Spoliation

When Can Spoliation Result in an Adverse Inference Jury Instruction? Where there was an Obligation to Preserve, a Culpable State of Mind, and Destruction of Relevant Evidence.

Employers should take note: erasing and taping over messages that relate to a fired employee is never a good idea. Employers who engage in this type of practice will never escape the wrath of a judge when the fired employee inevitably brings a wrongful termination. Eventually, such action catches up with the defending company and they will have to pay a steep price. Take, for instance, the case Novick v. AXA Network, LLC. The plaintiff was asking the judge for sanctions to be imposed on the defendants because he claimed that the defendants spoliated audio recordings and emails from an eight-week stretch, which ran from late August until early November 2006. The defendants admitted that recordings from this time period were likely erased and taped over. The problem here is that this stretch of time covers the time directly before and directly after Novick’s termination. It should seem obvious to anyone that a company’s failing to preserve any recordings regarding a former employee’s termination is a terrible idea and will likely hurt one’s case in court. It should instead be common sense that when an employee is terminated, and certainly when that termination is contentious, a lawsuit is foreseeable.  Thus, the employer should take care to preserve anything that might come into play at trial. Novick asked the judge to sanction the defendants for the spoliation of emails. The defendants could not produce any emails between the two employees at AXA Network, who took over Novick’s accounts, and Novick’s former clients. If these employees were involved with Novick’s clients after Novick was fired, it is only logical that there would have been emails taking place between these employees and those clients! Nevertheless, the defendants could not produce a single e-mail. Sanctions can be imposed on a party for spoliation in violation of a court order under Rule 37(b) of the Federal Rules of Civil Procedure or, where there has been no violation of a court order, a judge can impose sanctions for spoliation under the court’s “inherent power to control litigation.” West v. Goodyear Tire & Rubber Co., 167 F.3d 776, 779 (2d Cir. 1999) (emphasis added). For the court to exercise its inherent power, there must have been a showing of bad faith. United States v. Int’l Bhd. of Teamsters, 948 F.2d 1338, 1345 (2d Cir. 1991). The Novick court in this case found that the defendants did spoliate the audio recordings because they were notified in October 2006 to preserve the recordings for future litigation and to produce those recordings  to the plaintiff. In addition, the defendants provided no reason for why or how these recordings were missing. Unsurprisingly, the court suggested that such behavior indicates that the company acted deliberately and therefore possessed a culpable state of mind. The defendants acted in bad faith. The court did not find that the defendants spoliated the email messages, but it still believes they acted in bad faith with respect to the production of the emails because the company failed to search one of their email archives for months due to what was claimed as “human error.” This was clearly a delay tactic, further warranting sanctions. The court invoked its inherent power to control litigation because the defendants acted in bad faith, employed delay tactics, caused substantial costs to be incurred by the plaintiff, and wasted the court’s time. The court imposed an adverse inference jury instruction. Adverse inference instructions can be imposed against a party who had an obligation to preserve evidence at the time it was destroyed, who destroyed the evidence with a culpable state of mind, and who destroyed evidence that was relevant to the opposing party’s claim or defense. Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 107 (2d Cir. 2002). The clear takeaway from this case is that it is better to be safe than sorry; if it is reasonable that a lawsuit may be brought against you, take all measures to preserve any evidence that might have anything to do with that future case. Preserving the evidence will not hurt, but failing to do so will. Logan Teisch received his B.A. in Government and Politics from the University of Maryland, College Park in 2012. He is now a student at Seton Hall University School of Law (Class of 2015), focusing his studies in the area of criminal law. Logan’s prior experiences include interning with the Honorable Verna G. Leath in Essex County Superior Court as well as interning with the Essex County Prosecutor’s Office. Want to read more articles like this?  Sign up for our post notification newsletter, here.

When are sanctions issued based on evidence destroyed during the ordinary business protocols?

