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Archive for the ‘Adverse Inference’ Category

Case Blurb: Cammarata; The difficulty of proving relevance and prejudice of destroyed documents

Posted by rjbiii on March 29, 2010

It is well established that a party seeking the sanction of an adverse inference instruction based on spoliation of evidence must establish that: (1) the party with control over the evidence had an obligation to preserve it at the time it was destroyed; (2) the evidence was destroyed with a culpable state of mind; and (3) 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. The “relevance” and “prejudice” factors of the adverse inference analysis are often broken down into three subparts:

(1) whether the evidence is relevant to the lawsuit;
(2) whether the evidence would have supported the inference sought; and
(3) whether the nondestroying party has suffered prejudice from the destruction of the evidence.

Pension Committee recognized the difficulty and potential for unfairness in requiring an innocent party seeking discovery to show that information lost through spoliation is relevant and prejudicial. Those concerns are acute when the party seeking discovery cannot replace or obtain extrinsic evidence of the content of deleted information. But in many cases–including the present case–there are sources from which at least some of the allegedly spoliated evidence can be obtained. And in many cases–including the present case–the party seeking discovery can also obtain extrinsic evidence of the content of at least some of the deleted information from other documents, deposition testimony, or circumstantial evidence.

Courts recognize that a showing that the lost information is relevant and prejudicial is an important check on spoliation allegations and sanctions motions. Courts have held that speculative or generalized assertions that the missing evidence would have been favorable to the party seeking sanctions are insufficient. By contrast, when the evidence in the case as a whole would allow a reasonable fact finder to conclude that the missing evidence would have helped the requesting party support its claims or defenses, that may be a sufficient showing of both relevance and prejudice to make an adverse inference instruction appropriate.

See case summary here.

Rimkus Consulting Group, Inc. v. Cammarata, 2010 U.S. Dist. LEXIS 14573, 30-31 (S.D. Tex. Feb. 19, 2010) (referring to Pension Comm. of the Univ. of Montreal Pension Plan v. Banc of Am. Sec., LLC, No. 05 Civ. 9016, 2010 U.S. Dist. LEXIS 4546, 2010 WL 184312, at *3 (S.D.N.Y. Jan. 15, 2010))

See case Summary for Pension Committee here.

Posted in 5th Circuit, Adverse Inference, Case Blurbs, Judge Lee H. Rosenthal, S.D. Tex., Sanctions, Spoliation | Tagged: , | Leave a Comment »

Case Blurb: Cammarata; Bad Faith a Requirement for the Imposition of Severe sanctions in the 5th Cir

Posted by rjbiii on March 29, 2010

As a general rule, in this circuit, the severe sanctions of granting default judgment, striking pleadings, or giving adverse inference instructions may not be imposed unless there is evidence of “bad faith.”

Other circuits have also held negligence insufficient for an adverse inference instruction. The Eleventh Circuit has held that bad faith is required for an adverse inference instruction. The Seventh, Eighth, Tenth, and D.C. Circuits also appear to require bad faith. The First, Fourth, and Ninth Circuits hold that bad faith is not essential to imposing severe sanctions if there is severe prejudice, although the cases often emphasize the presence of bad faith. In the Third Circuit, the courts balance the degree of fault and prejudice.

See case summary here.

Rimkus Consulting Group, Inc. v. Cammarata, 2010 U.S. Dist. LEXIS 14573, at *23-24 (S.D. Tex. Feb. 19, 2010)(internal citations removed).

Posted in 5th Circuit, Adverse Inference, Bad Faith, Case Blurbs, Judge Lee H. Rosenthal, S.D. Tex., Sanctions, Spoliation | Leave a Comment »

Case Summary: Cammarata; Court Discusses E-Discovery Misconduct, Proportionality and Reasonableness

Posted by rjbiii on March 26, 2010

Rimkus Consulting Group, Inc. v. Cammarata, 2010 U.S. Dist. LEXIS 14573 (S.D. Tex. Feb. 19, 2010)

Procedural History: In Nov. 2006, Rimkus was sued by former employees Nickie Cammarata and Gary Bell. In this action in Louisiana, Cammarata and Bell sought a declaratory judgment that the forum-selection, choice-of-law, noncompetition, and nonsolicitation provisions in agreements they had signed with Rimkus were unenforceable. In response, Rimkus brought two actions in 2007 against these ex-employees in Texas; one in January and one in February. Rimkus alleged breach of the noncompetition and nonsolicitation covenants in their written employment agreements and that they used Rimkus’s trade secrets and proprietary information in setting up and operating a competitive enterprise (U.S. Forensic). The Texas cases were consolidated in this court.

