O'Lakes, Inc., 244 F.R.D. 614, 623 (D.Colo.2007), as support for its assertion that Plaintiff's correspondence in September 2006 was too vague to trigger a duty to preserve evidence. See Defendant's Response in Opposition, at 6. To the contrary, the facts in Cache La Poudre are completely distinguishable. In that case, plaintiff's counsel sent the putative defendant successive letters over a nearly two-year period in which she reiterated her client's desire to explore a negotiated resolution of the parties' dispute. I concluded that the less-than-adamant tone of counsel's letters, coupled with the lengthy passage of time, belied the contention that Cache La Poudre's correspondence had triggered a duty to preserve evidence.” Id., at p. 7

Non-Spoliators’ Failure to Request Preservation No Excuse for Failure to Preserve

The Court then relies on an ESI preservation decision from U.S. Magistrate Judge Grimm from the federal district court of Maryland and finds that the non-spoliating party’s failure to request or demand preservation does not excuse the duty to preserve, or pull back the trigger for that duty:

“The court acknowledges that Plaintiffs' letters of September 1 and 8, 2006, never specifically asked that the ESPs be preserved nor sought an opportunity to conduct their own inspection of the pumps. Those oversights, however, do not excuse Centrilift's failure to preserve relevant evidence. Cf. Thompson v. United States Department of Housing and Urban Development, 219 F.R.D. 93, 100 (D.Md.2003) (holding that a party's failure to request the preservation of documents “does not vitiate the independent obligation of an adverse party to preserve such information”).” Id., at p. 8

Intent (or Culpability) and Failure to Preserve Evidence

The Court begins its determination of intent with a sampling of decisional authority indicating that fault for failing to preserve evidence may fall anywhere within a continuum, ranging from “innocence” on through degrees of negligence and intentionality.

“Common sense suggests that a failure to produce or preserve relevant evidence may involve conduct that falls “along a continuum of fault-ranging from innocence through the degrees of negligence to intentionality.” Residential Funding Corp. v. DeGeorge Financial Corp., 306 F.3d 99, 108 (2d Cir.2002). See also Anderson v. Cryovoc, Inc., 862 F.2d 910, 925 (1st Cir.1988) ( “[n]ondisclosure comes in different shapes and sizes; it may be accidental or inadvertent, or considerably more blameworthy”); Minter v. Prime Equipment Co., 2007 WL 2703093, *3 (E.D.Okla.2007) (recognizing that “spoliation occurs with varying degrees of culpability”).” Id.

Blognote: Ok, this is why spoliation analyses give me migraines. Where in the continuum of “fault” lies the concept of “innocence.” What is an “innocent” fault? Imo, that means “faultless,” which in turn should lie outside any continuum defining fault. Innocence should mean zero fault. But if no fault exists, how can one find a violation of a duty to preserve? My point is that there must be some degree of culpability to support a finding of a violation of a preservation duty. Ordinary negligence provides the “should have known” for the lesser degree of fault, but I fail to see how total innocence can have any degree of fault sufficient to proceed with any spoliation analysis.

Bad Faith and Adverse Inferences

Spoliation decision fans (all three) should be familiar with the non-spoliating party’s assertion-dilemma: How to prove that the evidence that has been destroyed was relevant or would have been favorable to it (or unfavorable to the spoliating party) where the evidence is now missing? \

"A showing of bad faith can help a court make a determination that the missing relevant evidence (note that relevance must first be shown) would have been unfavorable to the spoliating party. In such instances, and only where bad faith, rather than mere negligence is found, a court in the Tenth Circuit is permitted to grant the “dispositive” sanction of an adverse inference instruction to the jury:
“In Aramburu v. Boeing Co., 112 F.3d 1398, 1407 (10th Cir.1997), the Tenth Circuit held that “the bad faith destruction of a document relevant to proof of an issue at trial gives rise to an inference that production of the document would have been unfavorable to the party responsible for its destruction.” In the same decision, the Tenth Circuit further reasoned that no adverse inference should arise where the destruction of a document resulted from mere negligence, because only bad faith would support an “inference of consciousness of a weak case.”
FN11 Id. See also Henning v. Union Pacific Railroad Co., 530 F.3d 1206,1219-20 (10th Cir.2008).” Id.

Footnotes are often quite instructive, and Footnote 11 to this decision is no exception. Rather than defining a term by what it is not, the court in the Goodman case cited in this footnote provides a good description of “bad faith” --- without using the term “faith.”

“FN11. “ ‘Bad faith’ is the antithesis of good faith and has been defined in the cases to be when a thing is done dishonestly and not merely negligently. It is also defined as that which imports a dishonest purpose and implies wrongdoing or some motive of self-interest.” Attorneys Title Guaranty Fund v. Goodman, 179 F.Supp.2d 1268, 1277 (D.Utah 2001).” Id.

Bad Faith Not Required for Imposition of Non-Dispositive Sanctions Such as Evidence Exclusion

In another interesting twist, the Court discusses that a finding of bad faith is not required for a court’s imposition of “non-dispositive” spoliation sanctions, or where either no adverse inference is requested (or is not appropriate). Included in such “non-dispositive” sanctions are evidence exclusions:

"Of course, in cases where an adverse inference instruction is neither requested nor appropriate, the Tenth Circuit has held that a finding of bad faith is not required to impose non-dispositive sanctions, such as excluding evidence. 103 Investors I, L.P. v. Square D Co., 470 F.3d at 988-89. See also Jordan F. Miller Corp. v. Mid-Continental Aircraft Service, Inc., 139 F.3d 912 (Table) (10th Cir.(Okla.1998).” Id.

