Destroying Evidence?

This may come as a surprise, but neither the California Civil Discovery Act nor any case law interpreting the same specifically prohibits the intentional destruction of evidence prior to a lawsuit being filed ' regardless of whether such litigation is being contemplated or even probable.

There is even authority in California suggesting that even after a lawsuit is filed, a duty to preserve evidence is not triggered until the party is served with discovery demands. For example, in New Albertsons, Inc. v. Sup. Ct. (2008) 168 Cal.App.4th 1403, 1430-1431, the Court of Appeal rejected sanctions for spoliation because it read the California Civil Discovery Act as authorizing sanctions only “[t]o the extent authorized by the chapter governing any particular discovery method or provision of this title,” and no discovery method authorized by the Civil Discovery Act addresses the possibility of spoliation prior to service of a discovery demand.

By comparison, federal courts recognize that a duty to preserve evidence arises when a party reasonably anticipates litigation, and most certainly when a party is contemplating filing a lawsuit. As explained in Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 218 (S.D.N.Y. 2003), the seminal case on the duty to preserve evidence and spoliation, “once 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.” This applies equally to both prospective plaintiffs and defendants in a federal lawsuit. However, in the case of would-be plaintiffs, the duty to preserve potentially relevant evidence is triggered at an earlier point, given that plaintiffs dictate when litigation actually begins and, as such, are able to anticipate litigation before the lawsuit is even filed.

Little Guidance in Case Law

The matter is further complicated by the fact that the Civil Discovery Act and California courts offer little, if any, guidance as to what actions are required of a party to satisfy its duty to preserve and, conversely, what parties are required to show in order to establish that relevant evidence has been spoliated, that sanctions should be imposed and what, if any, sanctions are appropriate.

Indeed, in Williams v. Russ, 167 Cal.App.4th 1215 (2009), the Court of Appeal explained that under Evidence Code section 500, which provides that a party has the burden of proof as to the existence or non-existence of each fact that is essential to his or her claim for relief, the burden of proof as to whether a requesting party has been prejudiced by the loss of documents may be shifted to the responding party. The Court of Appeal further explained that under Evidence Code section 500, “burden shifting is proper when one party's wrongdoing makes it practically impossible for the plaintiff to prove its case,” but noted that “[t]he burden does not shift automatically.” On that basis, the court held that “a party moving for discovery sanctions based on the spoliation of evidence must make an initial prima facie showing that the responding party in fact destroyed evidence that had a substantial probability of damaging the moving party's ability to establish an essential element of his claim or defense.”

Problems in Practice

In practice, this is a seemingly impossible standard to meet. Indeed, how can a party prove that a certain document which no longer exists was relevant, let alone critically, to his or her claim or defense? The California Supreme Court previously conceded as much in Cedars-Sinai Med. Center v. Sup. Ct. 18 Cal.4th 1 (1998), in which it held that there is no tort remedy for the intentional spoliation of evidence by a party to the cause of action to which the spoliated evidence is relevant in cases in which the spoliation victim knows or should have known of the alleged spoliation before the trial or other decision on the merits of the underlying action. In Cedars-Sinai, the Supreme Court noted that “[w]ithout knowing the content and weight of the spoliated evidence, it would be impossible for the jury to meaningfully assess what role the missing evidence would have played in the determination of the underlying action. The jury could only speculate ' .”

By comparison, in federal court, the question of which party should bear the burden of establishing the relevance of evidence that has been lost depends on the severity of the sanctions being sought. For more severe sanctions, such as dismissal or preclusion of the imposition of an adverse inference, federal courts will consider, in addition to the conduct of the spoliating party, whether the lost evidence was relevant and whether the innocent party has suffered prejudice as a result of the loss of evidence. For example, federal courts will presume relevance and prejudice when the spoliating party acted in bad faith or in a grossly negligent manner. See, e.g., Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 999, 109 (2d Cir. 2002).

It is also important to note that the uncertainty and questions concerning the applicable burden of proof and possible shifting of that burden also apply to third-parties responding to discovery demands. As noted by the California Supreme Court, “[s]ome discovery sanctions are available to punish third party spoliation, including monetary and contempt sanctions against persons who flout the discovery process by suppressing or destroying evidence.” Temple Community Hosp. v. Sup. Ct., 20 Cal.4th 464, 476-477 (1999).

Conclusion

Given the ever-increasing proliferation of, and reliance on, electronically stored information, it is imperative that prospective plaintiffs and defendants alike consult with an attorney as soon as litigation is threatened or even contemplated so that they may be properly advised in connection with collecting, preserving and producing potentially relevant documents. Although California law pertaining to the duty to preserve and spoliation is far from clear, to simply ignore these matters is to run the risk of severe discovery sanctions. Those range from monetary sanctions to evidence sanctions prohibiting the offending party from introducing designated matters into evidence to terminating sanctions which include dismissing part or all or an action, or granting a default judgment against the offending party.

Even setting all that aside, to play fast and loose with one's obligation to preserve relevant evidence will almost certainly place the offending party at a tactical disadvantage in a lawsuit as it will undoubtedly be forced to defend against discovery motions which, in turn, may serve to alienate the presiding judge. There is also the fact that such discovery motions, regardless of whether or not they are granted and sanctions imposed, create an appealable issue.

Gabriel Z. Reynoso writes for The Recorder, an ALM sister publication of this newsletter, in which this article also appeared.

