1. Spoliation of Evidence
for
North American Risk Services
Altamonte Springs, FL
9/25/14
Dale K. Forsythe, Esq.
Wayman, Irvin & McAuley, LLC

2. Definition
Spoliation of evidence refers to intentional or negligent withholding, hiding, alteration or destruction of evidence relevant to a legal proceeding.

3. Definition Word comes from the Latin word “spoliare” - to plunder.
Most dictionary definitions include words such as pillage, robbery, destruction.

4. Examples
Asbestos litigation - loss or destruction of sales records, meeting notes, medical findings
Truck accident – owner puts his truck back into operation or loses IVIS (in-vehicle information system)
Fire loss – failure of the property owner (defendant?) to preserve the scene/evidence

5. Consequences
Possible Criminal Consequences - fines or even incarceration
Judicial Approaches
Treat it as a matter within their inherent powers. (Telectron, Inc. v. Overhead Door Corp., 116 F.R.D. 107 (S.D.Fla. 1987)
Recognize it as a separate cause of action / independent tort (minority approach).
Treat it as a form of discovery abuse. Fed. R. Civ. P. 37

6. Duty to Preserve Evidence
Source of the Duty
Statutory authority
Contractual obligation
Case law
Procedural Rules – local, state, federal
Inherent authority of the court
Ethical obligations

7. Duty to Preserve Evidence
Once litigation arises
When defendant is served with complaint
When plaintiff is served with Answer/Counterclaim
Subpoena is served

8. Duty to Preserve Evidence
Prior to Litigation
- if pre-litigation communication of potential litigation, e.g., a pre-litigation hold letter
- once it becomes “reasonably certain that an action will be filed,” or when “litigation is reasonably anticipated.”

9. Duty to Preserve Evidence
Prior to Litigation
Factors to Consider (case by case):
Level of knowledge in organization about the claim;
The risk to the organization of the claim;
The risk of losing information without a “litigation hold;”
The complexity/number of sources
Burden generally less on a non-party
Connor R. Crowley, et. al.., The Sedona Commentary on Legal Holds: The Trigger and the Process, The Sedona Conference (2007).

10. Duty to Preserve Evidence
Whose else has the duty? Ethical obligation on the part of a lawyer Duty to advise clients

11. Duty to Preserve Evidence
Scope of Duty
Evidence that is relevant to the litigation serves as the minimum guideline
Suspend retention policy / litigation hold
Evidence reasonably likely to be part of discovery request

12. Duty to Preserve Evidence
Scope of Duty
Electronically stored information
Fed. R. Civ. P. 34
(a) In General. A party may serve on any other party a request within the scope of Rule 26(b):
(1) to produce and permit the requesting party or its representative to inspect, copy, test, or sample the following items in the responding party's possession, custody, or control:
(A) any designated documents or electronically stored information—including writings, drawings, graphs, charts, photographs, sound recordings, images, and other data or data compilations—stored in any medium from which information can be obtained either directly or, if necessary, after translation by the responding party into a reasonably usable form;.....

13. Duty to Preserve Evidence
Scope of Duty
Electronically stored information
Fed. R. Civ. P. 26
a. Required Disclosures
(1) Initial Disclosure.
(A) In General. Except as exempted by Rule 26 (a)(1)(B), or as otherwise stipulated or ordered by the court, a party must, without awaiting a discovery request, provide to the other parties:……
(ii) a copy—or a description by category and location—of all documents, electronically stored information, and tangible things that the disclosing party has in its possession, custody, or control and may use to support its claims or defenses, unless the use would be solely for impeachment;….

14. Duty to Preserve Evidence
Scope of Duty
Electronically stored information
Fed. R. Civ. P. 34
(b) Discovery Scope and Limits.
(2) limitations on frequency and extent
(B) Specific Limitations on Electronically Stored Information. A party need not provide discovery of electronically stored information from sources that the party identifies as not reasonably accessible because of undue burden or cost. On motion to compel discovery or for a protective order, the party from whom discovery is sought must show that the information is not reasonably accessible because of undue burden or cost. If that showing is made, the court may nonetheless order discovery from such sources if the requesting party shows good cause, considering the limitations of Rule 26(b)(2)(C). The court may specify conditions for the discovery.