This leaves the question whether a finding of negligent spoliation can result in the imposition of sanctions of evidence exclusion. We’ll know soon enough. First, though, the Court’s finds that defendant’s spoliation (or failure to preserve evidence) resulted from negligence or carelessness and not bad faith. Moreover, as the Court states in another instructive footnote, differences of opinion do not support a finding of bad faith:

“After carefully reviewing the record presented by the parties, I conclude that Centrilift's failure to preserve the second ESP was the product of negligence or carelessness, but not bad faith. It is undisputed that the second ESP is no longer intact and many of its primary components have been scrapped in whole or in part. There is no evidence, however, that would support a finding that the disposition of those parts was motivated by bad faith or willfulness on the part of Centrilift and its employees. Without question, the parties had diametrically opposed views on why the well tests failed.” Id.
at p. 9

That difference of opinion, without more, does not suffice to establish bad faith.” Id.

Appropriate Sanctions

Plaintiff requested a variety of sanctions, including an order:

1) Granting of an adverse inference instruction to the jury at trial;
2) Prohibiting defendant from calling any witness who would testify that the missing evidence (equipment) was in good working condition;
3) Prohibiting defendant from providing an opinion about the well from which the missing evidence was removed, and
4) Granting attorneys fees and costs

Having found no bad faith on the part of defendant, however, the Court was constrained to deny plaintiff’s request for any dispositive sanctions or adverse inference instruction. (Note here that the Court uses the disjunctive, and appears not to categorize an adverse inference instruction as a “dispositive sanction:”

“In the absence of bad faith, however, the court cannot impose a dispositive sanction or give an adverse inference instruction at trial. Again, I do not find that the factual record supports Plaintiffs' claim of bad faith and, therefore, must deny their motion to the extent that it seeks an adverse instruction.” Id., at p. 10

Prejudice to Non-Spoliating Party and Leveling the Playing Field

The Court begins its prejudice analysis by discussing the remedial functions served by the imposition of sanctions for spoliation. Spoliation fans will note the Court’s reference to two widely cited decisions: Mosaid, from the District of New Jersey and In re WRT Securities Litigation, from the Southern District of New York.

“Spoliation sanctions serve a remedial function by leveling the playing field or restoring the prejudiced party to the position it would have been [in] without spoliation.” Mosaid Technologies Inc. v. Samsung Electronics Co., 348 F.Supp.2d 332, 335 (D.N.J.2004). Cf. Silvestri v. General Motors Corp., 271 F.3d 583, 590 (4th Cir.2001) (spoliation sanctions are intended to “level the evidentiary playing field,” as well as penalize the offending party). In striving to “level the playing field,” there must be some reasonable relationship between the sanction imposed and the prejudice actually suffered by the moving party. See Larson v. Bank One Corp., 2005 WL 4652509, *14 (N.D.Ill.2005). Cf. In re WRT Energy Securities Litigation, 246 F.R.D. at 200 (“in the process of leveling the playing field, care must be taken not to tilt it too far in favor of the party seeking sanctions.”). Id.

Tenth Circuit Factors for Determining Appropriate Sanctions

The Court next turns to Tenth Circuit decisional authority in non-spoliation cases and discusses the five factors to be taken into account by a district court in its selection of an appropriate spoliation sanction:

"In a non-spoliation case, the Tenth Circuit has held that the trial court should weigh several factors in determining an appropriate sanction:

(1) the degree of actual prejudice to the moving party;
(2) the amount of interference with the judicial process;
(3) the culpability of the non-moving party;
(4) whether the court warned the party in advance that a dispositive sanction would be likely for non-compliance, and
(5) the efficacy of lesser sanctions.

See Ehrenhaus v. Reynolds, 965 F.2d 916, 921 (10th Cir.1992). See also Gates Rubber Co. v. Bando Chemical Industries, Ltd., 167 F.R.D. 90, 101 (D.Colo.1996).

In another illuminating footnote, the Court points out that spoliator-culpability, or actual notice (to preserve) from the non-spoliating party are not applicable where only “non-dispositive” sanctions are under consideration:

“FN15. Where a dispositive sanction is not at issue, only the first three factors are applicable. See Markham v. National States Insurance Co., 2004 WL 3019308, * 12 (W.D.Okla.2004).” Id., at p. 10

Result: In pertinent part, the Court ordered the exclusion of any testimony that the missing equipment was in good working condition, and further permitted the plaintiff to inform the jury that defendant had failed to preserve the complete unit:

“Having failed to preserve the second ESP as a complete unit, Centrilift should be precluded from offering at trial an opinion as to the “working condition” of the complete unit. Plaintiffs should also be permitted to tell the jury that Centrilift failed to preserve the second ESP as a complete unit after July 20, 2006.” Id., at p. 11.

Oh, and the Court also granted plaintiff’s request for attorneys fees and costs.

Blognote: This decision is noteworthy, if only for the volume of foreign (i.e., extra-circuit) decisional authority relied upon by the Court in its spoliation analysis, including the First, Second, Fourth and Ninth Circuits decisions in its opinion. Sister district courts include Maryland, Illinois, New York (Eastern and Southern), New Jersey, and California (Northern and Central).

Case: Kearney v. Foley & Lardner, LLP
Citation: --- F.3d ----, 2009 WL 1297656 (9th Cir. 2009)
Date: 2009-05-12
Topics: Tort of spoliation in California includes significant alteration of evidence

This decision is from a (Racketeer Influenced Corrupt Organizations Act) RICO matter appealed to the U.S. Court of Appeals for the Ninth Circuit. Here, a property owner brought suit against a school district’s law firm for allegedly suppressing the results of soil percolation test. The district court dismissed, and the property owner appealed.