Companies issue laptops to their employees to be used for business purposes both in the office and at home. A company’s distributing laptops is joined with the company’s responsibility to preserve the electronically stored information (ESI) when litigation is reasonably anticipated. Every company has its own “ordinary business protocol” to be used in relation to these laptops when a situation requires it, but sometimes these protocols lead to bigger issues. In Hawley v. Mphasis Corp., the United States District Court for the Southern District of New York granted an adverse inference instruction regarding a supervisor’s laptop, but not for the employee laptop. In Hawley, an employee of the defendant company brought an employment discrimination claim and moved for sanctions against the defendant for alleged discovery violations; those of which, in particular, were violations regarding spoliation of information on two company laptops.  The employee alleged that the company deleted all information from his work laptop, as well as his supervisor’s information, and did not produce records vital to the defendant’s case. The company countered, arguing that clearing the hard drive of a former employee’s laptop was the business protocol. In evaluating the request for an adverse inference sanction, the district court explained that the plaintiff must demonstrate: “(1) that the party having control over the evidence had an obligation to preserve it at the time it was destroyed; (2) that the records were destroyed with a culpable state of mind; and (3) that the destroyed evidence was relevant to the party’s claim or defense such that a reasonable trier of fact could find that it would support that claim or defense.” Hawley v. Mphasis Corp., No. 12 Civ. 592 (DAB) (JLC), 2014 WL 3610946, at *7 (S.D.N.Y. July 22, 2014) (quoting Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 107 (2d Cir. 2002)). As to the supervisor’s computer, the court held for an adverse inference sanction because the company had a duty to preserve the supervisor’s data from the time of the EEOC filing.  Furthermore, the company negligently destroyed the records on the laptop , which were found to be highly relevant to the employee’s case.  In regards to the employee’s computer, the court found both a duty and the requisite culpability; however, the court did not believe that the employee sufficiently proved how relevant the information was to his case. The lesson to extract from this case is that the courts do not care if your company’s protocol requires one procedure to be followed (i.e., wiping a hard drive) when it comes to the spoliation of relevant evidence.  The company’s wiping the hard drives is trumped by a duty to preserve data when a lawsuit is reasonably anticipated. The ruling in Hawley demonstrates that, in an employment case, the receipt of an EEOC charge triggers the obligation to preserve all data, but it could arise earlier depending on the circumstances. Be aware of when a lawsuit is reasonably anticipated and do not hesitate to act and preserve. Such awareness will help your company in the long run. With that, be on top of the individuals responsible for preserving company data and ensure those individuals are complying with company policy. One does not want to need a hard drive that has no data saved on it. Evidence must be preserved until litigation is resolved or no longer reasonably anticipated, and as courts become stricter with this rule of law, so should every company.  A look at the circumstances and a possible deviation from ordinary protocols may be needed. For more information on the case used as precedent, Residential Funding Corp. v. DeGeorge Fin. Corp., click here: http://caselaw.findlaw.com/us-2nd-circuit/1003010.html. Amanda is a third year student at Seton Hall University School of Law, where she is pursuing a J.D. with a certificate in Health Law. Prior to law school, she was a 2011 magna cum laude graduate of Seton Hall University, where she earned Bachelor of Arts in Political Science and a minor in Philosophy. Presently, she is a law clerk at a small firm handling real estate and bankruptcy matters. After graduation this native New Yorker hopes to work at a mid-sized firm in the Big Apple. Want to read more articles like this?  Sign up for our post notification newsletter, here.

What Conduct is Necessary for the Court to Impose a Dispositive Sanction?

