The Limits of Pre-Litigation Discovery Holds in California State Court and the Imposition of Sanctions for the Intentional Spoliation of Evidence
Owen M. Praskievicz, Esq.
Schwartz Semerdjian Cauley & Moot LLP
These days it is almost instinctual for attorneys to send discovery hold letters in anticipation of a lawsuit, and much has been written about their necessity. The idea is to put a party on notice of the need to preserve evidence and, whether it is electronic discovery or physical evidence that might otherwise be destroyed, it is undoubtedly considered a best practice for attorneys on both sides of the bar to keep an opponent’s evidence intact. There appears to be a disconnect, however, between the effect attorneys hope to accomplish with their litigation hold letters and what California law provides for if such a letter is ignored. This article seeks to clear up any confusion.
To be clear, under federal law there is no misunderstanding of a party’s duty in advance of litigation. “[A] litigant is under a duty to preserve evidence which it knows or reasonably should know is relevant to the action.” (In re Napster, Inc. Copyright Litig., 462 F. Supp. 2d 1060, 1067 (N.D. Cal. 2006)). The duty attaches “from the moment that litigation is reasonably anticipated.” (Apple Inc. v. Samsung Electronics Co., Ltd., 881 F. Supp. 2d 1132, 1136 (N.D. Cal. 2012).) “Once a party reasonably anticipates litigation, it must suspend its routine [evidence] retention/destruction policy and put in place a ‘litigation hold’ to ensure the preservation of relevant [evidence].” (Zubulake v. UBS Warburg, 220 FRD 212, 218 (S.D.N.Y. 2003).) Where a party has violated its duty to preserve evidence and engaged in spoliation, federal courts have the inherent power to impose sanctions. (See Sherman v. Rinchem Co., Inc., 687 F.3d 996, 1006 (8th Cir. 2012) (citations omitted)). Sanctions may include monetary sanctions, an adverse inference jury instruction, striking claims or defenses, exclusion of evidence, and default or dismissal.
California law is not quite as clear, as there is no statute that provides for the preservation of evidence before a lawsuit is filed or—surprisingly—even before discovery requests are made. California Code of Civil Procedure section 2023.030 provides that the court, after a noticed hearing, may impose monetary, issue, evidence, terminating, or contempt sanctions against anyone engaging in “conduct that is a misuse of the discovery process.” The “discovery process,” however, does not extend to pre-litigation activities and the California Civil Discovery Act does not specifically prohibit spoliation of evidence before a lawsuit has been filed. (See Dodge, Warren & Peters Inc. v. Riley (2003) 105 Cal.App.4th 1414, 1419.)
So what is a California litigator to do if a party destroys or threatens to destroy evidence before a lawsuit is filed? If such conduct is anticipated, a party should file for a temporary restraining order and preliminary injunction requiring a party to preserve relevant evidence in its possession for discovery purposes. (See Dodge, Warren & Peters Inc. v. Riley (2003) 105 Cal.App.4th 1414, 1419.) Disobedience of such a court order would then constitute an abuse of discovery for which the court may impose sanctions under Section 2023.030.
Another essential tool a party has is that litigants who destroy evidence in anticipation of litigation may be subject to an adverse inference jury instruction regarding the willful suppression of evidence. See Judicial Council of California Civil Jury Instructions (”CACI”) No. 204; Cal. Evid. Code § 413. CACI No. 204 provides that: “You may consider whether one party intentionally concealed or destroyed evidence. If you decide that a party did so, you may decide that the evidence would have been unfavorable to that party.” There does not appear to be any limitation on the use of this instruction to post-litigation activities.
Absent an injunction or discovery order, some cases have held that a litigation hold letter by itself does not carry much weight and there is authority in California suggesting the duty to preserve evidence does not arise until the party is served with discovery demands. (See New Albertsons, Inc. v. Superior Court, 168 Cal.App. 4th 1403, 1430–1431.) In New Albertsons, the Court rejected sanctions for the destruction of video recordings of a slip and fall even though the plaintiff sent a litigation hold letter and the destruction occurred even after requests were made for their production. (Id. at 1428.) The Court held that, generally, a court may not impose an evidence or issue sanction for the intentional spoliation of evidence absent the failure to obey an order compelling discovery, and in that case there was no motion to compel and no failure to obey an order compelling discovery. (Id. at 1430.) The New Albertsons court relied on Code of Civil Procedure sections 2031.310 (e) and 2031.320 (c), which authorize sanctions only where a party “fails to obey a court order compelling discovery.” (Id. at 1423.) The Court reasoned that “[t]he circumstances here involve neither the failure to comply with a discovery obligation nor the destruction of particularly probative evidence.” (Ibid.)
