Spoliation Remedies
By
Kristen M. Johnson, Esq.
Schwartz Semerdjian Ballard & Cauley, LLP
Published: 05.01.2014
Five years into contentious litigation that has been up on appeal twice on pretrial issues, your client is served with special interrogatories from the new counsel brought in by the opposition seeking to discover the steps your client took to preserve its evidence four years and two law firms prior to your representation. Were the computer hard drives preserved? Was a litigation hold letter ever distributed to the key employees? What steps were taken by your client’s previous counsel to ensure adherence with electronic discovery requests? If there were some missteps with document preservation, what are the potential consequences?
These are just a handful of questions that might arise when the notion of evidence destruction, commonly referred to as spoliation, is raised in litigation. Under California law, “spoliation of evidence” is the destruction or significant alteration of evidence, or the failure to preserve property for another’s use as evidence, in pending or future litigation. Kearney v. Foley & Lardner, LLP (9th Cir. 2009) 590 F.3d 638 (applying California law). Spoliation is not a new problem in civil litigation. The destruction may be negligent, willful, or reckless. It could occur under the watch and care of a party, non-party or counsel. From shredding documents to deleting electronic files, the manner of spoliation can vary. However, the effect of destruction of evidence is that it can destroy fairness and justice, increasing the risk of erroneous decisions and possibly increasing litigation costs as parties attempt to reconstruct what is no longer readily available. Further, spoliation offends the notion of fair play and undermines the adversarial system by violating the spirit of liberal discovery.
In response to spoliation, courts have developed several remedies against spoliators including adverse inference jury instructions, monetary or evidentiary sanctions, criminal penalties and possibly a separate spoliation tort. The availability of these remedies varies across jurisdictions and is often discretionary. This article discusses the potential remedies available in California when spoliation occurs.
Spoliation As An Independent Tort?
California was the first state to recognize the independent tort of spoliation. In Smith v. Superior Court (2d Dist. 1984) 151 Cal.App.3d 491 (disapproved of by Cedars-Sinai Medical Center v. Superior Court (1998) 18 Cal.4th 1, the court for the first time acknowledged that a cause of action may be stated for intentional destruction of evidence by a defendant in an underlying action. The identified elements of intentional spoliation include: (1) pending or probable litigation involving the plaintiff; (2) knowledge by the defendant of the existence or likelihood of litigation; (3) intentional “acts of spoliation” on the part of defendant designed to disrupt plaintiff’s case; (4) disruption of plaintiff’s case; and (5) damages proximately resulting therefrom. Shortly after Smith, in Velasco v. Commercial Bldg. Maintenance Co. (2d Dist. 1985) 169 Cal.App.3d 874, the court recognized that negligent spoliation by a third party could be actionable under appropriate circumstances relying upon Smith and earlier dicta in Williams v. State of California (1983) 34 Cal.3d 18. Although not finding the facts of the particular case actionable, the Velasco court analogized negligent spoliation to the recognized tort of negligent interference with prospective economic advantage.
In 1998, the California Supreme Court overruled Smith and specifically held than an independent tort of intentional spoliation is not cognizable against a party-defendant in the underlying case where the spoliation is or reasonably should have been discovered before the trial or other decision on the merits of the underlying cause of action. Cedars-Sinai Medical Center v. Superior Court (1998) 18 Cal. 4th 1. In Cedars-Sinai, the court offered detailed policy reasons for its refusal to recognize an action against a defendant in the primary action, including: strong policy favoring the use of nontort remedies to punish and correct litigation misconduct; prohibition against attacking adjudication on the ground that evidence was falsified or destroyed; uncertainty of harm in spoliation cases and difficulty of proof; direct and indirect costs of risks or erroneous determinations of spoliation harm to private parties and cost to defendants and courts litigating meritless actions; significant potential for jury confusion and inconsistency where underlying and spoliation claims are tried jointly; and duplicative proceedings without avoidance of the potential for inconsistent results where the actions are pursued separately with requirement of a “retrial within a trial” burdensome both to parties and courts. Just as there is no tort for intentional spoliation committed by a party to underlying litigation, likewise, there is no separate tort cause of action for negligent spoliation of evidence. Given California’s non-recognition of spoliation as an independent tort, practitioners should look traditional nontort litigation remedies for spoliation. Hernandez v. Garcetti (1998) 68 Cal. App. 4th 675.