In cases involving a large amount of e-discovery, it is common for a litigant to be accused of misplacing or destroying relevant evidence.  When evidence is lost, the court must evaluate whether sanctions are appropriate, and if so, what type of sanctions should be imposed.  In making this determination, the court will consider the following factors: (1) the degree of fault of the spoliation party, (2) the degree of prejudice to the adverse party, and (3) whether there is a less severe punishment that would avoid substantial unfairness to the adverse party while still serving to deter similar spoliation by others in the future. In Micron Technology, Inc. v. Rambus Inc., the parties sued and countersued for claims relating to patent infringement.  During discovery, the court determined that Rambus destroyed a significant amount of documents relevant to the lawsuit.  Specifically, Rambus engaged in three “shred days” (also known within the company as a “shredding parties”) where evidence was destroyed pursuant to the company’s document retention policy.  Much of this evidence, however, was lost after a litigation hold was in place. In order to determine if sanctions were appropriate, the court first analyzed whether there was any bad faith on the part of Rambus.  The court explained that bad faith requires a showing that the “spoliating party intended to impair the ability of the potential defendant to defend itself.”  The court found that during the shred days, employees were instructed to be selective about which documents they destroyed.  Employees were told to “expunge documents questioning the patentability of Rambus inventions,” while at the same time to “look for things to keep that would help establish that Rambus had intellectual property.”  Further, Rambus employees testified that they were destroying documents in preparation for the “upcoming battle” of litigation.  Ultimately, the court determined that Rambus destroyed documents in bad faith. Next, the court examined whether Rambus’s bad faith shredding parties caused prejudice to its adversary.  Prejudice “requires a showing that the spoliation materially affects the substantial rights of the adverse party and is prejudicial to the presentation of its case.”  The court explained that when bad faith exists, the spoliating party bears the “heavy burden” of showing a lack of prejudice.  The court explained that Rambus failed to meet this heavy burden and enumerated multiple claims and defenses that were prejudiced by Rambus’s bad faith destruction of evidence. Finally, the court considered whether a dispositive sanction is an appropriate sanction under these circumstances. The court explained that when there is “clear and convincing evidence that the spoliation was done in bad faith and was prejudicial to the opposing party, then dismissal may be an appropriate sanction” as long as a lesser sanction would serve as an adequate deterrent. The court considered whether an award of attorney’s fees or other monetary sanctions would be appropriate, but ultimately rejected these “relatively mild sanctions [that were] disproportionate to the degree of fault and prejudice at hand.”  Next, the court analyzed whether an adverse jury instruction would be a proper sanction.  The court rejected this sanction as being inadequate punishment and deterrence in light of Rambus’s extensive bad faith spoliation.  Lastly, the court considered whether an evidentiary sanction would be an adequate remedy.  This sanction would foreclose Rambus from offering any evidence related to the subject matter of the destroyed documents.  Once again, the court found this sanction to be unsatisfactory due to Rambus’s extensive destruction of evidence.   Therefore, after considering the extraordinary circumstances of this case, along with the lesser sanctions available, the court found that the only appropriate sanction was to hold Rambus’s patent-in-suit claims unenforceable against its adversary. In sum, the court held that a dispositive sanction is appropriate when a party destroys evidence in bad faith, the destruction is prejudicial to the adversary, and no lesser sanction would be appropriate to punish and deter similar action.  It should be noted that dispositive sanctions are rare, but nonetheless are warranted when “destruction of evidence is of the worst type: intentional, widespread, advantage-seeking, and concealed.” E-DiscoParty, a Seton Hall University School of Law graduate (class of 2014), served on the executive board of the Seton Hall Law Review and is a member of the Interscholastic Moot Court Board.  E-DiscoParty currently clerks for a Justice on the Supreme Court of New Jersey. 

Can a Court Sanction a Pro Se Party for Deleting Evidence? The Third Circuit Will, So Do Not Delete Your Data!

Whenever sanctions are involved, you can expect to see questionable behavior from one or more parties.  In this particular case, a pro se litigant tried to be cute and the court called him out for it.  The Appellant here used to own a company which provided consulting services to the Appellee.  Since the company became defunct, the owner became the only remaining party being sued. The district court had entered a discovery preservation order in which the parties agreed the appellant would return a laptop computer along with all of its data.  However, the appellant deleted data off the laptop minutes before signing the agreement.  Then the appellee initiated post-settlement litigation to obtain sanctions.  The appellant’s attorney then withdrew and the appellant continued pro se.  The judge found the appellant to be in civil contempt and awarded sanctions of over $50,000. The appellant raised three contentions on appeal.  First he argued sanctions under 28 U.S.C. § 1927 could only be awarded against attorneys, not pro se individuals.  Circuits are split on this issue.  The Third Circuit navigated around the issue, asserting that the district court judge could have justified its sanction under other grounds. Second, the appellant argues that monetary sanctions should not have been awarded because the information was deleted before the discovery agreement was signed.  The Third Circuit called out the argument as being a bit too clever and was not persuaded.  It all but accused the appellant of deliberately misleading the district court.  More damning was the actual language of the agreement.  It exposed the appellant to liability arising from the agreement itself, which governed the return of the laptop. Third, the appellant challenges the award for all attorneys' fees.  On this issue the Third Circuit remanded for a determination of what fees fairly reflect compensation for the appellant's contumacious conduct.  What is more vital here is the punishment for deleting data off the computer.  Those who try to outsmart the court will get their just deserts and acting pro se does not provide any sort of loophole.

Facebook Fails: Can I Delete my Facebook while a Lawsuit is Pending?