Here, the Circuit Court of Appeals discusses the tort of spoliation under California common law:

“Spoliation of evidence is the “destruction or significant alteration of evidence, or the failure to preserve property for another's use as evidence, in pending or future litigation.” Hernandez v. Garcetti, 68 Cal.App.4th 675, 680, 80 Cal.Rptr.2d 443 (1998). Kearney v. Foley & Lardner, LLP, --- F.3d ----, 2009 WL 1297656, 8 (9th Cir. 2009)

An interesting twist on the definition of spoliation is the expansion of the term evidentiary destruction to include “significant alteration.” This has significant implications for ESI discovery, as it may be argued that any manipulation of computer generated information is a significant alteration.

It also appears that, at least in California, the tort cannot be asserted if the non-spoliator could have discovered the evidence during discovery or before the conclusion of the litigation.

Case: In re Helicopter Crash Near Wendle Creek, British Columbia, On August 8, 2002
Citation: 2009 WL 1391422 (D. Conn. 2009)
Date: 2009-05-18
Topics: Conn federal district court review of spoliation as tort under Oregon law; non-futility amendment requirement pursuant Fed. R. Civ. P. Rule 15(a)(2)

In this matter from the U.S. District Court for the District of Connecticut, the Court rules on plaintiff’s motion to amend its complaint to include, inter alia, causes of action alleging negligent and intentional spoliation of evidence. Defendant objected to the amendments alleging destruction of evidence, arguing that Oregon spoliation is not recognized under Oregon law.

What we have here is “the only remaining case before” the Court in a multi-district litigation, originally filed in Oregon, and now in the Connecticut federal district court. Here, in the course of ruling upon plaintiff’s motion for leave to amend its complaint, U.S. District Judge Underhill must first determine whether Oregon law recognizes spoliation as an independent tort. Interestingly, once having decided the spoliation issue, District Judge Underhill indicates that the case will be returned to the federal district court in Oregon, where the case was originally filed.

The Court first notes that motions for leave to amend complaint in a federal court pursuant to Fed. R. Civ. P. Rule 15(a)(2) will not be permitted if the amendment would be futile if totally unsupported by the facts, or if no cognizable cause of action is alleged:

“A motion to amend will not be allowed under Rule 15(a)(2) if it is futile-that is, “if no set of facts can be proved under the amendment to the pleadings that would constitute a valid and sufficient claim or defense.” Miller v. Rykoff-Sexton, Inc., 845 F.2d 209, 214 (9th Cir.1988). If Oregon law does not recognize negligent and intentional spoliation as causes of action, and instead only permits that evidentiary inferences be drawn from spoliation, Croman's objection should be sustained. If Oregon law does recognize those causes of action, or is silent with respect to those causes of action but I predict the Oregon Supreme Court would recognize them, Sikorsky's motion for leave to amend should be granted.” In re Helicopter Crash Near Wendle Creek, British Columbia, On August 8, 2002, 2009 WL 1391422, 1 (D. Conn. 2009)

Accordingly, the Court notes, if no cause of action for spoliation exists under Oregon law, the Court must deny the motion for leave to amend.

Oregon Law on Spoliation is Unsettled

District Judge Underhill begins by pointing the Oregon common law is silent on the existence of either intentional or negligent spoliation.

It appears that spoliation law, although ancient doctrinally, has only recently emerged onto the litigation scene. Lest there be any doubt that these developments illustrate the emergence (or revival) of a spoliation practice, witness the tortuous analysis undertaken by District Judge Underhill in the following excerpt.

First, the Court reminds us that in the absence of appropriate decisional authority, a federal district court sitting in diversity must use its judgment in deciding how the highest court of that state would decide any particular issue.

“The Oregon Supreme Court has not yet considered whether intentional or negligent spoliation claims present cognizable causes of action. In such instances, “[i]n the absence of controlling forum state law, a federal court sitting in diversity must use its own best judgment in predicting how the state's highest court would decide the case.” Takahashi v. Loomis Armored Car Serv., 625 F.2d 314, 316 (9th Cir.1980). “In re Helicopter Crash Near Wendle Creek, British Columbia, On August 8, 2002, 2009 WL 1391422, 1 (D. Conn. 2009)

The Court’s analysis then turns to recent decisional authority from the U.S. District Court of Oregon, and cited by defendant, holding that the Oregon does not recognize the tort of intentional spoliation of evidence by a party:

“Croman argues that, in exercising my “best judgment in predicting how [Oregon]'s highest court would decide the case,” I should be persuaded by the holding in Blincoe v. Western States Chiropractic College, 2007 WL 2071916 (D.Or. July 14, 2007). In Blincoe, Magistrate Judge Papak recommended granting the defendant's motion to dismiss an intentional spoliation claim and concluded that “Oregon law does not recognize the tort of intentional spoliation of evidence by a party.” 2007 WL 2071916, at *7. Judge Papak's analysis considered the law of other states, as well as Oregon's numerous statutory, non-tortious remedies dealing with spoliation of evidence, in reaching that conclusion. Id. at *7-9.FN2” Id.