Adverse Inference Jury Instructions
The doctrine of spoliation conceptually encompasses both negligent and deliberate destruction of relevant evidence by a party to litigation. However, California appears to have limited the adverse presumption jury instruction that follows destruction or spoliation of evidence only to situations involving willful destruction or suppression. California trial courts are permitted to instruct juries with a “spoliation inference” that may be used where a litigant is found to have willfully destroyed or concealed evidence during the underlying litigation. See Cedars-Sinai Center, 18 Cal.4th at 12. Evidence Code section 413 provides in pertinent part:
In determining what inferences to draw from the evidence or facts in the case against a party, the trier of fact may consider, among other things, the party’s failure to explain or to deny by his testimony such evidence or facts in the case against him, or his willful suppression of evidence relating thereto, if such be the case.
The Judicial Council of California Advisory Committee on Civil Jury Instructions provides under instruction 204 that the jury may consider whether one party intentionally concealed or destroyed evidence. If the jury decides that a party did so, the jury may decide that the evidence would have been unfavorable to that party. It is prejudicial error to instruct the jury on wilful suppression of evidence when there is no evidence to support the instruction. County of Contra Costa v. Nulty (1965) 237 Cal.App.2d 593, 598.
The policy of limiting the adverse inference instruction to intentional acts of destruction flows from the rationale that only intentional destruction supports the inference that the destruction amounts to an admission by conduct of the weaknesses of the case. The implication is that there is a consciousness of guilt that has the potential to saturate the entire case. While some jurisdictions hold that the negligent destruction of relevant evidence can be sufficient to give rise to the spoliation inference, California only permits the instruction with willful destruction or suppression.
Sanctions
Courts determine the proper sanction for destruction or suppression of relevant evidence on a case-by-case basis. Unigard Security Ins. Co. v. Lakewood Eng. & Mfg. Corp. (9th Cir. 1992) 982 F.2d 363, 368. The following factors are generally considered in choosing an appropriate sanction: the degree of fault of the party who altered or destroyed the evidence; the degree of prejudice suffered by the opposing party; and whether a lesser sanction will avoid substantial unfairness to the opposing party and, where the offending party is seriously at fault, will serve to deter such conduct by others in the future. Prac. Guide Fed. Civ. Proc. Before Trial (Nat Ed.) Ch. 11(I)-C.
The California Supreme Court instructs that spoliation constitutes a misuse of the discovery process that is subject to a comprehensive range of punishment, including monetary, issue, evidentiary, and terminating sanctions. See e.g., Cal Code Civ. Proc §§ 2023.010(3), 2023.030(a) to (d); Cedars-Sinai Medical Center v. Superior Court, 18 Cal.4th 1, 12. A terminating sanction may be appropriate in the first instance without a violation of prior court orders in egregious cases of intentional spoliation of evidence. R.S. Creative, Inc. v. Creative Cotton Ltd. (1999) 75 Cal.App.4th 486, 497. Some jurisdictions have found that once the duty to preserve evidence has attached, counsel’s failure to issue a written litigation hold letter to a client constitutes gross negligence for sanctions purposes, “because it is likely to result in destruction of relevant information.” Pension Committee of Univ. of Montreal Pension Plan v. Banc of America Securities, LLC (S.D. NY 2010) 685 F.Supp.2d 456, 466. The court may exclude related or derivative evidence offered by a party who has destroyed evidence while under a duty to preserve it. Uniguard Security Ins. C., 982 F.2d 363, 368.
CONCLUSION
If placed in the situation where evidence may have been destroyed, it is a good idea to get ahead of the situation as soon as possible. Recognizing that the implications of spoliation in California litigation could range from various sanctions (including terminating sanctions) to adverse jury instructions is important in advising clients about the significance of document preservation in the first place. If brought on as new counsel on a pending matter, consider issuing a litigation hold letter to your client to be sure that these issues are addressed. It may not be too late to exercise these cautions to preserve documents and it could mean avoiding steep consequences.