The defendant in personal injury litigation commonly requests discovery concerning a plaintiff’s Facebook account.  The reason such requests are made is that pictures on Facebook may reveal the “injured” plaintiff dancing on top of a bar table, skiing, traveling, etc.  These damaging photos may prove that the plaintiff’s injury is not as severe as he or she claims and could result in dismissal of the case.  Therefore, it is not uncommon for a plaintiff to delete his or her Facebook account in order to conceal any damaging pictures.  The deletion of a Facebook account, however, may result in sanctions such as an adverse inference jury instruction.[1] In Gato v. United Airlines, Inc., the plaintiff was injured while working for the defendant.  During the litigation, the plaintiff permanently deleted his Facebook account.  The defendant motioned for an adverse inference jury instruction claiming that the deletion of the Facebook account destroyed relevant evidence, thereby prejudicing the defendant. In granting the sanction, the district of New Jersey adopted a very low standard as to what a litigant must show in order to obtain an adverse inference jury instruction.  The court held that “so long as evidence is relevant, the offending party’s culpability is largely irrelevant, as it cannot be denied that the opposing party has been prejudiced.”  This seemingly simple sentence has enormous implications for litigants in the district of New Jersey for two reasons. First, it means that as long as the destroyed evidence was relevant, a litigant need not prove that the adversary intentionally (or even negligently) destroyed evidence.  The lack of state of mind requirement eliminates what is often the most difficult element to prove when seeking spoliation sanctions.  Without the need to prove a litigant’s culpability in destroying the evidence, the court seems to impose a form of strict liability upon the destroying party.  The only requirement imposed by the court is that the party seeking sanctions prove that the destroyed evidence was relevant.  This is a significant deviation from the traditional method employed by courts which requires proof that a party was at least negligent in destroying the evidence. Second, the court indicates that as long as the evidence is relevant, it will presume that the destruction of the evidence was prejudicial to the opposing party.  This eliminates the need for the party seeking sanctions to prove that it was prejudiced by the missing evidence.  Instead, the party only needs to prove that the evidence was relevant. Notably, the court explained that the defendants in Gato were “prejudiced because they have lost access to evidence that is potentially relevant to Plaintiff’s damages and credibility.”  In other words, the defendant in Gato did not have to even prove that the destroyed evidence was undoubtedly relevant—the defendant only had to prove that the evidence was potentially relevant. In sum, the District of New Jersey imposed an adverse inference jury instruction simply because the destroyed evidence was potentially relevant to the litigation.  The court did not require the defendant to show that it was prejudiced by the destruction, nor did the court require any showing as to the Plaintiff’s state of mind in destroying the evidence.  Moving forward, litigants must be extra careful in their efforts to preserve evidence relevant to litigation. E-DiscoParty, a Seton Hall University School of Law graduate (Class of 2014), served on the executive board of the Seton Hall Law Review and is a member of the Interscholastic Moot Court Board.  Currently, E-DiscoParty clerks for a Justice on the Supreme Court of New Jersey.  [1] An adverse inference jury instruction is a powerful sanction where the court advises the jury to presume that any destroyed or missing evidence contained detrimental information about the party that destroyed or lost the evidence.

