Case Blurb: Lowry Development LLC; Producing Party’s destruction of evidence and untruthful testimony warrant sanctions

In the exercise of my discretion in this matter, I have determined that the destruction of this computer occurred at a time [Producing Party] knew or should have known that the computer and the data it contained were part of the evidence in this case. [Producing Party]’s decision to discard the computer was not the product of simple negligence, and [Producing Party]’s untruthful testimony concerning the manner in which this computer was handled is sufficient to infer the necessary element of bad faith in connection with his actions. I am of the opinion that [Requesting Party] should be allowed to introduce evidence concerning the disposition of this computer and concerning Groves’s untruthful testimony about this matter.

The existence of a mutual mistake of fact in connection with the formation of the [Requesting Party] insurance contract is an issue on which Great American would ordinarily bear an extraordinary burden of proof. The jury’s decision on this issue will depend in substantial part on the credibility of [Producing Party]’s testimony, and the parties have recognized that should [Requesting Party] prevail on the defense of mutual mistake [Producing Party], would be liable to the plaintiff for his wind-related losses. In these circumstances, I find that the appropriate sanction for [Producing Party]’s destruction of the data contained in his computer is to ameliorate the effect of this loss of evidence by reducing [Requesting Party]’s burden of proof to a preponderance of the evidence. See: McGuire v. Sigma Coatings, Inc., 48 F.3d 902 (5th Cir.1995). I will so instruct the jury at the appropriate time.

Accordingly, I will grant [Requesting Party]’s motion for sanctions, and I will permit [Requesting Party] to elicit testimony and introduce other evidence related to the destruction of this evidence. After I have heard the evidence in the case, I will fashion an appropriate jury instruction concerning the inferences or conclusions the jury may draw from [Producing Party]’s actions, and [Requesting Party]’s burden of proof on the issue of mutual mistake will be to prove the facts necessary to establish this defense by a preponderance of the evidence.

Great Am. Ins. Co. of N.Y. v. Lowry Dev., LLC, 2007 WL 4268776 (S.D. Miss. Nov. 30, 2007)

Case Blurb: Butler; Court discusses granting adversary access to producing party’s information systems

Plaintiff requests that this court order Kmart “to provide [p]laintiff and [p]laintiff’s expert open access to Kmart’s home office databases….” Fed. R. Civ. P. 34(a) does not generally give the requesting party right to search the responding party’s records. In re Ford Motor Co., 345 F.3d at 1317. *FN* In an instance where the responding party has acted improperly, the court may, in its discretion and to preserve discoverable information, respond accordingly. The plaintiff has produced no evidence demonstrating that Kmart has acted improperly. As such, this court will not provide the plaintiff with unfettered access to Kmart’s computer databases. Should additional intervention be required at a later time, the court will consider what measures should be undertaken concerning Kmart’s computer systems and the plaintiff’s access to them.

*FN* The court is aware that In re Ford Motor Co. was decided prior to the amendments to the FEDERAL RULES OF CIVIL PROCEDURE concerning electronically stored information. Those amendments however do not disturb the validity of the Eleventh Circuit’s holding here.

Butler v. Kmart Corp., 2007 WL 2406982 (N.D. Miss. Aug. 20, 2007).

Case Summary: Tschirhart; Court grants a default judgment to plaintiff after finding defendant deliberately destroyed evidence

In a trial concerning copyright infringement by the user of peer-to-peer systems, the court granted plaintiff recording company a default judgment against defendant, concluding that defendant deliberately destroyed the evidence, music files that had resided on the hard drive of her computer, in bad faith. A forensics expert found that defendant had “wiped” the hard drive after notice of litigation and again after the court ordered defendant to produce the computer for a forensic examination. Defendant, while not disputing the deletion operations occurred, claimed that they occurred as a part of automated defragmentation operations. The court was not convinced. In addition to a finding of bad faith, the court also found that the three elements required by the Fifth Circuit to dismiss the case had been established. Specifically, the court concluded that: (1) the destruction of evidence was attributable to the client and not the attorney; (2) the destruction caused substantial prejudice to the opposing party; and (3) a less drastic sanction was not appropriate. The plaintiff’s motion for terminating sanctions was granted, while defendant was ordered to pay the amount of the costs and fees relating to the filing of the motion. Arista Records LLC v. Tschirhart, 241 F.R.D. 462 (W.D. Tex. 2006).

