Did you know? Spoliation doesn’t just apply to physical evidence!

Spoliation! This is a word that we are all familiar with, and a claim of spoliation is something that everyone wants to avoid. When someone claims spoliation, the first thing that generally comes to mind is that someone failed to retain physical evidence from a fire scene, such as an electrical outlet, toaster or some other item of evidence. Spoliation, however, does not just apply to physical items from a fire scene.

“Spoliation refers to the destruction or material alteration of evidence or the failure to preserve property for another’s use as evidence in pending or reasonably foreseeable litigation.”(1) Courts around the country have recognized that evidence in this regard may include documents and computerized or other electronic information relating to a loss. For example, if you have computer database records or emails that may be “relevant to litigation,” efforts must be made to obtain and preserve these items. One federal court has explained that “[o]nce a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a ‘litigation hold’ to ensure the preservation of relevant documents….”

Depending on the circumstances of the case, it can be very difficult, or near impossible, to identify items of documentary or electronic evidence that should be maintained for future use. Having your insureds discuss the issue with subrogation counsel as early in the case as is reasonably practicable can be helpful in identifying items that should be retained while these items are still likely to be available. Waiting until defense counsel requests these items years down the road may result in adverse consequences if it is found that these items are no longer recoverable. (See “The Many Flavors of Spoliation, and The Consequences” article in this newsletter for a discussion of the consequences of failing to retain evidence).

In addition to making efforts to maintain documentation and computerized or electronic evidence, it is also important to recognize whether you will need any of these items from your subrogation targets. While the subrogation target has the same duty to retain evidence when litigation is anticipated, it may be appropriate to send a letter to the adverse counsel requesting that these items be maintained. Placing your request in writing will only serve to strengthen your position down the road, if it turns out that the requested items were not maintained. Furthermore, identifying specific items that you would like retained, and making efforts to request them in writing as early in the case as is feasible, is important because they are more likely to be available early in the case.

In short, once litigation is anticipated, it is important to remember that discovery, and hence, spoliation of evidence, does not just apply to physical evidence. Careful thought must be given to the carrier’s, insured’s and defendant’s retention policies regarding documents and computerized or electronic information, before it is too late

1. Thompson v. U.S. Dept. of Hous. & Urban Dev., 219 F.R.D. 93, *100 (D. Md. 2003).

The many flavors of spoliation, and the consequences.

There are many different types of spoliation. First-party spoliation occurs when a party to a lawsuit spoliates evidence that is important to the other party. Third-party spoliation occurs when the spoliation is committed by someone who is not a party to the underlying action. Further, spoliation is intentional when a party purposefully precludes another party from using evidence to its advantage. On the other hand, negligent spoliation occurs when the actions or inactions of a party mistakenly or unknowingly affect evidence that could benefit another party. Whether a party’s conduct amounts to negligent spoliation or intentional spoliation, and the consequences, differ greatly depending on the jurisdiction.

In the vast majority of states, no independent tort claim exists for negligent or intentional spoliation of evidence. Many states’ courts have simply never decided a case based on this particular issue; however, most courts that have addressed the issue have explicitly refused to acknowledge such a claim. Often, these courts have found it proper to remedy any harm caused by spoliation in other ways.

As an alternative to allowing a party to allege a separate cause of action for spoliation, some of these states will allow parties to request adverse evidentiary inferences at the time of trial. This often results in the judge instructing the jury that they may conclude from the spoliating party’s actions that the missing evidence would have damaged that party’s case, and helped the other party’s case. Also, discovery sanctions, such as precluding the spoliating party from using certain evidence or relying on certain experts, are often used to punish a party for certain types of spoliation. In egregious situations, courts may even resort to dismissal of a claim.

Independent tort claims for spoliation of evidence are permitted in relatively few jurisdictions, including Alaska, Louisiana, New Mexico, Ohio, Montana, the District of Columbia, Illinois and West Virginia. The specific claims that are permitted vary in each of these jurisdictions. Some of these jurisdictions limit these claims based on whether the spoliation was third-party or first-party, and some jurisdictions limit such claims according to whether the alleged spoliation was negligent or intentional. Thus, it is important to know the applicable restrictions in your jurisdiction before bringing claims of spoliation.

The bottom line is that some sort of remedy for spoliation of evidence may be available to you, depending on the jurisdiction of your case. These remedies vary from something as mild as a discovery sanction to dismissal of the entire case, depending on the circumstances. Thus, it is important to correctly categorize the type of spoliation you are dealing with, so that you can determine the remedies or sanctions available in your jurisdiction.

Protecting yourself against claims of spoliation.

Sometimes, the circumstances of a loss are such that you are unable to provide all potentially interested parties with a full and complete opportunity to inspect the loss scene. This can occur for any number of reasons, including the issuance of an order of demolition by local officials, when holding the scene poses an unreasonable risk of danger, when a party is unable to be immediately identified, etc. If you find yourself in one of these situations, you may not be able to prevent other parties from claiming that you committed spoliation of evidence. You can, however, begin to lay the groundwork for defending such a claim by making every reasonable effort to prevent prejudice to any potentially interested parties who could allege such a claim.

Immediately contacting every potentially interested party that you can identify and inviting them to attend and participate in any activities that take place at the loss site is the most important action you can take. If you are unable to identify or include every potentially interested party immediately following the loss, including as many parties as possible will go a long way toward defending future claims of spoliation.

In the event you are unable to provide a potentially interested party with the opportunity to inspect the undisturbed loss scene, steps should be taken to document the scene before it is altered. Documenting the loss scene immediately following the loss can be accomplished by having your expert photograph the scene in great detail and, when appropriate, videotape the investigation. These steps will give any parties not in attendance and/or their experts the opportunity to make observations about the loss scene, despite their absence.

The use of video-recording can be invaluable when potentially destructive activities, such as experts digging a fire scene or demolition of the property per the instruction of local officials, commence outside the presence of a potentially interested party. While it is important to make an effort to cause the minimal amount of disruption possible in these situations, sometimes it is inevitable that permanent alteration of the loss scene will occur. Involving fire investigators from the local fire department or state fire marshal’s office in these activities is also a good idea when possible, as any absent parties will have the opportunity to review the reports generated by the local officials. They will also have the opportunity to interview or depose the local officials. Being able to provide the missing party with an opportunity to familiarize itself with the activities that took place at the scene in its absence will help reduce the prejudice (if any) suffered by that party.

Another way to proactively protect against future claims of spoliation, or enable yourself to effectively defend against them, is to maintain any physical evidence that an absent party may wish to examine. This means maintaining not only any evidence you need to prove your theory, but also seriously considering retaining additional items so that they can be ruled out as having been involved in the cause of the fire. Retaining, for example, other products that were located near the product you contend failed and resulted in the loss, will support your defense of any future spoliation claims. Providing the other party with an opportunity to examine other items from the loss scene will assist you in defeating claims by the other party that they are unable to rule out these other items.