Employers—Got Resumes? Don’t Toss Them Just Yet

Plaintiff Erick Zayas joined with the Equal Employment Opportunity Commission (EEOC) to sue Ventura Corp. for employment discrimination on the basis of sex in 2007. In essence, Zavas complained that Ventura’s long-standing tradition of hiring women for the position he applied to was discriminatory. Furthermore, Zavas alleged that Ventura destroyed relevant evidence. In its answer, Ventura stated that the fact that no men have filed applications or have not met the position requirements did not support the plaintiffs’ assertion of discrimination. However, during limited discovery a list revealed that qualified men did in fact apply and accounted for 34.5 percent of qualified applicants. The central issue involved application materials received by Ventura. These included materials submitted by e-mail and hard copy resumes. The court first notes that spoliation is “the failure to preserve evidence that is relevant to pending or potential litigation.”  The duty to preserve relevant evidence arises once litigation is reasonably anticipated. The court noted that since Ventura was notified in 2007 that it was being charged with sexual discrimination, at that point Ventura should have reasonably anticipated litigation and was thus under the duty to preserve. Ventura attempted to make a statutory argument that resumes did not need to be preserved. The relevant statute, 29 CFR 1602.14 (see http://www.law.cornell.edu/cfr/text/29/1602.14), makes reference to “application forms” and “test papers.” Ventura argued that it required neither application forms nor test papers and that resumes were not mentioned. However, the court rejected this argument. The court noted that the statute also includes the language, “other records having to do with hiring.” The court ultimately held that resumes therefore clearly applied. Ventura’s Human Resource Analyst testified that certain documents were shredded or taken to a warehouse as a result of an office restructuring in 2009. Furthermore, the HR Analyst wasn’t able to find the said documents. The plaintiffs were therefore able to establish that Ventura either lost or destroyed the resumes between 2007 and 2010. Because Ventura was on notice since 2007, the disappearance of these documents constituted a violation of its duty to preserve relevant evidence. Soft copies of resumes delivered by e-mail were also lost in the same time period. In fact, th plaintiffs were able to produce a relevant e-mail to and from Ventura, while Ventura was not able to produce the very same e-mail. This e-mail alone and the fact that other relevant e-mails likely existed in the 2007-2010 period but were nowhere to be found, was sufficient to infer that Ventura likely destroyed them. The court held that sanctions were in order for Ventura’s violation of its duty to preserve. As a result of Ventura’s failure to preserve relevant evidence, the court imposed a “spoliation instruction” or adverse inference instruction. Such an instruction allows the trier of fact to infer that the content of the destroyed relevant evidence was damaging to Ventura’s case. Lesson learned? If you intentionally or unintentionally destroy relevant evidence while under a duty to preserve, an adverse inference instruction will likely bring swift defeat and sway the trier of fact against you. It’s best to preserve evidence and maintain your credibility with the court and trier of fact even with bad facts. Rocco Seminerio is a Seton Hall University School of Law graduate (Class of 2014). Mr. Seminerio focuses in the areas of Estate Planning, Elder Law, and Health Law. He graduated from Seton Hall University in 2011 with a degree in Philosophy. He also has an interest in the life sciences.

Does a Litigation Hold Require the Preservation of Employee Text Messages? Big Problems in Little Packages: Lost Cell Phone Leads to Spoliation Sanctions

Big things can often come in small packages, especially in the field of eDiscovery.  In Christou v. Beatport, LLC, the defendants learned that something as small as a text message on a lost cell phone can lead to a bevy of headache-inducing preservation issues, even without proof that the lost texts actually contained relevant information. Originally, the two parties worked together to create Beatport, an online marketplace dedicated to promoting and selling electronic dance music.  When that relationship eventually fell apart, the plaintiff, a prominent nightclub owner, brought suit against Beatport and his former employee who, as a “talent buyer,” was responsible for attracting DJs to perform at the plaintiff’s venues.  The plaintiff claimed that since the falling-out, the former talent broker had been strong-arming DJs against performing at the plaintiff’s nightclubs by threatening to drop them from his now high-profile website. Soon after the case was filed, the plaintiff issued a litigation hold letter to the defendants seeking the preservation of electronically stored information.  Despite the fact that this letter specifically referenced text messages, the defendants made no effort whatsoever to preserve the text messages on the former employee’s cell phone.  Of course the phone was then lost, about a year and a half after the hold should have been instituted. The plaintiff sought spoliation sanctions in the form of an adverse jury instruction.  The defendants attempted to shelter themselves from punishment behind testimony that the former talent broker did not use texts to contact clients and no proof was offered that there was relevant evidence anywhere in the phone.  Thus, the defendants felt the plaintiff’s motion was entirely speculative. Given the disappearance of the phone, the court recognized that there was simply no way to know whether it contained any relevant evidence.  There was also no evidence that the defense had done their due diligence by reviewing the text messages to determine whether any were responsive to the plaintiff’s discovery requests. The court explained that spoliation sanctions are appropriate when “(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.”  Here, there was no question that the defendants neglected their duties by failing to make any effort whatsoever to preserve the text messages. Because the loss of the phone was an accident, or at the most the result of negligence, an adverse jury instruction was unwarranted because it would be too harsh a punishment.   Instead, the court permitted the plaintiffs to present evidence at trial about the litigation hold and the defendant’s failure to abide by it.  Despite finding no foul play by the defendants, sanctions were necessary because “[a] commercial party represented by experienced and highly sophisticated counsel cannot disregard the duty to preserve potentially relevant documents when a case like this is filed.” The previous sentence best sums up the defendants’ actions.  They completely shirked all responsibility by failing to turn over the requested text messages or securing the phone itself.  Even though the phone was lost accidentally, spoliation sanctions were warranted because of the defendants’ complete disregard of their preservation duties.  The time and money spent belaboring this eDiscovery dispute could have  been completely avoided if the defendants simply preserved all of its electronically stored information, especially those documents specifically mentioned in a litigation hold.  Instead, the defendants suffered what probably turned out to be significant financial consequences fighting the motion and were left to combat incredibly damaging evidence at trial. Jeffrey, a Seton Hall University School of Law graduate (Class of 2014), focused his studies primarily in the area of civil practice but has also completed significant coursework concerning the interplay between technology and the legal profession.  He was a cum laude graduate of the University of Connecticut in 2011, where he received a B.S. in Business Administration with a concentration in Entrepreneurial Management. 