15. Duty to Preserve Evidence
Scope of Duty Electronically stored information Rule 37— Failure to Make Disclosure or Cooperate in Discovery: Sanctions - incorporates other provisions

16. Duty to Preserve Evidence
Sophisticated entities / litigants (such as insurance carriers) can be held to a higher standard.
Ballotis v. McNeil, 870 F. Supp. 1285, 1290 (M.D. Pa. 1994).
Allstate Ins. Co. v. Sunbeam Corp.,865 F. Supp. 1267, 1278 (N.D. Ill., 1994).
Indiana case – Thompson v. Owensby, 704 N.E. 2d 134 (Ind. App. 1998).

17. Duty to Preserve Evidence
Litigation/claims tactics:
Early inspection
Early notification
Participate in post-accident inspections
Records
Confirm product identification (products case)
Chain of custody

18. Consequences / Remedies

19. Criminal Statute – Florida, Title XLVII
918.13 Tampering with or fabricating physical evidence.
(1) No person, knowing that a criminal trial or proceeding or an investigation by a duly constituted prosecuting authority, law enforcement agency, grand jury or legislative committee of this state is pending or is about to be instituted, shall:
(a) Alter, destroy, conceal, or remove any record, document, or thing with the purpose to impair its verity or availability in such proceeding or investigation; or
(b) Make, present, or use any record, document, or thing, knowing it to be false.
(2) Any person who violates any provision of this section shall be guilty of a felony of the third degree, punishable as provided in § , § or §775,084.

20. Judicial Approaches

21. Inherent power of the court
The authority to dismiss an action for lack of prosecution or to enter default for discovery abuses is one of the inherent powers of the court. In particular, the courts have the inherent power to enter a default judgment as punishment for a defendant's destruction of documents. Telectron, Inc., supra, HN2 at 108.; See also, Trigon Ins. Co. v. United States, 204 F.R.D. 277 (E.D. Va. 2001).

22. Independent Cause of Action
Minority Position
First Party v. Third Party
Negligent v. Intentional

23. Independent Cause of Action
Elements of Negligent Spoliation Against Third Parties (from Montana standard, Gentry v. Douglas Hereford Ranch, Inc., 962 P. 2d 1205 (Mont. 1998).
Potential civil action
Legal or contractual duty to preserve evidence
Destruction of the evidence
Significant impairment of ability to prove potential civil action
Causal connection
Significant possibility of success if the evidence were available
damages

24. Independent Cause of Action
Elements of Intentional Spoliation Against Third Parties (from Oliver v. Stimson Lumber Co., 993 P. 2d 11 (Mont. 1998)).
Existence of a potential lawsuit
The defendant’s knowledge of the potential lawsuit
Intentional destruction of evidence designed to disrupt/defeat lawsuit
Disruption of the lawsuit
Causal connection

25. Independent Cause of Action
States which recognize independent cause of action:
Alaska – first part intentional tort recognized (Hazen v. Anchorage, 72 P. 2d 456 (Alaska 1986)).
Hawaii – still unresolved (Matsuura v. E.I. du Pont de Nemours and Co., 73 P. 3d 687, 706 (Haw. 2003)).
Idaho – not recognized, but it would require intentional action (Yoakum v. Hartford Fire Ins. Co., 923 P. 2d 416, (Idaho 1996)).
Illinois – claim can fit within existing negligence principles (Dardeen v. Kuehling, 821 N.E. 2d 227, 231 (Ill. 2004).

26. Independent Cause of Action
States which recognize independent cause of action:
Indiana – third party tort only if duty exists (Gloyzbach, CPA v. Froman, 827 N.E. 2d 105 (Ind. App. 2005)).
Louisiana – is independent cause of action, if intentional (Guillory v. Dillard’s Dept. Store, Inc., 777 So. 2d 1,3 (La. App. 3d Cir. 2000); Desselle v. Jefferson Hosp. Dist. No. 2, 887 so. 2d 524, 534 (La. App. 2004).
Montana – have adopted torts of intentional and negligent spoliation against third parties (Gentry, supra.; Oliver, supra).