Procedural Posture: The court convened to hear motions by Rimkus alleging that the Cammarata and Bell and their counsel “conspiratorially engaged” in “wholesale discovery abuse” by destroying evidence, failing to preserve evidence after a duty to do so had arisen, lying under oath, failing to comply with court orders, and significantly delaying or failing to produce requested discovery. Defendants responded by acknowledging that they did not preserve “some arguably relevant emails” but argue that Rimkus cannot show prejudice because the missing emails “would be merely cumulative of the evidence already produced.” Rimkus asked the court to strike the defendants’ pleadings,enter a default judgment against them or give an adverse inference jury instruction, and hold both defendants and their counsel in contempt.

Discussion: The court began its analysis by acknowledging the framework recently set out by Judge Scheindlin in Pension Committee of the University of Montreal Pension Plan v. Banc of America Securities, LLC, No. 05 Civ. 9016, 2010 U.S. Dist. LEXIS 4546, 2010 WL 184312 (S.D.N.Y. Jan. 15, 2010) (see our case summary here). Unlike Montreal Pension Plan, this case involve allegations of intentional destruction of ESI, but common analytical issues existed, nevertheless.

In the fifth circuit, Federal Courts apply federal rules in diversity cases. The court stated that allegations of spoliation are addressed by courts by an applicable statute that adequately addresses the conduct with its attendant limits, and if no such statute exists, by the more flexible inherent power of the court. When inherent power does apply, it is interpreted narrowly, and its reach is limited by its ultimate source–the court’s need to orderly and expeditiously perform its duties. In this case, the court’s inherent power and Rule 37 both apply.

Electronically stored information is routinely deleted or altered and affirmative steps are often required to preserve it. Such deletions, alterations, and losses cannot be spoliation unless there is a duty to preserve the information, a culpable breach of that duty, and resulting prejudice. Generally, the duty to preserve arises when a party has notice that the evidence is relevant to litigation or . . . should have known that the evidence may be relevant to future litigation. Generally, the duty to preserve extends to documents or tangible things (defined by Federal Rule of Civil Procedure 34) by or to individuals likely to have discoverable information that the disclosing party may use to support its claims or defenses.

The court stated that bright-line rules were difficult to draw with respect to acceptable and unacceptable behavior in e-discovery matters, and explained that acceptable conduct turned on the concepts of reasonableness and proportionality with respect to the case.

Analysis depends heavily on the facts and circumstances of each case and cannot be reduced to a generalized checklist of what is acceptable or unacceptable. Determining whether sanctions are warranted and, if so, what they should include, requires a court to consider both the spoliating party’s culpability and the level of prejudice to the party seeking discovery. Culpability can range along a continuum from destruction intended to make evidence unavailable in litigation to inadvertent loss of information for reasons unrelated to the litigation. Prejudice can range along a continuum from an inability to prove claims or defenses to little or no impact on the presentation of proof. A court’s response to the loss of evidence depends on both the degree of culpability and the extent of prejudice.

The court explained that the general rule for the 5th Circuit is that severe sanctions of granting default judgment, striking pleadings, or giving adverse inference instructions may not be imposed unless there is evidence of “bad faith.” This is different from the 2d Circuit’s rule allowing for such rulings in instances of gross negligence, under which the court in Pension Committee of the University of Montreal Pension Plan was operating. The court went on to list the general rule of other circuits, as summarized in the table below.

Circuit Standards for Severe Sanctions

The court then contrasted case law between the 5th and 2d circuits, noting that the Supreme Court’s decision in Chambers v. NASCO, Inc., 501 U.S. 32 (U.S. 1991) might limit the ability of a court to impose sanctions when acting under the authority of its inherent powers.

The court then turned to the issue of burden of proof. A party seeking the sanction of an adverse inference instruction based on spoliation of evidence must establish that: (1) the party with control over the evidence had an obligation to preserve it at the time it was destroyed; (2) the evidence was destroyed with a culpable state of mind; and (3) 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.

The “relevance” and “prejudice” factors of the adverse inference analysis are often broken down into three subparts: “(1) whether the evidence is relevant to the lawsuit; (2) whether the evidence would have supported the inference sought; and (3) whether the nondestroying party has suffered prejudice from the destruction of the evidence.” Like the court in Pension Committee, the court here acknowledged the difficulty and potential unfairness in requiring an innocent party seeking discovery to show that information lost through spoliation is relevant and prejudicial. Fortunately in this case (and many others), the party seeking discovery can also obtain extrinsic evidence of the content of at least some of the deleted information from other documents, deposition testimony, or circumstantial evidence.