Unfortunately for defendant, even though the Oregon Supreme Court had not ruled on the existence of either flavor or spoliation-as-tort, the Court of Appeals of Oregon “discussed and recognized a claim of negligent spoliation of evidence.” Although the language from that decision excerpted by District Judge Underhill stands for something less than absolute clarity, the phrase “failed to make a prima facie showing” is a pretty clear indication that a prima facie showing of negligent spoliation would be sufficient to properly allege a cause of action under Oregon law:

“In the time since Blincoe, although the Oregon Supreme Court has not addressed whether intentional or negligent spoliation causes of action are recognized under the law of the state, the Court of Appeals of Oregon discussed and recognized a claim of negligent spoliation of evidence. In Marcum v. Adventist Health System/West, 215 Or.App. 166, 168 P.3d 1214, 1228-29 (Or.App.2007), rev'd on other grounds, 345 Or. 237, 193 P.3d 1 (Or.2008), the Oregon appellate court acknowledged the parties' dispute regarding spoliation causes of action under Oregon law, declined to “address the precise contours” of a negligent spoliation claim, and ultimately held that the plaintiff-appellant's negligent spoliation claim failed. Nonetheless, the Marcum court discussed the merits of that claim:” Id.

“’We need not, and do not, address the precise contours of a cognizable claim for “negligent spoliation” under Oregon law. That is so because plaintiff here failed to make a prima facie showing that defendants' alleged failure to maintain or produce the allegedly “missing” records materially impaired her prosecution of her medical negligence and informed consent claims.’” Id., at. p. 2

District Judge Underhill then determined that leave to amend a complaint to allege negligent spoliation under Oregon law would not be futile, and that absent decisional authority (or other developments) to the contrary, it was also likely that the Supreme Court of Oregon would recognize both torts of negligent and intentional spoliation of evidence.

“[A]bsent further guidance or development from the Oregon Supreme Court, the appellate court's decision in Marcum indicates that Sikorsky's proposed amendments adding spoliation claims would not be futile. Absent a more recent or more authoritative ruling to the contrary, I predict on the basis of the Marcum decision that the Supreme Court of Oregon would recognize intentional and negligent spoliation of evidence as causes of action .FN3 “In the absence of a pronouncement by the highest court of a state, the federal courts must follow the decision of the intermediate appellate courts of the state unless there is convincing evidence that the highest court of the state would decide differently.” Owen ex rel. Owen v. United States, 713 F.2d 1461, 1464 (9th Cir.1983). Here, there is no convincing evidence that the Oregon Supreme Court would not recognize spoliation causes of action. Accordingly, Sikorsky's motion for leave to amend (doc. # 361) is GRANTED.” Id.

Result: Motion for leave to amend to allege intentional and negligent spoliation of evidence granted.

Blognote: This digest will keep abreast of spoliation law developments (especially as they relate to computer generated information or ESI discovery) so stay tuned.

Case: Ford Motor Company, et al., v. Edgewood Properties, Inc.
Citation: ---F. Supp. 2d ---, 2009 WL 1416223 (D. N.J. 2009)
Date: 2009-05-19
Topics: Waiver by operation of late objection to producing party's non-native production, preserving objections to non-response ESI data format, ESI document collection process, cooperation and eDiscovery agreements, Sedona Principal 12

In this action from the United States District Court for the District of New Jersey for contract contribution and indemnification under Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and state environmental law, both parties moved to compel discovery.

U.S. Magistrate Judge Salas ruled, inter alia, that the contractor's objection to format for production of electronically stored information (ESI) was untimely, and that contractor failed to make colorable showing that owner withheld documents in response to request for ESI.

Preservation of Objections to Format of ESI Produced – Use It or Waive It

This case stands as a stark warning to counsel who, as requesting parties, intend to take advantage of the 2006 amendment to the Federal Rules of Civil Procedure, entitling requesting parties to define the form and format of production. If the producing party fails to produce as requested, and the requesting party fails to timely object, any future objection will likely be considered waived.

The “What Not to Do” Follows:

Here, although ESI in native data format was properly requested, the producing party responded by stating that it would produce ESI in .tiff format, with accompanying searchable text. It appears that the parties either failed or agreed to fail to meet and confer to discuss any disagreements prior to defendant’s raising the issue surrounding plaintiff’s ESI production with a motion to compel:

Defendant’s Request:

“Edgewood demanded in its initial document request that Ford produce documents in native format (or documents containing metadata), as it was entitled to ask it to do under Fed.R.Civ.P. 34. (Joint Appendix (“JA”) Ex. 9).” Ford Motor Co. v. Edgewood Properties, Inc., ---F.R.D.---, 2009 WL 1416223, 5 (D.N.J. 2009)

Plaintiff’s response:

“The heart of the problem is that in Ford's response (JA Ex. 4), it wrote that ‘Ford and Ford Land will produce such electronically stored information in Tagged Image File Format (“TIFF”) with accompanying searchable text.’” Id.

Dueling Declarations, Passivity and Failure to Timely Object

The Court notes that both sides exhibited a lack of exemplary behavior in dealing with what ultimately became a serious discovery dispute. That said, the Court found that the requesting party was both “passive” to what it later asserted was non-responsive ESI production, as well as that party’s failure to timely raise it before the Court.

Result: Objection to ESI production format waived:

The dueling declarations of Brooke Gaede on behalf of Edgewood, and John McGahren on behalf of Ford, suggest that the parties never came to an agreement as to how documents would be produced, so Ford unilaterally adopted its own objection and produced them in TIFF format. The Court will need not wade into the murky waters of whether or not Edgewood affirmatively assented to Ford's document production, for Edgewood's passivity to Ford's production and its timely failure to object to it renders its objection waived. Id.