27. Independent Cause of Action
States which recognize independent cause of action:
New Mexico – Intentional tort recognized, negligent tort rejected (Coleman v. Eddy Potash, Inc., 905 P. 2d 185 (N.M. 1995)).
Ohio - Intentional tort recognized (for first party and third party ) (Smith v. Howard Johnson Co., Inc., 615 N.E. 2d 1037 (Ohio 1993).
West Virginia – Intentional tort recognized (for first party and third party) and negligent tort recognized for third party) (Hannah v. Heeter, 584 S.E. 2d 560 (W.Va. 2003).

28. Independent Cause of Action - Florida
Florida – no independent cause of action for first-party spoliation (Martino v. Wal-Mart Stores, Inc., 908 So. 2d 342 (Fla. 2005). Florida appellate courts have recognized third party claims (Townsend v. Conshor, Inc., 832 So. 2d 166 (Fla. Dist. Ct. app. 2002); Jost v. Lakeland Reg’l Med. Ctr., Inc., 844 So. 2d 656 (Fla. 2d DCA 2003).

29. Independent Cause of Action - Florida
Third party claims do not arise until after completion of underlying action. (Lincoln Ins. Co., v. Home Emergency Servs., Inc., 812 So. 2d 433 (Fla. Dist. Ct. App. 2001). Third party claim against otherwise immune employer also permitted. (Builder’s Square, Inc. v. Shaw, 755 So. 2d 721 (Fla. Dist. Ct. app. 1999).

30. Independent Cause of Action - Florida
Negligent spoliation cause of action (from Jost, supra):
1. existence of potential civil action
2. legal or contractual duty to preserve evidence
3. destruction of the evidence
4. significant impairment to ability to prove lawsuit
5. causal connection
6. damages

31. Discovery Abuse
The preferred position across most jurisdictions, in the first party situation primarily, is to treat the loss or manipulation of evidence as a form of discovery abuse. The court has rather wide discretion to formulate appropriate orders/sanctions under the facts and circumstances of a particular case.

32. Discovery Abuse Pennsylvania Rule of Civil Procedure 4019:
(c)  The court, when acting under subdivision (a) of this rule, may make
(1)  an order that the matters regarding which the questions were asked, or the character or description of the thing or land, or the contents of the paper, or any other designated fact shall be taken to be established for the purposes of the action in accordance with the claim of the party obtaining the order;
(2)  an order refusing to allow the disobedient party to support or oppose designated claims or defenses, or prohibiting such party from introducing in evidence designated documents, things or testimony, or from introducing evidence of physical or mental condition;
(3)  an order striking out pleadings or parts thereof, or staying further proceedings until the order is obeyed, or entering a judgment of non pros or by default against the disobedient party or party advising the disobedience;
(4)  an order imposing punishment for contempt, except that a party may not be punished for contempt for a refusal to submit to a physical or mental examination under Rule 4010;
(5)  such order with regard to the failure to make discovery as is just.

33. Discovery Abuse
The Pennsylvania Supreme Court in Schroeder v. Com. Dept. of Transportation, 710 A. 2d 23 (Pa. 1998), adopted the following three part test from Schmid v. Milwaukee Electric Tool Corp., 13 F.3d 76 (3rd Cir. 1994), to be considered in determining a penalty for failure to preserve evidence:
1. the degree of fault of the party who altered or destroyed the evidence;
2. the degree of prejudice suffered by the opposing party; and
3. the availability of a lesser sanction that will protect the opposing party's rights and deter future similar conduct.

34. Discovery Abuse
Three part test was applicable in product liability actions as well as non-product liability actions. (Eichman v. McKeon, 2003 PA Super 185, 824 A.2d 305 (Pa. Super. 2003)).

35. Discovery Abuse Evaluation of fault Look at:
The extent of the offending party’s duty or responsibility to preserve the evidence
The presence of bad faith
Creazzo v. Medtronic, Inc., 903 A. 2d 24 (Pa. Super. 2006).

36. Discovery Abuse Evaluation of intent Look at:
Destroyed with actual knowledge?
Court order, preservation letter?
What would reasonable party have done?
Was it analyzed by spoliating party?

37. Discovery Abuse Evaluation of reasonableness of retention policy
Look at:
Facts and circumstances surrounding the relevant documents?
Other lawsuits?
Policy initiated in bad faith?
Retain notwithstanding policy
Lewy v. Remington Arms Co., 836 F. 2d 1104 (8th Cir. 1988).

38. Discovery Abuse Factors in determining prejudice
How important is it to the party’s case?
Can evidence be reconstructed?
Other sources?

