Courts nationwide consider destruction of evidence, commonly referred to as spoliation, as a very serious matter and are swift to penalize those who destroy or withhold relevant evidence, and to impose the harshest of sanctions of those who intentionally destroy evidence. A party seeking sanctions for destruction of evidence must generally establish (1) that the party that had control over the evidence had an obligation to preserve the evidence at the time that it was destroyed; (2) that the evidence was destroyed with a culpable state of mind, which means that the party destroyed the evidence knowingly or negligently; and (3) that the destroyed evidence was relevant to the party's claim or defense. Often, a finding that a party destroyed evidence will result in the court instructing the jury that it must or should draw an adverse inference against the offending party and assume that the destroyed evidence would have harmed the offending party's case. In most cases, that means game over for the offending party.
Recent decisions in the Second Circuit, however, demonstrate that a party accused of destroying or withholding relevant evidence may suffer a similar near fatal blow even when they have not been officially sanctioned for spoliation and even where the court has not made specific findings that a party's conduct warranted the imposition of an adverse inference sanction. The trend started in Mali v. Fed. Insur. Co., 720 F.3d 387 (2d Cir. 2013) where the Second Circuit held that the Connecticut District Court did not err when it permitted the jury to draw its own adverse inference when evidence surfaced during trial that the plaintiff may have withheld relevant evidence during discovery. In Mali, an insured plaintiff sued her insurance company when it refused to make payments for damage that she alleged that she suffered when a remodeled barn full of expensive personal property was destroyed by fire. The insurer requested photographs of the interior of the barn, including photographs of the second floor, where items worth hundreds of thousands of dollars were allegedly located. The insured responded that she had no pictures of the second floor of the barn, but a witness called in support of the plaintiff's claim testified that she had seen pictures of the second floor. The plaintiff rebutted the witness's testimony, testified that she did not have photographs of the second floor, and that the witness had been provided with pictures of the second floor-located personal property that were taken while the personal property was in a different location.
The insurer, based on the witness's testimony, moved the court to impose a mandatory adverse inference instruction. While the court did not grant the adverse inference instruction sought by the insurer, it ultimately instructed the jury that it had the ability to determine whether the insurer had proven by a preponderance of the evidence that the photograph existed, whether the photograph was in the plaintiff's exclusive possession, and whether the plaintiff had satisfactorily explained her non-production of the photograph. The Court further instructed that the jury could infer, but was not required to do so, that the photograph would have negatively impacted the plaintiffs case and could give that inference whatever weight or effect that it deemed appropriate. The jury found in favor of the insurer and the plaintiff appealed. The Second Circuit held that the instructive given in Mali was not a sanction or punishment that required the trial court to make specific findings. Instead, the Second Circuit found that the permissive adverse inference instruction given to the jury merely explained the jurors the inferences that they were free to draw in considering circumstantial evidence when making their determination.
More recently, the District Court for the Eastern District Court of New York has expanded the application of the permissive adverse inference instruction as a basis to deny a motion for summary judgment. In a March 2014 decision, the Court denied a motion for summary judgment when the non-moving party presented conflicting evidence regarding the existence or non-existence of unproduced still and video images of the incident that gave rise to the suit. Relying on Mali, the Court reasoned that the jury would have the responsibility to determine whether the evidence did or did not exist and to decide if it would take an adverse inference against the defendant if it determined that the evidence existed and was not produced. The simple potential that an adverse inference could be drawn by the fact-finder, along with other questions of fact, precluded the Court from granting the motion from summary judgment.
This trend is in its early stages, and it is yet to be seen how much reach or impact they have in the long run. Parties and their attorneys, however, should be mindful that just the accusation that they have wrongfully withheld or destroyed evidence could ultimately be held against them at trial, and should exercise as much caution as possible to ensure that potentially relevant evidence is neither withheld nor destroyed. Although the two decisions discussed above did not specifically concern electronic discovery, it is easy to see how they could be applied to a party withholding or destruction of electronically stored information. Decisions like these are the reason that it is important for clients to ensure that they have protocols and procedures in place regarding the storage and retention of electronically stored information, to train their employees about those protocols and procedures, and to institute a system of controls to ensure that their employees and officers are following those protocols. Likewise, these decisions reinforce to attorneys the importance of issuing and enforcing prompt litigation holds to ensure that clients retain evidence in accordance with their obligations under the law, as well as the importance of performing secondary and tertiary reviews of ESI in their possession to ensure that relevant evidence is not inadvertently withheld from production.
Originally published October 15, 2014
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