The court also stated its belief that such requirements act as an important check on spoliation allegations and sanctions motions. Unlike the 2d circuit, case law in the Fifth Circuit indicates that an adverse inference instruction is not proper unless there is a showing that the spoliated evidence would have been relevant. Also unlike the 2d circuit, the 5th circuit has no case law allowing for the presumption that destroyed evidence was relevant or its loss prejudicial, even in the event that bad-faith is established. Before an adverse inference may be drawn, there must be some showing that there is in fact a nexus between the proposed inference and the information contained in the lost evidence and that “some extrinsic evidence of the content of the emails is necessary for the trier of fact to be able to determine in what respect and to what extent the emails would have been detrimental.

In the present case, the party seeking sanctions for deleting emails after a duty to preserve had arisen presented evidence of their contents. The evidence included some recovered deleted emails and circumstantial evidence and deposition testimony relating to the unrecovered records. There was no need to rely on a presumption of relevance or prejudice.

In determining an appropriate penalty, the court stated that the severity of a sanction for failing to preserve when a duty to do so has arisen must be proportionate to the culpability involved and the prejudice that results. A sanction should be no harsher than necessary to respond to the need to punish or deter and to address the impact on discovery. Adverse inference instructions can take varying forms that range in harshness, and are properly viewed as among the most severe sanctions a court can administer.

The court made the findings necessary to submit the spoliation evidence and an adverse inference instruction to the jury. The court noted, however, that the record also presented conflicting evidence about the reasons the defendants deleted the emails and attachments; evidence that some of the deleted emails and attachments were favorable to the defendants; and an extensive amount of other evidence for the plaintiff to use.

The instruction formulated by the court will ask the jury to decide whether the defendants intentionally deleted emails and attachments to prevent their use in litigation. If the jury finds such misconduct, the jury must then decide, considering all the evidence, whether to infer that the lost information would have been unfavorable to the defendants. Rather than instruct the jury on the rebuttable presumption steps, it is sufficient to present the ultimate issue: whether, if the jury has found bad-faith destruction, the jury will then decide to draw the inference that the lost information would have been unfavorable to the defendants

Posted in 5th Circuit, Adverse Inference, Burden of Proof, Case Summary, Duty to Preserve, Inherent Power of Fed. Courts, Judge Lee H. Rosenthal, Litigation Hold, S.D. Tex., Sanctions, Spoliation | 7 Comments »

Around the Block: Jan. 7, 2010

Posted by rjbiii on January 7, 2010

A look at some interesting recent articles and posts about law and technology:

New York case law on litigation holds is discussed by Attorney Mark Berman. From the article:

It is well established that the “utter failure to establish any form of litigation hold at the outset of litigation is grossly negligent.” A showing of gross negligence is “plainly enough to justify sanctions at least as serious as an adverse inference.”

BUT…

On the other hand, not every matter is ripe for e-discovery, and the decision in Kaiser v. Raoul’s Rest. Corp.,is illustrative of the fact that one still needs to sufficiently justify a request for e-discovery, and that overbroad demands will not be countenanced.

The Fulton County Daily Reporter posts the news that a Georgia Judge has voluntarily stepped down, apparently because of an investigation into his relationship with a defendant that began on Facebook. From the article:

Woods’ departure from the bench effectively ends inquiries being made in the circuit from the Georgia Judicial Qualifications Commission, which investigates complaints against judges. The JQC, whose workings are confidential by law, has made no public statement of any investigation regarding Woods.

From Ryley, Carlock, and Applewhite:

In Vagenos v. LDG Financial Services, LLC, 2009 U.S. Dist. Lexis 121490 (E.D.N.Y. Dec. 31, 2009), District Court Judge Brian M. Cogan denied defendant’s in limine motion to preclude plaintiff from offering at trial an alleged duplicate recording of an electronically-stored telephone message, but ordered an adverse inference instruction for plaintiff and his counsel’s failure to preserve the message.

From Law Technology News, an article examining how to Mine Web 2.0 for Evidence:

On Oct. 17, 2009, an armed assailant robbed two men outside a housing project in Brooklyn, N.Y. Almost immediately, the police focused their investigation on Rodney Bradford, a 19-year-old resident of the housing project who had been indicted a year earlier for a similar robbery. After one of the victims positively identified Bradford in a police lineup, the police arrested him and charged him with first-degree robbery.