Think Plaintiffs Have All the Leverage? Not If They Spoliate.

Individual plaintiffs often exert settlement leverage against corporate defendants because, irrespective of the merits of the suit, the prospective costs of litigation coerce early settlement.  Therefore, an individual plaintiff often has nothing to lose.  Even if a plaintiff’s suit is meritless, often times the worst case scenario faced is dismissal of the suit.  Additionally, where a case is taken on a contingent fee basis, an individual plaintiff is merely left where they started.  However, Taylor v. Mitre Corp. shows that in some circumstances an individual plaintiff can in fact find himself or herself in a worse position than prior to litigation. In Taylor, the plaintiff of the same name filed suit against his former employer, The Mitre Corporation, alleging violations of the Family Medical Leave Act and Americans with Disabilities Act.  However, it was Taylor that was soon on the defensive.  First, Taylor was accused of spoliating evidence when he smashed a work computer with a sledge hammer.  It is not clear what sanctions resulted from this conduct; however, the court did not remain quiet following Taylor's later response to the Magistrate Judge's ordering Taylor to produce his laptop for inspection.  Upon issuance of the order, Taylor promptly ran specialized programs—Evidence Eliminator and CCleaner—on his computer for the clear purpose of deleting relevant data and information. Upon learning of Taylor's second act of spoliation, the court sanctioned Taylor by dismissing his suit.  A severe sanction, of course, but it is arguable whether dismissal alone serves as an effective deterrent to future spoliation of evidence.  After all, if a plaintiff has extensively spoliated evidence, it is likely that a plaintiff’s case was not meritorious in the first place.  Additionally, dismissing a non-meritorious suit will merely leave the plaintiff where he started and leave the defendant out a bundle of unnecessary litigation costs. Accordingly, the court not only dismissed Taylor's suit but also found him responsible for Mitre's reasonable fees and costs associated with the motion for sanctions—$202,399.66 in total.   The court arrived at this total by applying the lodestar methodology and was not swayed by Taylor's claim of financial hardship.  It is believable that an individual plaintiff will be hard-pressed to pay such costs; however, the court reasoned that reducing an award of fees and costs is appropriate where the full sanction will have a chilling effect on the filing of future, potentially meritorious, claims.  The court found that imposing sanctions for bad-faith spoliation would not have such a chilling effect, and therefore refused to reduce the award in favor of Mitre. So what's the moral of the story?  In many cases a plaintiff will have little to lose and the nuisance value of their suit places them in strong settlement position.  But conduct by the plaintiff in bad-faith can quickly shift this leverage. Adam L. Peterson is a graduate of Seton Hall University School of Law (Class of 2014).  Adam was a member of the Seton Hall Law Review and, prior to law school, Adam was an Environmental Analyst with the New York State Department of Environmental Conservation.  

Is Negligent Spoliation of Evidence Sufficient to Warrant Permissive Adverse Jury Instruction?