What is becoming very clear from the tenor of these decisions is that the Court’s are rapidly losing patience with counsel’s inability or unwillingness to cooperate in eDiscovery planning, and late-to-the-gate complaints when the inevitable ESI discovery disputes arise therefrom:

“The Sedona Principles and Sedona commentaries thereto are the leading authorities on electronic document retrieval and production. William A. Gross Const. Assc., Inc. v. American Mfrs. Mut. Ins. Co., 256 F.R.D. 134, 136 (S.D.N.Y.2009) (“[t]his Court strongly endorses The Sedona Conference Cooperation Proclamation”); John B. v. Goetz, 531 F.3d 448 (6th Cir.2008) (following principles); Aguilar v. Immigration and Customs Enforc. Div. of U.S. Dep't of Homeland Sec., 255 F.R.D. 350 (S.D.N.Y.2008) (same)” Id.

And so, Magistrate Judge Salas then invites (or directs) counsel for the parties to embark upon a journey through the straits of ESI discovery. The Court isn’t taking up print space for no reason: note the use of the phrase “parties’ concomitant obligations.”

“Relying on the principles and on the Federal Rules, Aguilar explicated the procedure by which parties are to propound electronic discovery requests upon each other, and the parties' concomitant obligations thereto.” Id.

Requesting Party Must Specify Format of Production in Request

A requesting party is not required to specify the format of production, but if it does not, Rule 34(b)(2)(E)(ii) provides that in the event a requesting party does not specify ESI production format, the producing party is now fully entitled to produce ESI in what it considers to be “reasonably usable form or forms,” provided that the producing party complies with Fed. R. Civ. P. Rule 34(b(2)(D) and affirmatively state to requestor “the form or forms it intends to use.” Not surprisingly courts (including this court) hold that “reasonably usable” can mean .tiff images with searchable text.

Aguilar explained that under Rule 34, a party may request the form of production as metadata. “The responding party then must either produce ESI in the form specified or object.” Here, Ford objected to the production of metadata. “If the responding party objects ... the responding party must state “the form or forms it intends to use for its production of ESI.” Id. (quoting Fed.R.Civ.P. 34(b)(2)(D)). If the requesting party further objects and states an alternative form, the parties must meet and confer in an effort to solve the dispute before filing a motion to compel. Aguilar, 255 F.R.D. at 355. Here, crucially, Edgewood did not object to Ford's production within a reasonable period of time, as will be fleshed out in detail below.” Id., at p. 7

How badly mangled was defendant’s discovery efforts? The following excerpt provides a hint or five, but it’s never a good sign when a court suggests that issues addressing adherence to Sedona Principal 12, relating to agreements concerning production of metadata, are best undertaken before production begins. In short, it appears that there was no eDiscovery agreement (or cooperation, for that matter) between the parties. The Court so notes, and explains the consequences (usually bad, at least to one party):

“The squabble between the parties about the appropriate mode of production certainly is not indigenous to this case, and to that end, the Court does not write on a clean slate. For the courts and in particular the Sedona Principles specifically have addressed the production of metadata absent an agreement by the parties on the mode of production. Specifically, Principle 12 of the Sedona Principles states that:

“Absent party agreement or court order specifying the form or forms of production, production should be made in the form or forms in which the information is ordinarily maintained or in a reasonably usable form, taking into account the need to produce reasonably accessible metadata that will enable the receiving party to have the same ability to access, search, and display the information as the producing party where appropriate or necessary in light of the nature of the information and the needs of the case Id. at 356 (emphasis added). Thus, the producing party ordinarily must take into account the need for metadata to make otherwise unintelligible documents understandable.” Id., at p. 6

As the Court indicates, it’s always better to lock the barn door before Bessie takes that stroll… and before production is complete:

“This Principle, of course would be better applied in a case where production had not yet commenced.” Indeed, Aguilar observed that “[c]ourts generally have ordered the production of metadata when it is sought in the initial document request and the producing party has not yet produced the documents in any form.” Id. at 357. Such is not the case here, as Ford's production is complete. Id.

So, how long did defendant wait until bringing the issue of format of production to the Court’s attention?

The gestation period for waiver was nearly nine months:

The foregoing conclusively demonstrates that Edgewood waited from the end of March 2008 to November 2008 to object to Ford's production. And even then it waited two months to bring the problem to this Court's attention. This is by no means to suggest that parties seek court intervention every time there is a whiff of a dispute between them. Meet and confers between the parties are integral to the discovery process. Id., at p. 7

Note again the Court’s emphasis on the requesting party’s apparent failure to request a meet and confer to resolve the issue.

The Court’s take?

“…[T]he delay in this case on the part of Edgewood is patently unreasonable.”

What-Not-to-Do: Waiving Objections to Format of Production by Passivity Until Production is Complete

“The simple holding here is that it was unreasonable to wait eight months after which production was virtually complete.

And now, the first hammer blow:

“It was incumbent on Edgewood to review the adequacy of the first production so as to preserve any objections. The Court is not dictating a rigid formulation as to when a party must object to a document production. Reasonableness is the touchstone principle, as it is with most discovery obligations. The simple holding here is that it was unreasonable to wait eight months after which production was virtually complete. Id., at p. 7

The proper way to go about resolving an eDiscovery dispute is to meet and confer (in a timely fashion) and if no resolution ensures, a party must then, and also in a time fashion, bring the issue before the court.