Open-and-shut case, right? Wrong. It turns out Bradford was innocent and he had an airtight alibi to prove it. At the time of the crime, he was 12 miles away at his father’s house in Harlem, updating his Facebook status. After the district attorney subpoenaed Facebook and received the exculpatory evidence, Bradford was cleared of all charges and released.

Computerworld contributor Richard Power discusses how the Information Age has transformed the world the of the Private Investigator, with a Q&A with former FBI Agent (and current PI) Ed Stroz:

Stroz had served for 16 distinguished years in the US Federal Bureau of Investigation (FBI), during which he established the New York City FBI computer crime squad, one of the first two in the country, and directed several significant FBI investigations, including the high-profile international case of Vladimir Levin, a Russian hacker who broke into Citibank. In 2000, Stroz founded a private investigation (PI) firm in 2000, and has assisted his corporate clients in responding to Internet-extortions, denial-of-service (DoS) attacks, hacks and unauthorized access, and theft of trade secrets. He has also pioneered the concept of incorporating behavioral science into the methodology for addressing computer crime and abuse.

Marica Coyle posts an article for the National Law Journal noting that the Supreme Court will hear a case to resolve a circuit split concerning the work-product doctrine.

Textron Inc. v. U.S. stems from a long-running legal battle between the corporation and the Internal Revenue Service over the government’s demand for Textron’s tax-accrual work papers. Those papers generally are prepared with the assistance of in-house and external counsel and relied upon by independent auditors to determine the accuracy of financial statements. They often contain legal analyses and evaluations of potential litigation risks associated with particular tax transactions.

Last August, the 1st U.S. Circuit Court of Appeals, in a 3-2 en banc ruling, held that the papers were not protected by the work-product doctrine and had to be turned over to the IRS in a tax shelter investigation.

Posted in Adverse Inference, Articles, Litigation Hold, Technology, Trends | Tagged: | Leave a Comment »

Case Blurb: Scalera; Courts states test for Imposition of Adverse Inference for Spoliation (2nd Cir.)

Posted by rjbiii on December 16, 2009

A party seeking an adverse inference instruction as a sanction for the spoliation of evidence must establish that:
(1) “the party having control over the evidence had an obligation to preserve it at the time it was destroyed,”
(2) “the records were destroyed with a ‘culpable state of mind,'” and
(3) “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.”

“A party seeking sanctions for spoliation has the burden of proving that the alleged spoliator had an obligation to preserve evidence, acted culpably in destroying it, and that the evidence would have been relevant to the aggrieved party’s case.”

Scalera v. Electrograph Sys., 2009 U.S. Dist. LEXIS 91572 at *6-7, 23 (E.D.N.Y. Sept. 29, 2009)(citing Toussie v. County of Suffolk, 2007 U.S. Dist. LEXIS 93988, 2007 WL 4565160, at *6 (E.D.N.Y. Dec. 21, 2007) and Ramirez v. Pride Dev. & Constr. Corp., 244 F.R.D. 162, 164 (E.D.N.Y. 2007)).

See Case Summary here.

Posted in 2nd Circuit, Adverse Inference, Case Blurbs, E.D.N.Y., Magistrate Judge A. Kathleen Tomlinson, Spoliation | Leave a Comment »

Case Summary: Elec. Mach. Enters.; Spoliation arising from a Bankruptcy Claim

Posted by rjbiii on December 9, 2009

Elec. Mach. Enters. v. Hunt Constr. Group, Inc. (In re Elec. Mach. Enters.), 416 B.R. 801 (Bankr. M.D. Fla. 2009)

Procedural History: Adversary Proceeding arising from Chapter 11 filing by electrical contractor, in the jurisdiction of the Middle District of Florida. Plaintiff electrical contractor (EME) sought damages from construction manager for, inter alia, spoliation of evidence.

Factual Background: A construction management business, Construct Two Construction Managers, Inc., was formed specifically to manage one particular project: the building of a the Orange County Convention Center in Orlando, Florida. Construct Two was a joint venture between two large, national construction-related businesses, Hunt Construction Group (HCC) and The Clark Construction Group (CCG). During the project, there were scheduling and coordination issues that resulting in the need for re-work, resulting in plaintiff’s claim for additional charges. Also during the project, the plaintiff electrical contractor filed for relief under Chapter 11 of the bankruptcy code. EME finished all of its designated tasks associated with the construction project despite this filing.

