Eric Pesale, Esq., Guest Writer
Spoliation:
(noun) spōlēˈāSHən – Spoliation of evidence is the intentional, reckless, or negligent withholding, hiding, altering, fabricating, or destroying of evidence relevant to a legal proceeding.
No matter what kinds of cases your organization is dealing with, you’ll need to take reasonable steps to preserve evidence in anticipation of current or imminent litigation. This is especially true if you’re dealing with electronically-stored evidence (ESI).
When handling ESI, spoliation is a critical risk factor. Editing a single letter in a text file or altering a minor piece of metadata can be enough to raise presumptions of tampering. And, in turn, make your evidence inadmissible.
Spoliation can open your business up to liability issues and litigation headaches in U.S. federal courts. Many of these stem from Federal Rules of Civil Procedure (FRCP) Rule 37(e), which describes the different ways courts can sanction parties who intentionally or unintentionally fail to take reasonable steps to preserve evidence during litigation. Here are some ways spoliation can frustrate your litigation goals.
1. You Could Face Unnecessary Discovery Issues Tied to Your Information Governance and Data Retention Policies
It’s important to have defensible information governance and legal hold programs when organizing and storing your ESI. Many businesses take a “siloed” approach to information. Meaning each corporate department or division maintains its own separate data retention and organization rules, leading to disorganization and inconsistency in locating and preserving ESI.
Without a uniform strategy for locating, preserving, and producing evidence, organizations are at risk of increased spoliation which can lead to major legal repercussions.
Peter Kiewit Sons, Inc., v. Wall Street Equity Group, Inc., underscores this. In this trademark infringement case, the defendants did provide evidence that they used data retention systems. However, there was a major problem. The systems they used required employees to internally delete all copies of correspondence they had with their clients—including marketing materials containing relevant evidence—unless they brokered sales with them.
This meant that only the defendant’s customers possessed documents that were relevant to the trademark dispute. While the court noted there was nothing wrong with using a document retention system that incorporated defensible deletion policies, it found that the defendant had an “essentially non-existent retention policy” that made it “an unreliable source of discovery”.
As a result, the court stated that the defendant would be unable to defend from any claims against it and allowed the plaintiff to subpoena the defendant’s customers for relevant ESI. This, of course, wouldn’t have happened had they preserved and maintained relevant documents in ways that conformed to standard business practices.
Although the case occurred before revised FRCP 37(e) was enacted, courts would likely arrive at the same result today. As the advisory committee’s 2015 comments indicate, courts will still consider whether companies had maintained records under the routine, good-faith operation of an electronic information system—and intervened to freeze that system when necessary—when determining whether parties took reasonable steps to preserve ESI.
2. It Could Create Burden of Proof Problems at Trial
When organizations are being sued, the plaintiff bears the burden of providing admissible evidence and credible witnesses to prove their claims. If plaintiffs are able to show that the sued organization intentionally destroyed or corrupted evidence in order to deprive them of the opportunity to use it at trial, judges have several options under FRCP 37(e)(2) that could make their burden of proof easier to bear.
First, courts can order that any lost evidence that was intentionally destroyed would be presumed to be favorable to the requesting party. While this might not represent a death knell for the sued organization’s case, it would likely need to introduce additional evidence and witness testimony to successfully overcome this presumption.
Judges can order even steeper sanctions depending on the severity of the spoliation. Judges, for example, can issue adverse inference instructions directing juries to presume any lost or corrupted evidence to be favorable to the plaintiff.
They can also decide to dismiss the organizations’ claims, dismiss the case entirely, or enter a default judgment in favor of the plaintiff.
3. You May Need to Fend Off Additional Discovery, Depositions, and Evidence-Related Restrictions
If the spoliation at issue was unintentional, a sued organization would still bear the burden of proof of demonstrating that any lost evidence would not have prejudiced the plaintiff. To satisfy this burden, the organization needs to show that the plaintiff was in a better position to produce destroyed or corrupted documents.
In case of failure, courts may direct the defendant to take necessary measures to make up for the prejudice. This means that judges can order an organization to compensate plaintiffs for attorney fees relating to any motions and other requests they made to obtain corrupt ESI.
They can also place limitations on what kinds of evidence the defendant can introduce at trial, or order that it provides increased access to key custodians, executives, and witnesses.
These avoidable scenarios can all equip plaintiffs with additional opportunities to request key evidence or elicit helpful testimony to help satisfy their burdens of proof. Courts could also order additional discovery under FRCP 16 and 26 regardless of whether they found the plaintiffs to be prejudiced by specific ESI spoliation.
4. You Could Face Additional Civil Liability For Spoliation Under State Law
While FRCP 37(e) does give judges discretion over whether to issue spoliation sanctions, they don’t preempt parties from directly suing businesses for spoliation under state law so long as state law applies to the case and authorizes these claims.
As of this writing, ten states have explicitly recognized some form of an independent tort action for spoliation. The parameters of what types of spoliation would qualify of this tort will vary from state to state.
Ohio, for example, recently narrowed the scope of their intentional spoliation tort in Elliot-Thomas v. Smith to only apply to parties who destroyed evidence instead of those who hid or concealed it. Still, it can present a real and present risk for organizations dealing with spoliation.
Organizations can lose cases simply because they didn’t use the right frameworks for organizing and preserving relevant ESI evidence.
Fortunately, you can avoid these risks by implementing defensible information governance, legal hold, collection, and preservation protocols.
Eric Pesale is an attorney who writes about business and legal issues for various publications, law firms, and companies. His articles on eDiscovery, cybersecurity, and information governance have been featured in CSO, The New York Law Journal, Above the Law, and Lexology. Eric is the founder and chief legal contributor of Write For Law®, and is admitted to practice in New York, Connecticut, and New Jersey.