The Court then delivers the coup de grace:

“The Court finds Edgewood's objection to be out of time. It is beyond cavil that this entire problem could have been avoided had there been an explicit agreement between the parties as to production, but as that ship has sailed, it is without question unduly burdensome to a party months after production to require that party to reconstitute their entire production to appease a late objection. The advent of E-Discovery does not serve to destroy parties' discovery obligations that would exist in the ordinary course were other media involved. Parties would be best to heed the admonition of a recent court that “the best solution in the entire area of electronic discovery is cooperation among counsel.” William A. Gross, supra, 256 F.R.D. at 136l.” Id.

Result: No goodness for defendant:

“Accordingly, Edgewood's motion to compel the native documents is denied.” Id.

Plaintiff’s Document Collection Process

Defendant also “mounted a complaint” against plaintiff Ford’s document collection process. Defendant asserted that there was a “noticeable absence of documents in Ford’s production” related to key issues. Methinks defendant means that production was a mite bit gappy. Defendant’s assertion was that plaintiff’s document collection process was flawed, and sought relief in the form of…a second document search and collection:

“Edgewood responded that it…’is seeking to confirm the adequacy of Ford's manual document collection process using a limited, least cost, least burdensome test. This test involves using a vendor to perform a narrowly tailored key word search of electronically-stored records from a limited time period associated with certain custodians ... for the purpose of determining whether Ford failed to collect responsive documents. The search would be performed on Ford's electronically-stored as such records are stored in their original location (e.g., a custodian's laptop, Ford servers, etc.).’” Id., at p. 8

The Court didn’t quite see it that way:

“In essence, then, even though it disavows the term “entire reconstitution of the document collection process,” the remedy proposed by Edgewood does, in fact, seek at least a substantial reconstitution of the document collection process by trying to add to the existing repository of ESI that Ford collected over a year ago.” Id.

You can see where this is going. The first stop is the Sedona Principles.

In essence, the Sedona practice commentary condones automated ESI discovery searches.
“In The Sedona Conference Best Practices Commentary on the Use of Search and Information Retrieval Methods in E-Discovery, Practice Point 1 states that “[i]n many settings involving electronically stored information, reliance solely on a manual search process for the purpose of finding responsive documents may be infeasible or unwarranted. In such cases, the use of automated search methods should be viewed as reasonable, valuable, and even necessary.” (emphasis added).” Id.

The second stop is meet-and-confer-ville. Not surprisingly, the Court again returns to the failure by the requesting party’s to attempt to reach some type of agreement on search, collection and culling ESI:

“Once again, the Court confronts this peculiar situation insofar as Edgewood has a point that the document collection method used by Ford is not necessarily contemplated under the Sedona Principles, but that agreement by the parties at the outset as to the mode of collection would have been the proper and efficacious course of action. However, “[a]bsen[t] agreement, a [responding] party has the presumption, under Sedona Principle 6, that it is in the best position to choose an appropriate method of searching and culling data.” The Sedona Conference Best Practices Commentary on the Use of Search and Information Retrieval Methods in E-Discovery.” Id.

The result: Another hammer blow to defendant:

"Once again, the lack of agreement here inheres to the detriment of Edgewood.” Id.

Producing Party Has No Carte Blanche to Determine Mode of Collection, but is best Positioned to Do So

The Court notes that the Sedona principles “wisely” state that “it is in fact, the producing party who is [in] the best position to determine the method by which they will collect documents.” The Court notes, however, that the power to determine collection, search and culling methods is not absolute, which opens the door to a challenge by an adversary. The Court also hints that search, collection and culling should be discussed in a meet and confer and, where possible, agreed to in advance by the parties:

“The Sedona Principles wisely state that it is, in fact, the producing party who is the best position to determine the method by which they will collect documents. The producing party responding to a document request has the best knowledge as to how documents have been preserved and maintained. That being said, the producing party under the Sedona Principles doesn't have carte blanche to specify the mode of collection and it is clear that manual collection is sometimes even disfavored. However, absent an agreement or timely objection, the choice is clearly within the producing party's sound discretion." Id., at p. 9

Assertions of Production Inadequacy Must be Colorable

Ultimately, the Court wasn’t buying defendant’s argument that plaintiff Ford’s production was inadequate, and found that “reinventing the wheel” would be unduly burdensome to plaintiff Ford.

“The Court finds that reinventing the wheel here would be unduly burdensome to Ford. See Fed R. Civ. P. 26(b)(2)(C)(i). The gravamen of Edgewood's complaint is that it suspects it has not received all of the documents to which it is entitled.” Id.

Conclusory allegations of nefarious behavior asserted late in the game just won’t cut it:

“But such a conclusory allegation premised on nefarious speculation has not moved several courts, nor will it move this one, to grant burdensome discovery requests late in the game. See, e.g., Margel v. E. G.L. Gem Lab Ltd., No. 04-1514, 2008 WL 2224288, at *3 (S.D.N.Y. May 29, 2008) (“[u]nder ordinary circumstances, a party's good faith averment that the items sought simply do not exist, or are not in his possession, custody or control, should resolve the issue of failure of production ...”) (quoting Zervos v. S.S. Sam Houston, 79 F.R.D. 593, 595 (S.D.N.Y.1978)); Golden Trade S.r.L. v. Lee Apparel Co., 143 F.R.D. 514, 525 n. 7 (S.D.N.Y.1992) (“[i]n the face of a denial by a party that it has possession, custody or control of documents, the discovering party must make an adequate showing to overcome this assertion”); see also U.S. v. O'Keefe, 537 F.Supp.2d 14, 22 (D.D.C.2008) (noting that in the face of a protest of “inexplicable deficiencies” in a party's production, vague and speculative notions that there, in essence, should be more, are insufficient to compel judicial action). Id.