This may come as a surprise, but neither the California Civil Discovery Act nor any case law interpreting the same specifically prohibits the intentional destruction of evidence prior to a lawsuit being filed ' regardless of whether such litigation is being contemplated or even probable.

There is even authority in California suggesting that even after a lawsuit is filed, a duty to preserve evidence is not triggered until the party is served with discovery demands. For example, in New Albertsons, Inc. v. Sup. Ct. (2008) 168 Cal.App.4th 1403, 1430-1431, the Court of Appeal rejected sanctions for spoliation because it read the California Civil Discovery Act as authorizing sanctions only “[t]o the extent authorized by the chapter governing any particular discovery method or provision of this title,” and no discovery method authorized by the Civil Discovery Act addresses the possibility of spoliation prior to service of a discovery demand.

By comparison, federal courts recognize that a duty to preserve evidence arises when a party reasonably anticipates litigation, and most certainly when a party is contemplating filing a lawsuit. As explained in Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 218 (S.D.N.Y. 2003), the seminal case on the duty to preserve evidence and spoliation, “once 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.” This applies equally to both prospective plaintiffs and defendants in a federal lawsuit. However, in the case of would-be plaintiffs, the duty to preserve potentially relevant evidence is triggered at an earlier point, given that plaintiffs dictate when litigation actually begins and, as such, are able to anticipate litigation before the lawsuit is even filed.

Little Guidance in Case Law

The matter is further complicated by the fact that the Civil Discovery Act and California courts offer little, if any, guidance as to what actions are required of a party to satisfy its duty to preserve and, conversely, what parties are required to show in order to establish that relevant evidence has been spoliated, that sanctions should be imposed and what, if any, sanctions are appropriate.

Indeed, in Williams v. Russ , 167 Cal.App.4th 1215 (2009), the Court of Appeal explained that under Evidence Code section 500, which provides that a party has the burden of proof as to the existence or non-existence of each fact that is essential to his or her claim for relief, the burden of proof as to whether a requesting party has been prejudiced by the loss of documents may be shifted to the responding party. The Court of Appeal further explained that under Evidence Code section 500, “burden shifting is proper when one party's wrongdoing makes it practically impossible for the plaintiff to prove its case,” but noted that “[t]he burden does not shift automatically.” On that basis, the court held that “a party moving for discovery sanctions based on the spoliation of evidence must make an initial prima facie showing that the responding party in fact destroyed evidence that had a substantial probability of damaging the moving party's ability to establish an essential element of his claim or defense.”

Problems in Practice

In practice, this is a seemingly impossible standard to meet. Indeed, how can a party prove that a certain document which no longer exists was relevant, let alone critically, to his or her claim or defense? The California Supreme Court previously conceded as much in Cedars-Sinai Med. Center v. Sup. Ct . 18 Cal.4th 1 (1998), in which it held that there is no tort remedy for the intentional spoliation of evidence by a party to the cause of action to which the spoliated evidence is relevant in cases in which the spoliation victim knows or should have known of the alleged spoliation before the trial or other decision on the merits of the underlying action. In Cedars-Sinai, the Supreme Court noted that “[w]ithout knowing the content and weight of the spoliated evidence, it would be impossible for the jury to meaningfully assess what role the missing evidence would have played in the determination of the underlying action. The jury could only speculate ' .”

By comparison, in federal court, the question of which party should bear the burden of establishing the relevance of evidence that has been lost depends on the severity of the sanctions being sought. For more severe sanctions, such as dismissal or preclusion of the imposition of an adverse inference, federal courts will consider, in addition to the conduct of the spoliating party, whether the lost evidence was relevant and whether the innocent party has suffered prejudice as a result of the loss of evidence. For example, federal courts will presume relevance and prejudice when the spoliating party acted in bad faith or in a grossly negligent manner. See, e.g., Residential Funding Corp. v. DeGeorge Fin. Corp. , 306 F.3d 999, 109 (2d Cir. 2002).

It is also important to note that the uncertainty and questions concerning the applicable burden of proof and possible shifting of that burden also apply to third-parties responding to discovery demands. As noted by the California Supreme Court, “[s]ome discovery sanctions are available to punish third party spoliation, including monetary and contempt sanctions against persons who flout the discovery process by suppressing or destroying evidence.” Temple Community Hosp. v. Sup. Ct ., 20 Cal.4th 464, 476-477 (1999).

Conclusion

Given the ever-increasing proliferation of, and reliance on, electronically stored information, it is imperative that prospective plaintiffs and defendants alike consult with an attorney as soon as litigation is threatened or even contemplated so that they may be properly advised in connection with collecting, preserving and producing potentially relevant documents. Although California law pertaining to the duty to preserve and spoliation is far from clear, to simply ignore these matters is to run the risk of severe discovery sanctions. Those range from monetary sanctions to evidence sanctions prohibiting the offending party from introducing designated matters into evidence to terminating sanctions which include dismissing part or all or an action, or granting a default judgment against the offending party.

Even setting all that aside, to play fast and loose with one's obligation to preserve relevant evidence will almost certainly place the offending party at a tactical disadvantage in a lawsuit as it will undoubtedly be forced to defend against discovery motions which, in turn, may serve to alienate the presiding judge. There is also the fact that such discovery motions, regardless of whether or not they are granted and sanctions imposed, create an appealable issue.

Gabriel Z. Reynoso writes for The Recorder, an ALM sister publication of this newsletter, in which this article also appeared.