During the project, EME hired Richard Coble, a construction dispute consultant, to assist in compiling information, initially to determine what was happening on the Project and subsequently to determine possible claims that EME might have in connection with the Project. In December of 2003, after completion of the construction project, Mr. Coble became aware that project documents belonging to HCC were being thrown into a dumpster located on the project site. EME instituted this suit to prevent the further destruction of documents related to its claims against HCC. The court also issued an injunction requiring HCC to retrieve and preserve whatever thrown-away Project documents still existed from the job site dumpster, at its own cost.

Discussion on the Spoliation Claim:
HCC did not convincingly dispute the fact that their documents ended up in the dumpster. It did argue, in its own defense, that no one at HCC was aware of possible litigation from this project until EME filed this adversary proceeding. The court was not persuaded by this, however, given the numerous complaints, claims, disputes, threatened and actual lawsuits, and public records requests advanced by EME and others. Although both CGG and HCC had a document retention policy, there was no policy for the joint venture entity created for this project.

One HCC official testified that no attorneys from either Hunt or their outside counsel advised him not to throw away Project documents during the month of July 2003. That same official also testified that no one ever advised him that HCC needed to maintain all records relating to EME. This testimony confirmed Mr. Sterling’s testimony that HCC employees were to use their own judgment as to what to destroy. Until receiving this court’s TRO prohibiting the destruction of relevant documents, HCC took no action to preserve documents relating to the Project. Thereafter, the parties participated in a massive effort to retrieve and restore the discarded documents. This required restoration of physical documents as well as the retrieval of electronically stored documents. The court then analyzed what, if any, remedies were available to EME for spoliation under the law.

Spoliation as a Cause of Action
The court began by citing Sterbenz v. Attina, 205 F. Supp. 2d 65, 74 (E.D.N.Y. 2002) to note that there is no federal cause of action for spoliation. The court stated that at one time, the State of Florida recognized both a first-party cause of action brought by a party to the underlying lawsuit and a third-party cause of action brought against a non-party for either negligent or intentional spoliation of evidence. After the Florida’s Supreme Court’s decision in Martino v. Wal-Mart Stores, Inc., 908 So. 2d 342 (Fla. 2005), there is no longer a first-party cause of action for spoliation against the same defendant as in the underlying litigation. The court commented that in Martino, the state Supreme Court held that the availability of sanctions, including the imposition of evidentiary presumptions and inferences, provides sufficient protection to the plaintiff where the defendant in the litigation commits negligent or intentional spoliation of evidence. A cause of action brought by a third-party still exists.

Spoliation Sanctions
The began its analysis of possible sanctions by noting that Federal Courts were split on the question of whether the Federal or State law governs the imposition of spoliation sanctions in federal courts sitting in diversity. The Eleventh Circuit has held that Federal Law governs, but is informed by state law. The court, therefore, addressed the applicable federal case law on spoliation sanctions in the Eleventh Circuit before turning to the principles of Florida law governing the imposition of spoliation sanctions.

The court began by noting that the Eleventh Circuit has not enunciated a standard for the imposition of spoliation sanctions where the underlying cause of action arises under Florida law. In Flury v. Daimler Chrysler Corp., 427 F.3d 939, 944 (11th Cir. 2005), the panel adopted the law of the state (Georgia) to guide its analysis. The panel also found that Georgia law was “wholly consistent with federal spoliation principles.” While defendant argued that Flurry applied to this case, the court stated that Georgia law materially differs from Florida law in this area, leading the court to reject applying the Flurry factors to the instant matter. Instead, the court fully followed the standards set under Florida law.

The definition of spoliation, under Florida law, is the “intentional destruction, mutilation, alteration, or concealment of evidence.” Impositions of sanction are meant to ensure the non-spoliator does not bear an unfair burden, and to serve as a deterrent to “miscreant defendants.”

The court explained that the Fourth District Court of Appeal has articulated the following three threshold questions that a court must answer before imposing spoliation sanctions in Florida:

  1. whether the evidence existed at one time,
  2. whether the spoliator had a duty to preserve the evidence, and
  3. whether the evidence was critical to an opposing party being able to prove its prima facie case or a defense.