Result: Motion denied. Why? Assertions of bad behavior based only on a belief that documents are being withheld by a producing party do not a colorable showing of bad faith make.

“Here, Edgewood has not made a colorable showing that Ford is purposefully (or even negligently) withholding documents.” Id.

But all was not lost for defendants. Depositions had not yet taken place, and the Court indicates some willingness to revisit the issue if evidence indicating bad faith arises from these depositions.
“If relevant, unproduced documents appear or are even referenced in these depositions, Edgewood can move for the appropriate relief before this Court at that time, whether it be via another motion to compel documents, or for sanctions. For now, however, Edgewood's motion to compel on this point is denied.” Id.

Blognote: This decision addresses a topic deserving of some discussion. Imo, there are three levels of counsel attitude to eDiscovery. Those who understand nothing and want to avoid ESI discovery at all costs; those who understand enough to know that they want to avoid eDiscovery at all costs, and those that understand eDiscovery and are prepared to engage in same. Given these three varieties of counsel, there are three possible counsel-sets in any litigation. The first set is comprised of counsel on both (or all) sides who don’t understand eDiscovery, and who affirmatively choose not to engage in same. The second set is comprised of counsel on both (or all) sides who understand enough about eDiscovery to avoid it all costs, and who either tacitly agree or stipulate to same. The third set is the most interesting. One side’s counsel is either eDiscovery ignorant or eDiscovery phobic. The other side’s counsel understands and embraces eDiscovery. And runs circles around her adversaries. I suspect that this counsel-set falls within that third category.

Case: Innis Arden Golf Club v. Pitney Bowes, Inc.
Citation: --- F.Supp.2d ----, 2009 WL 1416169 (D. Conn. 2009)
Date: 2009-05-21
Topics: Counsel involvement as trigger for duty to preserve, suspension of routine document retention and destruction policy, bad faith or intent not required for imposition of sanctions for spoliation, spoliation sanctions of evidence preclusion, implications of spoliation finding for summary judgment and Daubert expert exclusion

This decision, again involving CERCLA claims, comes to us from the U.S. District Court for the District of Connecticut. Although not involving ESI, the Court addresses preservation duty triggers that are equally applicable to ESI. This case also stands as a reminder of the circuit split on the issue of bad faith or intent. In the Second Circuit (and not in the Tenth and others) a party may be sanctioned for spoliation of evidence even in the absence of bad faith or intentional conduct.

In this case, plaintiff golf club discovered PCB’s (a pollutant) on its property that it alleged emanated from defendant’s adjoining property. Through time, defendant golf club failed to preserve certain relevant soil samples.

Here, U.S. District Judge Atherton rules on defendant Pitney Bowes’ motion for sanctions for spoliation of evidence, holding that:

(1) plaintiff- land owner's duty to preserve soil samples attached when its counsel became actively involved;
(2) the landowner breached its duty to preserve evidence.

U.S. District Judge Atherton ruled that the appropriate sanction for plaintiff golf club’s spoliation was preclusion of evidence based on soil samples.

The Court starts out with the statement that the duty to preserve evidence “is fundamental to federal litigation.” The Court continues with Second Circuit decisional authority outlining both the duty, and the consequences for its breach:

“The obligation to preserve evidence arises when the party has notice that the evidence is relevant to litigation or when a party should have known that the evidence may be relevant to future litigation. See Kronisch v. United States, 150 F.3d 112, 126 (2d Cir.1998). Once a court has concluded that a party was under an obligation to preserve the evidence that it destroyed, it must then consider whether the evidence was intentionally destroyed, and the likely contents of that evidence. See id. at 127. The determination of an appropriate sanction for spoliation, if any, is confined to the sound discretion of the trial judge, see West v. Goodyear Tire & Rubber Co., 167 F.3d 776, 779 (2d Cir.1999), and is assessed on a case-by-case basis. See United States v. Grammatikos, 633 F.2d 1013, 1019-20 (2d Cir.1980). Innis Arden Golf Club v. Pitney Bowes, Inc., ---F.R.D.---, 2009 WL 1416169, 5 (D. Conn. 2009)

Spoliation Sanctions May be Imposed Pursuant to Fed. R. Civ. P. Rule 37(b) or Under Court’s Inherent Powers

It always pays to keep in mind that there are two avenues for spoliation sanctions imposition. A spoliation sanction requested pursuant to Fed. R. Civ. P. Rule 37(b) must be made after a discovery order has been violated. Spoliation sanctions may also be imposed without a discovery order violation under federal common law doctrine of a court’s “inherent powers:”

“In addition to the sanctions authorized by Federal Rule of Civil Procedure 37(b) for spoliation of evidence in violation of a court order, “a district court may impose sanctions for spoliation, exercising its inherent power to control litigation.” West, 167 F.3d at 779. Id.

Duty to Preserve Evidence

District Judge Atherton then sets out Second Circuit (and some Southern District of New York) decisional authority in explaining a party’s duty to preserve evidence. In sum, the duty may attach either when legal proceedings have begun, or when a party should have known that evidence may be relevant to anticipated future litigation:

“The “obligation to preserve evidence arises when the party has notice that the evidence is relevant to litigation.” Kronisch, 150 F.3d at 126. This duty may attach not only once legal proceedings have begun, but also “when a party should have known that the evidence may be relevant to future litigation.” Id. (emphasis added).” Id.