39. Discovery Abuse
In Croydon Plastics Co. v. Lower Bucks Cooling & Heating, 698 A.2d 625, 629 (Pa. Super. 1997), the Superior Court emphasized that the decision to sanction a party, and the severity of the sanction imposed, was bestowed to the sound discretion of the trial court. The Superior Court in Croydon quoted Stewart v. Rossi, 681 A.2d 214, 217 (Pa. Super. 1996), by stating that the court must carefully balance the equities of the particular case and "dismiss only where the violation of the discovery rules is willful and the opposing party has been prejudiced." 698 A.2d at 629.

40. Discovery Abuse (1)the nature and severity of the discovery violation;
The court in Stewart enumerated the following considerations to be addressed when imposing the sanction of dismissal:
(1)the nature and severity of the discovery violation;
(2) the defaulting party's willfulness or bad faith;
(3) prejudice to the opposing party;
(4) the ability to cure the prejudice; and
(5) the importance of the precluded evidence in light of the failure to comply.
Croydon, 698 A 2d at 629.

41. Discovery Abuse
Except in egregious circumstances, the preferred approach over dismissal is an adverse inference against the party responsible for the spoliation, in the form of an instruction to the jury.

42. Discovery Abuse Fla. R. Civ. P. 1.380
(b)  Failure to Comply with Order.
(1)  If a deponent fails to be sworn or to answer a question after being directed to do so by the court, the failure may be considered a contempt of the court.
(2)  If a party or an officer, director, or managing agent of a party or a person designated under rule 1.310(b)(6) or 1.320(a) to testify on behalf of a party fails to obey an order to provide or permit discovery, including an order made under subdivision (a) of this rule or rule 1.360, the court in which the action is pending may make any of the following orders:
(A)  An order that the matters regarding which the questions were asked or any other designated facts shall be taken to be established for the purposes of the action in accordance with the claim of the party obtaining the order.
(B)  An order refusing to allow the disobedient party to support or oppose designated claims or defenses, or prohibiting that party from introducing designated matters in evidence.
(C)  An order striking out pleadings or parts of them or staying further proceedings until the order is obeyed, or dismissing the action or proceeding or any part of it, or rendering a judgment by default against the disobedient party.
(D)  Instead of any of the foregoing orders or in addition to them, an order treating as a contempt of court the failure to obey any orders except an order to submit to an examination made pursuant to rule 1.360(a)(1)(B) or subdivision (a)(2) of this rule…….

43. Discovery Abuse
When evidence is intentionally lost, misplaced, or destroyed by one party, courts are to rely on sanctions in Fla. R. Civ. P (b)(2), and a jury could well infer from such a finding that the records would have contained indications of negligence. Public Health Trust v. Valcin, 507 So. 2d 596 (Fla. 1987).
If negligent loss of evidence hinders the other party’s ability to establish a prima facie case, then a rebuttable presumption of negligence for the underlying tort will be applied. (Upheld in Martino v. Wal-Mar Stores, Inc., 908 So. 2d 342 (Fla 2005).

44. Take Away
Insurance carrier has higher duty than typical litigant, likely has a duty to insured, possible third parties.
Spoliation by a defendant can lead to an inference of negligence when no negligence existed.
Spoliation by a plaintiff /subrogee could result in dismissal or exclusion of important evidence.
While not many states have affirmatively found independent cause of action against third party, quite a few simply have not addressed the issue in the appropriate circumstances.

45. Disclaimer
This material is prepared for information/educational purposes only. It is not intended as legal advice, nor should it be construed as or relied upon as legal advice. You should consult with counsel before embarking on any course of conduct or refraining from any activity that may entail legal consequences. Although the above was prepared on the basis of the state of the law of Pennsylvania or other states as noted, as of the date of preparation, the law is subject to interpretation and may change in the future. Therefore, absolutely no representations are made relative to any specific legal situation or the application of law to any specific facts. NO EXPRESS OR IMPLIED WARRANTIES ARE INTENDED OR MADE.
The foregoing is not intended to be a complete and exhaustive review of each and every reported or unreported decision issued by Pennsylvania Courts, state and federal, on the issues presented. Rather, the foregoing is intended as an overview of some of the recent and significant decisions with respect to these issues.

46. Wayman, Irvin & McAuley, LLC
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