The court concluded that the first factor had been adequately proved by EME. The second factor, however, was less clear. In Florida, the court explained, a duty to preserve evidence can arise by contract, by statute, or by a properly served discovery request (after a lawsuit has already been filed). The court noted that the majority of Florida courts have held that there is no common law duty to preserve evidence before litigation has commenced. While the court agreed that there was no doubt that HCC destroyed arguably relevant documents before EME’s lawsuit, EME had not provided sufficient argument that there existed any duty under Florida to retain those documents. EME’s citing of Federal cases to bolster its argument that a duty to preserve evidence arises either “when the party has notice that the evidence is relevant to litigation or when a party should have known that the evidence may be relevant to future litigation,” did not meet the court’s definition of being “informed by state law.” Because of this, the court could not justify the imposition of sanctions. The court noted that in an unreported case arising under Georgia law, the Eleventh Circuit recently stated that spoliation includes “the destruction or significant alteration of evidence. or the failure to preserve property for another’s use as evidence in pending or reasonably foreseeable litigation.” The court, nevertheless stated that unlike in Florida, under Georgia law, spoliation includes the destruction of evidence “that is necessary to pending or contemplated litigation.” Thus the court found its own conclusions to be consistent.

Although the court found that the existence of a duty was not proved by plaintiff, it noted that there was some support for imposing an adverse inference where critical evidence was destroyed intentionally, pre-litigation, even where no duty to preserve existed. In Martino, the Florida Supreme Court, while dividing remedies for spoliation into “lighter” and “stronger” groups, had found that where evidence is “intentionally lost, misplaced, or destroyed” the appropriate sanctions would be found in Florida Rule of Civil Procedure 1.380(b)(2) and include applying an adverse jury inference; whereas, where “the loss of the evidence was determined to be negligent the . . . rebuttable presumption of negligence for the underlying tort” applies. The court discussed the Fourth District Court of Appeal’s decision in Golden Yachts, Inc. v. Hall, 920 So. 2d 777 (Fla. Dist. Ct. App. 4th Dist. 2006), that opened up the possibility of applying the “lighter” sanction of adverse inference where no duty existed if the pre-litigation spoliation was intentional.

The court drew a correlation between this principle and the Federal principle of imposing sanctions where bad faith on the part of the spoliator was evident. It observed that the 11th Circuit requires a finding of bad faith before imposing an adverse inference sanction.

The final factor examined by the court was whether the destroyed evidence was critical for proving a prima facie case or a defense. The court reasoned that if spoliation sanctions are imposed “to assure that the non-spoliator does not bear an unfair burden,” then there is no reason to apply sanctions where no harm comes from the spoliation. The court noted that EME produced substantial evidence in this case to establish its claims in the underlying litigation. The court determined that while the disposed documents may have further undermined HCC’s defenses or supported EME’s claims, none of the destroyed documents were truly critical to EME’s case. Accordingly, the court concluded that under Florida law, it could not impose sanctions on HCC.

Posted in 11th Circuit, Adverse Inference, Bankruptcy Court, Bankruptcy Judge Michael G. Williamson, Case Summary, Case Summary-FL, M.D. FL., Sanctions, Spoliation, Uncategorized | 1 Comment »

Case Blurb: Asher Assocs LLC; Role of Intent in Assessing Sanctions

Posted by rjbiii on July 12, 2009

Common sense suggests that a failure to produce or preserve relevant evidence may involve conduct that falls “along a continuum of fault — ranging from innocence through the degrees of negligence to intentionality.”

In Aramburu v. Boeing Co., 112 F.3d 1398, 1407 (10th Cir. 1997), the Tenth Circuit held that “the bad faith destruction of a document relevant to proof of an issue at trial gives rise to an inference that production of the document would have been unfavorable to the party responsible for its destruction.” In the same decision, the Tenth Circuit further reasoned that no adverse inference should arise where the destruction of a document resulted from mere negligence, because only bad faith would support an “inference of consciousness of a weak case.” FN11.

FN11: “‘Bad faith’ is the antithesis of good faith and has been defined in the cases to be when a thing is done dishonestly and not merely negligently. It is also defined as that which imports a dishonest purpose and implies wrongdoing or some motive of self-interest.” Of course, in cases where an adverse inference instruction is neither requested nor appropriate, the Tenth Circuit has held that a finding of bad faith is not required to impose non-dispositive sanctions, such as excluding evidence.

Asher Assocs., LLC v. Baker Hughes Oilfield Operations, Inc., 2009 U.S. Dist. LEXIS 40136 at *27-28 (D. Colo. May 12, 2009)(internal citations removed).

