A court held that it is permissible to impose monetary sanctions to compensate a party for the time and money it expended addressing the opposing party’s spoliation of evidence, regardless of the spoliating party’s degree of fault.

Courts May Award Monetary Sanctions Prior to Trial For Spoliation That Occurred Before the Commencement of Litigation

In this breach of contract lawsuit, the plaintiffs alleged that the defendant refused to pay a debt of approximately $380,000 and failed to supply groceries to the plaintiffs’ market. The market was forced to closed down and the plaintiffs disposed of every paper record they possessed for the market, including general ledgers, invoices, sales reports, cancelled checks, company bills, time clock reports, trial balances, balance sheets, and income statements. The plaintiffs also threw out the only computer the market used and they did not retain any of the information contained on that computer. After the commencement of litigation, the defendant filed a motion for sanctions based on spoliation of evidence related to the financial records destroyed by the plaintiffs. The court determined that an adverse inference sanction was warranted based on the plaintiffs’ intentional and bad faith destruction of evidence, and that it would entertain arguments relating to monetary sanctions after the defendant specifically delineated the time and money it spent addressing the discovery and spoliation issues.

The plaintiffs filed a motion for reconsideration challenging the court’s determination that they had an affirmative duty to preserve evidence related to the litigation and challenging the court’s finding that an award of monetary sanctions prior to trial may be permissible. The court held that the plaintiffs had a duty to preserve evidence because knowledge of a potential claim is sufficient to impose that duty. Therefore, it would be appropriate for the court to issue an adverse inference to the jury if the matter reached trial in order to alleviate the harm caused by the spoliation.

The court also held that an award of monetary sanctions prior to trial is permissible to compensate the defendant for the time and money it spent addressing the plaintiffs’ intentional spoliation of evidence. Even though the court found that the destruction of evidence was done intentionally and in bad faith, it noted that the plaintiffs’ culpability was not relevant to any award of monetary sanctions because the award would be remedial in nature, not punitive.
Danielle is a third year student at Seton Hall University School of Law (Class of 2016). Prior to law school, she graduated magna cum laude from The College of New Jersey, where she earned her B.S. in Criminology with a minor in Arabic. After graduation, Danielle will clerk for a civil judge in the Superior Court of New Jersey.

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