One might ask, of course, what good would a motion to compel or a discovery order be if a party has already destroyed evidence? In such cases, “if it is sufficiently egregious, misconduct committed in connection with the failure to produce evidence in discovery may justify the imposition of nonmonetary sanctions even absent a prior order compelling discovery, or its equivalent. Furthermore, a prior order may not be necessary where it is reasonably clear that obtaining such an order would be futile.” (New Albertsons v. Sup. Ct. (2008) 168 Cal.App.4th 1403, 1426.)
New Albertsons provides a good analysis of case law in situations where sanctions were issued against parties who lost or destroyed evidence even absent a court order. In Vallbona v. Springer (1996) 43 Cal.App.4th 1525, the defendants failed to formally respond to the plaintiffs' inspection demands, but produced some documents informally and represented that that they did not have other requested documents. There, the defendant later testified in his deposition that he had not searched for the requested documents at the time of the inspection demands, but that he recently searched for them, was unable to find them, and believed that they had been stolen. (Id. at 1541–1544.) The defendants then attempted to introduce at trial some of the documents that they had failed to produce earlier. (Id.) The trial court granted the plaintiffs' motion for evidence and issue sanctions. (Id.)
Vallbona concluded that the record supported the trial court's finding that the defendants had willfully misused the discovery process. (Id. at 1545, 1547.) Quoting Do It Urself Moving & Storage, Inc. v. Brown, Leifer, Slatkin & Berns (1992) 7 Cal.App.4th 27, 35–36, Vallbona then stated, “[r]equiring plaintiffs here to seek a formal order to compel defendants to comply with discovery would have been similarly futile since Dr. Springer had claimed the requested documents were stolen.” (Vallbona, supra, 43 Cal.App.4th at p. 1546.) Vallbona also stated that the sanctions were properly tailored to the harm caused by the failure to timely produce the documents in response to discovery, and that imposing a lesser sanction would have forced the plaintiffs to go to trial without the benefit of the requested evidence. (Id. at 1546, 1548.) Vallbona therefore concluded that the evidence and issue sanctions were justified despite the absence of a prior order compelling discovery. (Id.)
Keep in mind that in any case involving the intentional spoliation of evidence, parties should review Cedars-Sinai Medical Center v. Superior Court (1998) 18 Cal.4th 1, in which the California Supreme Court ruled that there is no tort cause of action for spoliation of evidence against a party to the litigation. The court emphasized the availability of other remedies for spoliation, including terminating sanctions. The court recognized the strong public policy “favoring use of nontort remedies rather than derivative tort causes of action to punish and correct litigation misconduct.” (Id. at p. 11.) The court observed: “Destroying evidence in response to a discovery request after litigation has commenced would surely be a misuse of discovery within the meaning of section 2023, as would such destruction in anticipation of a discovery request.” (Id. at 12.)
Although Cedars-Sinai did not discuss pre-litigation spoliation of evidence, the Supreme Court examined the broad range of sanctions provided in section 2023 for a misuse of the discovery process: “The sanctions under Code of Civil Procedure section 2023 are potent. They include monetary and also examined other deterrents to spoliation of evidence by a litigant, which presumably would include actions outside of the “discovery process,” including the evidentiary inference that evidence made unavailable was unfavorable to the party responsible (Evid. Code, § 413); disciplinary sanctions by the State Bar of California against the lawyers involved (Bus. & Prof. Code, §§ 6106, 6077; Rules Prof. Conduct, rule 5-220); and prosecution for the misdemeanor of willful destruction or concealment of evidence under Penal Code section 135.3.
The takeaway here is that there is an array of remedies for spoliation of evidence, but an attorney must be proactive in order to utilize these tools. Simply shooting off a discovery hold letter is usually not enough.