Posted in 10th Circuit, Adverse Inference, Bad Faith, Case Blurbs, D. Colo., Data Retention Practices, Duty to Preserve, Exclusion of Evidence, Good Faith, Magistrate Judge Craig B. Schafer, Sanctions, Spoliation | Leave a Comment »

Case Blurb: Nursing Home Pension Fund; Standards for the imposition of ‘lesser sanctions’

Posted by rjbiii on September 15, 2008

The parties debate whether plaintiffs must demonstrate prejudice before the Court can impose lesser sanctions. The Ninth Circuit has recognized that it has sent conflicting signals regarding whether prejudice must be shown in order for the sanction of dismissal to be appropriate. A court in this district recently clarified that the Ninth Circuit has required a showing of prejudice only when courts are acting under Federal Rule of Civil Procedure 37, which applies when a party disobeys a court order regarding discovery. When acting under its inherent authority, however, a district court need not consider prejudice to the party moving for sanctions…and prejudice has not been required when a party moves for lesser sanctions. Here, the Court is considering lesser sanctions in the form of an adverse inference, and even assuming prejudice is required, the Court notes that it would be quite difficult for plaintiffs to demonstrate how they were harmed by evidence to which they do not have access.

Nursing Home Pension Fund v. Oracle Corp., 2008 WL 4093497 at *5 (N.D.Cal. Sept. 2, 2008) (internal citations removed).

Posted in 9th Circuit, Adverse Inference, Case Blurbs, Duty to Preserve, Judge Susan Illston, N.D. Cal., Sanctions, Spoliation | Leave a Comment »

Case Blurb: Bright; Court Discusses History and Application of the Adverse Inference

Posted by rjbiii on September 9, 2008

[Requesting Party] contends that a jury should be allowed to infer from Plaza’s destruction of the recorded surveillance footage that the tenor of the evidence in the footage was unfavorable to Plaza’s case. According to Bright, therefore, the destruction of the footage showing the area prior to Bright’s fall gives rise to an inference of spoliation. The Third Circuit Court of Appeals explained the history of the spoliation inference in In re Hechinger Inv. Co. of Delaware, Inc.:
Since the early 17th century, courts have admitted evidence tending to show that a party destroyed evidence relevant to the dispute being litigated. Such evidence permitted an inference, the “spoliation inference,” that the destroyed evidence would have been unfavorable to the position of the offending party.
The Court went on to note that
the “key considerations in determining whether such a sanction is appropriate should be: (1) the degree of fault of the party who altered or destroyed the evidence; (2) the degree of prejudice suffered by the opposing party; and (3) whether there is a lesser sanction that 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.”

Bright v. United Corp., 2008 WL 2971769 (V.I. July 22, 2008).

Posted in 3d Circuit, Adverse Inference, Case Blurbs, Justice Edgar D. Ross, Sup. Ct. Virgin Islands | Leave a Comment »

Case Blurb: Bright; Court Discusses Company’s Retention Practices of Surveillance Tapes and Spoliation

Posted by rjbiii on September 9, 2008

This appeal concerns a slip and fall accident that took place at the Plaza Extra supermarket in Estate Sion Farm, St. Croix on June 20, 2004. […]

The Superior Court granted summary judgment in favor of Plaza, holding that, because [Plaintiff] Bright failed to provide any evidence that Plaza knew or should have known about the substance on the floor, no reasonable jury could find that Plaza had breached its duty to Bright as a matter of law. The instant appeal followed. […]

Bright’s fall was captured on Plaza’s closed-circuit video surveillance system, which is comprised of both a digital hard drive that records only a finite amount of data before reusing itself and a video recorder. The digital footage is automatically recorded over every few weeks unless it is manually copied from the digital hard drive to the video recorder. At his June 2005 deposition, Plaza’s manager testified that he examined the footage of Bright’s fall immediately after being notified of her fall, the video failed to show anything visible on the floor at the time of the fall. Concluding that Bright “probably tripped on herself,” the manager testified that he elected not to review or copy any of the footage prior to or after the fall. He also testified that the store had no set procedure for retaining video footage of slip and fall accidents and that the store simply retained the footage of the actual fall in Bright’s particular circumstance. […]

Therefore, the record contains no video evidence indicating when or if someone spilled anything on the floor prior to Bright’s fall. The only evidence in the record which indicates length of time is Bright’s deposition testimony. When asked if anything indicated how long the substance had been there, she testified that there was a little dust on the drops which indicated to her that it had to be there “for a little while.” […]