Suspension of Document Retention or Destruction Policy

Citing Zubulake IV, the Court then explains that once a duty to preserve has been triggered, a party must suspend its document retention policy:

"As other courts have found, “[o]nce a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a ‘litigation hold’ to ensure the preservation of relevant documents.” Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 218 (S.D.N.Y.2003); see also Treppel v. Biovail Corp., 249 F.R.D. 111, 118 (S.D.N.Y.2008) (following Zubulake's formulation); Doe v. Norwalk Cmty. Coll., 248 F.R.D. 372, 377 (D.Conn.2007) (same); In re NTL, Inc. Securities Litig., 244 F.R.D. 179, 193 (S.D.N.Y.2007) (same).” Id.

Spoliation Sanction Spoilers: Affirmative Disclaimer or Delay

Disclaimer or delay by the non-spoliating party constitutes defenses to a spoliation challenge:

“…[T]he cases in which courts deny requests for sanctions turn on facts showing that the party seeking the evidence either disclaimed an interest in the evidence or did not seek to inspect the evidence within a reasonable time. See, e.g., Allstate Ins. Co. v. Hamilton Beach/Proctor Silex, Inc., 473 F.3d 450, 457-58 (2d Cir.2007) (declining to impose sanctions where the party “affirmatively disclaimed any interest in the evidence ... after being provided a full opportunity to inspect the items”); Fujitsu, 247 F.3d at 436 (finding sanctions not warranted given that “FedEx did not request to inspect the damaged shipping container after Fujitsu notified it of the damage, nor at any time other than prior to making the summary judgment motion”)” Id., at p. 7

The Court found that plaintiff golf club had spoliated evidence, and that defendant Pitney Bowes had neither affirmatively disclaimed, nor delayed its assertion of evidence spoliation.

And so, on to the sanctions-type determination.

Appropriate Sanctions

Borrowing from Third Circuit decisional authority, District Judge Atherton then provides an overview of what type of sanction to apply after a finding of spoliation has been made. The objectives are threefold: prophylactic, punitive and remedial.

“After a finding of spoliation, “the applicable sanction should be molded to serve the prophylactic, punitive, and remedial rationales underlying the spoliation doctrine.” West, 167 F.3d at 779. Factors to be considered include “the degree of fault of the party who altered or destroyed the evidence,” “the degree of prejudice suffered by the opposing party,” and whether the appropriate sanction minimizes the prejudice to the opposing party and “serve[s] to deter such conduct by others in the future.” Howell v. Maytag, 168 F.R.D. 502, 505 (M.D.Pa.1996) (quoting Schmid v. Milwaukee Elec. Tool Corp., 13 F.3d 76, 79 (3d Cir.1994)).” Id., at p. 8

Presumptively harsh is another term that comes to mind.

Second Circuit – No Bad Faith or Intent Required for Imposition of Spoliation Sanctions

In the sanctions-type determination phase, Second Circuit decisional authority is clear: a showing of bad faith or intentional conduct is not necessary:

“In the Second Circuit, a party may be sanctioned for the destruction of evidence even in the absence of bad faith or intentional misconduct. Byrnie v. Town of Cromwell, 243 F.3d 93, 107-08 (2d Cir.2001). “Trial judges should have the leeway to tailor sanctions to insure that spoliators do not benefit from their wrongdoing-a remedial purpose that is best adjusted according to the facts and evidentiary posture of each case.” Reilly v. Natwest Markets Group, 181 F.3d 253, 267 (2d Cir.1999).” Id.

The Court explains further that the destruction of evidence by the plaintiff golf club so materially impaired and prejudiced the defendant’s ability to mount a “bright line” defense that a sanction more severe than an adverse inference was warranted, and the Court ruled that a preclusion of evidence was appropriate:

“While the Court finds no basis on which to conclude that Innis Arden purposefully destroyed evidence to advantage it or disadvantage Pitney Bowes, the consequences of the loss of this evidence are significant and cannot be adequately remedied through applying an adverse inference. By virtue of the failure to preserve scientific sampling and data, Pitney Bowes has been precluded from what might have been a bright-line defense, such as radioisotope dating showing that the PCB-contaminated sediment predated Pitney Bowes's presence on Barry Place. Such a defense could obviate the need for and expense of a trial, while a negative-inference sanction can only be applied at trial. In destroying the underlying evidence that its experts have relied on, Innis Arden has hampered Pitney Bowes's capacity to challenge the underlying foundations for the experts' opinions. In short, the key raw “fingerprint” evidence in this case simply no longer exists, but the party that is responsible for its destruction seeks to benefit from its use. For all these reasons, in the Court's view, the appropriate sanction to adequately address the harm suffered by Pitney Bowes, penalize Innis Arden, and deter future destruction of evidence is preclusion of evidence based on the soil samples Innis Arden took from its own property and subsequently destroyed.” Id., at p. 10.

Spoliation and Summary Judgment Practice, and Daubert Expert Exclusion

One issue arising from spoliation assertions is whether a finding of spoliation can support the denial of summary judgment when the movant is the spoliating party. In one sentence, the Court provides a tantalizing clue, perhaps indicating that a finding of spoliation may be included to presume as true facts for purposes of summary judgment. The Court also appears to be willing to take plaintiff’s spoliation into account in considering whether to exclude plaintiff’s Daubert expert (or testimony):

“Accordingly, Pitney Bowes's and Pateley's motions for sanctions for spoliation of evidence [Doc.419, 426] are granted, and the sanction of preclusion detailed above will be imposed at trial and in consideration of the pending motions for summary judgment and Daubert expert exclusion."

Stay tuned.


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