An employer doesn’t need an attorney to tell him or her that destroying evidence relevant to litigation may make the court very unhappy.  Often times, when a party acts in bad faith by intentionally destroying evidence, the court will impose a sanction such as an “adverse inference” jury instruction.  This type of instruction orders the jury to infer that the missing evidence would have been detrimental to the guilty party.  But what if a party did not intentionally destroy evidence in bad faith, but rather lost the evidence due to a negligent mistake?  Should the same adverse inference instruction be used? In Pillay v. Millard Refrigerated Services, the court held that even if a party is merely negligent in destroying evidence, a jury may presume that the evidence would have been unfavorable to that party.  This permissive adverse inference instruction differs from the circumstances where the court determines that the party acted in bad faith because the court gives the jury the option of making an adverse inference.  Typically, when bad faith is present, the court will instruct the jury that it should presume the missing evidence is detrimental to the party who destroyed it.  This instruction differs from the instruction in Pillay where the court gave the jury the option of making the adverse inference. The Pillay court imposed a permissive adverse inference jury instruction when an employer negligently deleted relevant information.  The employer claimed that it terminated an employee because the employee’s production levels were down.  The employee claimed that he was terminated for unlawful reasons and that the employer’s labor management system (“LMS”) would show that the employee’s production level exceeded expectations. The employer, however, no longer possessed the LMS data because of routine deletions of the data after one year.  The data was deleted despite opposing counsel’s numerous requests to preserve all relevant documents and evidence. The employer argued sanctions were not warranted because the LMS data was not deleted intentionally or in bad faith.  The court rejected this argument holding that even without a showing of bad faith, the court has the discretion to impose sanctions when a party’s negligence causes information to be lost.  The court sanctioned the employer with the following permissive adverse jury instruction: Pillay contends that Millard at one time possessed data documenting [an employee’s] productivity and performance that was destroyed by Millard.  Millard contends that the loss of data was accidental.  You may assume that such evidence would have been unfavorable to Millard only if you find by a preponderance of the evidence that (1) Millard intentionally or recklessly caused the evidence to be destroyed; and (2) Millard caused the evidence to be destroyed in bad faith. Moving forward, this case means litigants must be extra careful in preserving evidence that may be relevant to litigation.  One negligent misstep, even if done without any showing of bad faith, may be the cause of an adverse jury instruction that can potentially be the deciding factor in a lawsuit. E-DiscoParty, a Seton Hall University School of Law graduate (class of 2014), served on the executive board of the Seton Hall Law Review and is a member of the Interscholastic Moot Court Board. E-DiscoParty now clerks for a Justice on the Supreme Court of New Jersey. 

Proof and Prejudice: Court Refuses Adverse Inference Sanction Due to Lack of Proof of Prejudice, Despite Proof of Spoliation

One might think that in a lawsuit if your adversary is caught breaking the rules there might be some penalty. However, in Cottle-Banks v. Cox Communications, the Honorable Gonzalo P. Curiel of the District Court for the Southern District of California held otherwise, allowing the defendant’s misconduct to go unpunished. This case started when Brittini Cottle-Banks alleged “that Cox has violated the negative-option-billing provision of the federal Cable Act by failing to disclose and obtain customers’ consent to be charged for monthly rental fees associated with their cable set-top boxes.” Due to this allegation, Cox had a duty to preserve any potentially relevant evidence. The evidence in question consists of records of telephone calls made to Cox by customers. Despite being put on notice that they had a duty to not record over the records of these calls, Cox did just that. This taping over resulted in about 6 months worth of calls being taped over. With proof of this spoliation of evidence, Cottle-banks moved for an adverse inference sanction; an order from the court instructing a jury to assume that whatever was deleted was evidence against Cox. However, the 9th Circuit does not have a rule on this sanction so Judge Curiel used the standard from the second circuit. For an adverse inference sanction a party must establish that their adversary: had control of the evidence, a culpable state of mind, and the spoiled evidence was relevant and supportive of a party’s claim or defense The evidence of these first two elements is clear. Cox clearly had control and their failure to preserve despite being put on notice is indicative of a culpable state of mind. However, because “the burden falls on the ‘prejudiced party’ to produce ‘some evidence suggesting that a document or documents relevant to substantiating his claim would have been included among the destroyed files.” Since Cottle-Banks had no proof that she was prejudiced by Cox’s spoliation of evidence, the Court refused to grant an adverse inference sanction. Thus, if you are going to move for an adverse inference sanction, be sure to have some proof of prejudice. Matthew G. Miller, a Seton Hall University School of Law student (Class of 2014), focuses his studies in the area of Intellectual Property. Matt holds his degree in Chemistry from the University of Chicago. Currently, Matt works as a legal intern at Gearhart Law.