Plaza filed a motion for summary judgment asking the trial court to find that Bright had failed to establish that Plaza had actual or constructive notice of any substance on the floor that may have caused Bright’s injuries. Bright opposed the motion arguing she was entitled to a spoliation inference because Plaza had intentionally erased the video footage depicting what had transpired prior to and after her fall. Plaza replied to the opposition by contending that Bright failed to show that the store had engaged in bad faith, malicious, or fraudulent conduct, which is a prerequisite to the application of a spoliation inference. In a Memorandum Opinion, dated June 11, 2007, the Superior Court granted summary judgment in favor of Plaza, holding that Bright failed to provide sufficient evidence that Plaza knew or should have known of the substance on the floor and failed to demonstrate fraud or deceit that would permit deliberation on the availability of the spoliation inference. Bright timely filed her Notice of Appeal… […]

On appeal, Bright contends that Plaza’s destruction of the surveillance video establishes constructive notice because it permits a jury to infer that the video would have shown that the liquid was on the floor long enough for Plaza to have discovered it prior to her fall. According to Bright, the adverse inference created by Plaza’s destruction of the tape defeats summary judgment. Plaza contends that Bright is not entitled to a spoliation inference, and that even if she was, common law precludes the use of a spoliation inference to substitute for actual evidence supporting constructive notice. According to Plaza, a spoliation inference is improper where the evidentiary destruction was a matter of routine and was devoid of any fraudulent intent, and the inference cannot be utilized to establish an essential element of a negligence claim. […]

There is no dispute in this matter that the recorded surveillance footage was at all times within the exclusive possession and control of Plaza. The parties dispute, however, whether there was an actual suppression or withholding of evidence. Bright argues that Plaza intentionally destroyed the recorded surveillance footage in order to conceal evidence which was unfavorable to Plaza. Plaza argues that as a regular course of business, the store only maintains the relevant footage of any recorded fall. Therefore, according to Plaza, the failure to retain footage of the time preceding and following the fall was neither fraudulent nor intentional. The trial court found that “Bright offer[ed] no evidence that Plaza … attempted to perpetrate a fraud or that Plaza’s conduct was anything other than a matter of routine.” (App. at 12-13.) The evidence, however, belies the trial court’s determination. […]

During his deposition, Plaza’s manager testified that he retained only the portion of the surveillance footage which captured Bright’s fall. (App.211-12.) The manager’s conscious and intentional choice not to review or retain the recorded footage prior to or after the fall resulted in the destruction of relevant evidence. […]

We find this case to be very analogous to Stevenson v. Union Pacific R.R. Co., 354 F.3d 739 (8th Cir.2004). In analyzing a routine document retention policy, the Eighth Circuit Court of Appeals applied the Gumbs test and held that the trial court did not abuse it discretion in permitting a spoliation inference as a sanction for the defendant’s pre-litigation destruction of a voice recording. Id. at 747-48. Similar to Plaza, the Stevenson defendant learned of the accident shortly after it occurred and began his investigation immediately thereafter, but failed to take the steps necessary to preserve the recorded evidence. Also like Plaza, the Stevenson defendant had previously been involved in several accidents and knew that such recorded evidence would be relevant to any potential litigation. FN1 Additionally, Bright, like the Stevenson plaintiff, was prejudiced by the destruction of the evidence because there is virtually no other evidence establishing the dispositive issue. In concluding that fraudulent intent was present, the Eighth Circuit Court of Appeals recognized that the case “tests the limits of what [the court is] able to uphold as a bad faith determination.” Id. Nevertheless, the particular circumstances present in that case, which were similar to those present in the case before this Court, warranted a spoliation inference.

FN1:Remarkably, in another case currently before this Court, Plaza’s management applied a different procedure in determining what portion of a recorded slip and fall accident to retain. In Williams v. Plaza Extra, S.Ct. Civ. No.2007/118, where the recorded surveillance footage appeared to vindicate Plaza, management retained a large portion of the footage, including footage from depicting a custodian cleaning the area twelve minutes prior to the fall and several minutes of footage after the fall. The fall in Williams occurred in the same store on April 8, 2002, nearly two years before the fall at issue in this case. […]

While this Court does not find any statutory or case law indicating precisely what portion of surveillance footage capturing a slip and fall accident should be retained, common sense dictates the retention of comprehensive surveillance footage of any accident, including a reasonable period of time preceding and following the accident.

Bright v. United Corp., 2008 WL 2971769 (V.I. July 22, 2008).

Posted in 3d Circuit, Adverse Inference, Case Blurbs, Data Retention Practices, Data Sources, Document Retention, Justice Edgar D. Ross, Sup. Ct. Virgin Islands, Video Files | Leave a Comment »

 
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