United States: Spoliation: How Failing To Preserve Evidence Can Spell Disaster For Your Case

Last Updated: May 24 2018
Article by Robert Quinn

Whether it is a defective product, an unmaintained piece of equipment, or even a security tape, failing to preserve evidence relevant to the claimant's injury may be devastating to your case.  When a party destroys or fails to preserve material evidence, even if the conduct is not intentional, a court is authorized to impose a wide range of sanctions against the offending party.

While sanctions for spoliating evidence were initially a shield to be used by parties prejudiced by the destruction of evidence, recently plaintiff's attorneys are using such spoliation sanctions more as a sword to maintain or even revive an otherwise a weak case.  It is a common practice now for attorneys to send businesses "preservation letters" before defense counsel gets involved and then later using the failure to preserve evidence as a basis to maintain a potentially frivolous claim by arguing that defendant's failure to preserve some piece of evidence has prevented the plaintiff from proving their case.  The duty to preserve begins when litigation is reasonably foreseeable. As soon as a potential claim is identified, a litigant is under a duty to preserve evidence that it knows or reasonably should know is relevant to the action. Because a potential claim may be identified in prelitigation correspondence, the duty to preserve may start months or even years before a complaint is filed. 

In order for the Court to find spoliation, it must apply a two-part test:  first, whether the evidence at issue is "relevant and necessary" to the litigation; and second, whether there was "contemplated or pending litigation" at the time of the alleged spoliation.  When determining whether to impose sanctions for spoliation, the courts look at various factors.  The trial court looks a: (1) whether the party seeking sanctions was prejudiced as a result of the destruction of the evidence; (2) whether the prejudice could be cured; (3) the practical importance of the evidence; (4) whether the party who destroyed the evidence acted in good or bad faith; and (5) the potential for abuse if expert testimony about the evidence was not excluded.  Because such an analysis by the court is completely within its discretion, it is even more important that any evidence that may be relevant to the plaintiff's claim be preserved as best as possible.

There are many examples of business being sanction for not preserving even the minutest evidence.  In the case of Kroger Co. v. Walters, the court sanctioned Kroger for failing to preserve a videotape of the alleged incident.  While the videotape itself did not cause the alleged incident, the plaintiff argued that it contained evidence of what really happened.  The court found that the spoliation of this evidence was so egregious that Kroger was prohibited from defending the claim.  Even though Kroger may have had valid defenses to the ultimately refute the plaintiff's claim, Kroger was barred from doing so because it failed to preserve the evidence.

Similarly, in the case of Howard v. Alegria, a pickup truck driver was involved in a collision with a commercial tractor trailer.  Following the accident, the owner of the tractor trailer was notified that the pickup truck driver wanted to inspect the tractor trailer involved in the accident.  Instead of preserving the tractor trailer in the same condition it was following the accident, the tractor trailer company had in fact repaired the tractor trailer shortly after the accident.  Because the vehicle had already been repaired, the plaintiff was prohibited from inspecting the vehicle and determining what, if anything, was wrong with the tractor trailer at the time of the collision.  Not only did the tractor trailer company repair the vehicle before the plaintiff had an opportunity to inspect it, but they also destroy all of the on-board tracking data, including the crash data.  The court found that the tractor trailer company had intentionally prejudiced the plaintiff by spoliating crucial evidence.  As a result of the tractor trailer company's failure to preserve this evidence, the court sanctioned the company by striking its answer and defenses.

While the two examples provided above involved intentional acts by the defendants to destroy relevant evidence, a court can impose sanctions even if the conduct was not willful.    

As a business owner, you should take steps to ensure that all evidence relating to an incident are preserved as soon as it comes to your attention.  This may include collecting damaged equipment or contacting your security provider and asking them to save the any video footage from the day of the incident.  Contacting your security provider is especially important to remember since many video surveillance systems automatically delete the footage every seven days.

 In order to ensure that all the relevant information is preserved, implementing a "litigation hold" policy is recommended.  While most companies have a routine document retention/destruction policy, the litigation hold ensures the preservation of relevant documents and other relevant evidence.  A litigation hold is instructs employees (as well as other potential custodians of certain documents) to retain and preserve relevant evidence in response to a contemplated or pending litigation. The hold should be in writing and distributed to those individuals who are most likely to have relevant information, such a administrative staff and the IT department.  The litigation hold should also provide some guidance regarding the types of documents that are relevant along with any applicable date ranges.  The sooner this information is disseminated to the proper employees, the better chances you have to preserve all relevant evidence.  It is important to note that a party's obligations do not end with the issuance of a litigation hold letter. You and your attorney should take steps to ensure that all sources of potentially relevant information are identified and placed "on hold."  Furthermore, this duty to preserve evidence will be in place for the entire duration of the litigation, which in some cases, may take years.  You may hire new employees during the course of the litigation. To the extent that those employees become the custodians of potentially relevant evidence, it is essential that they receive a copy of the current litigation hold and are aware of their duty to preserve.

The technological advances may also cause special challenges to the duty to preserve potentially relevant evidence. To comply with the duty to preserve, you should consider all sources of electronically stored information used by your employees, including text messages, voicemail messages, videos recorded on smartphones, etc.  One way to avoid any potential spoliation of relevant information is to limit prohibit employees from conducting work on any personal laptops or personal cell phones.  While this may be cost prohibitive, it will reduce the chances of losing critical information inadvertently.  Another way to reduce the risk that potentially relevant information is accidentally destroyed is to instruct your employees to refrain from conducting business using the employees' personal email accounts or personal phone numbers as that information may be outside the company's network and data retention system.  While these restrictions may seem cost prohibitive to you or frustrating to your employees, the potential sanctions imposed for failing to preserve this evidence may be significantly greater.

Judges and juries are increasingly holding companies liable for failing to preserve documents or other evidence relevant to litigation, even the evidence was destroyed unintentionally.  Understanding when a potential claim arises and implementing a "litigation hold" policy will significantly diminish the risk that relevant evidence will be lost.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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