Case Blurb: Tschirhart; Factors to examine before dismissing a case, 5th Circuit

To support the severest sanctions under Rule 37(b)-striking pleadings or dismissing a case-the Fifth Circuit has usually required a finding of bad faith or willful conduct. Arista Records LLC v. Delina Tschirhart, 241 F.R.D. 462 (W.D. Tex.) (citing Pressey v. Patterson, 898 F.2d 1018, 1021 (5th Cir. 1990)).
When a defendant demonstrates flagrant bad faith and callous disregard of its responsibilities, the district court’s choice of the extreme sanction is not an abuse of discretion. Id. (citing Emerick v. Fenick Industries, Inc., 539 F.2d 1379, 1380 (5th Cir. 1976)).
The Fifth Circuit has specifically required, in addition to a finding of bad faith, several factors which must be present prior to dismissing a case for violating a discovery order. Those factors include:

• The violation must be attributable to the client instead of the attorney;
• The misconduct must cause substantial prejudice to the opposing party; and
• A finding that less drastic sanctions would not be appropriate. To support the severest sanctions under Rule 37(b)-striking pleadings or dismissing a case-the Fifth Circuit has usually required a finding of bad faith or willful conduct.

Id. (citing FDIC v. Connor, 20 F.3d 1376, 1380-81 (5th Cir. 1990)).

Case Blurb: Alcoa, Inc.; Elements to establish need for adverse inference instruction, 5th Circuit

A party seeking the sanction of an adverse inference instruction based upon spoliation of evidence must establish these elements:

• The party in control of the evidence had an obligation to preserve it at the time it was destroyed;
• The records were destroyed with a “culpable state of mind;”
• The destroyed evidence was “relevant” to the party’s claim or defense such that a reasonable trier of fact could find that it would support that claim or defense.

Additionally, the Fifth Circuit only permits an adverse inference sanction against a destroyer of evidence upon a showing of “bad faith” or “bad conduct.”
For the spoliator to have a culpable state of mind, it must act with fraudulent intent and a desire to suppress the truth. Such a state of mind is not present where the destruction is a matter of routine or where employees have simply deleted emails b/c they had no legitimate business reason. When evidence is destroyed in bad faith, that fact alone is sufficient to demonstrate relevance. However, when the destruction is negligent, relevance must be proven by the party seeking sanctions. Some jurisdictions outside of the 5th Cir. merely require a “gross negligence standard, rather than the “bad faith” standard. Consolidated Aluminum Corp. v. Alcoa, Inc., 2006 WL 2583308 (M.D.La).

Case Blurb: Alcoa, Inc.; Appropriate situations for issuance of an Adverse Inference Instruction

Typically, the giving of an adverse inference instruction has been upheld where the facts of the case are extreme, such as where the destroyed evidence was the very automobile that was the subject of the products liability action. Consolidated Aluminum Corp. v. Alcoa, Inc., 2006 WL 2583308 (M.D.La) (citing Concord Boat Corp. V. Brunswick Corp., 1997 WL 33352759 (E.D.Ark. 1997) citing Dillon v. Nissan Motor Co., 986 F.2d 263 (8th Cir. 1993)).

Case Blurb: Alcoa, Inc.; Issuance of Adverse Inference Instruction often ends the litigation

The court in Zubulake pointed out that the giving of an adverse inference instruction often terminates the litigation in that it is “too difficult a hurdle” for the spoliating party to overcome. The court therefore concluded that the adverse inference instruction is an “extreme” sanction that should “not be given lightly.” Consolidated Aluminum Corp. v. Alcoa, Inc., 2006 WL 2583308 (M.D.La) (citing Morris v. Union Pacific R. R., 373 F.3d 896, 900 (8th Cir.2004)).

Case Blurb: Alcoa, Inc.; Effect of an adverse inference instruction

Imposition of an adverse inference instruction has been recognized as a powerful tool in a jury trial since, when imposed, it basically brands one party as a bad actor, guilty of destroying evidence that it should have retained for use by the jury. Consolidated Aluminum Corp. v. Alcoa, Inc., 2006 WL 2583308 (M.D.La) (citing Morris v. Union Pacific R. R., 373 F.3d 896, 900 (8th Cir.2004)).

Case Blurb: Alcoa, Inc; Purposes of Monetary Sanctions

Like an adverse inference, an award of costs serves both punitive and remedial purposes: It deters spoliation and compensates the opposing party for the additional costs incurred. Such compensable costs may arise either from the discovery necessary to identify alternative sources of information, or from the investigation and litigation of the document destructions itself. Consolidated Aluminum Corp. v. Alcoa, Inc., 2006 WL 2583308 (M.D.La) (citing U.S. Phillip Morris USA, Inc., 327 F.Supp. 2d 21 (D.D.C. 2004)).

Case Blurb: Alcoa; Adverse Inference, exclusion are drastic measures

In exercising its discretion, a court may exclude the spoiled evidence or allow the jury to infer that the party spoiled the evidence b/c the evidence was unfavorable to the party’s case. However, these sanctions are considered drastic, and courts generally try to avoid imposing them when lesser sanctions are available. Consolidated Aluminum Corp. v. Alcoa, Inc., 2006 WL 2583308 (M.D.La) (citing Morris v. Union Pacific R. R., 373 F.3d 896, 900 (8th Cir.2004)).