Connell OHara by jolinmilioncherie


									    Corporate Counsel
                    The Metropolitan


Volume 12, No. 9                        © 2004 The Metropolitan Corporate Counsel, Inc.                                September 2004

                         The Duty Of Corporate Counsel
                              To Preserve Evidence
                                    By Jeffrey L. O’Hara and Matthew I. Gennaro

                                              negligent spoliation by a party to under-      for Big Trucking Company (“BTC”).
                                              lying litigation (“first party spoliation”)    Pam is injured in a car accident when
                                              is not actionable separately in tort, rea-     she loses control of her car and hits a
                                              soning that since “obligations not to          BTC truck driven by Greg. Greg does
     While several remedies exist for evi-    destroy evidence arise in the context of       not appear to be culpable and both vehi-
  dence spoliation (the most common           particular lawsuits . . . spoliation is best   cles are totaled. The truck is placed in
  being the spoliation inference and sanc-    remedied within the lawsuit itself, not as     storage for several months before BTC
  tions for failure to make discovery),       a separate tort.” Trevino v. Ortega, 969       has it scrapped and recovers its insur-
  none is more controversial or far-reach-    S.W.2d 950, 953 (Tex. 1998). As such,          ance. Months later, Jill receives a call
  ing than the recognition of spoliation as   the number of states that currently rec-       from counsel for the manufacturer of
  an independent claim for destruction of     ognize first party spoliation in some          Pam’s car. Pam has filed a product lia-
  evidence. This is not surprising consid-    form is limited: four states/districts rec-    bility suit against the car’s manufacturer
  ering that spoliation can encompass not     ognize only first party intentional spoli-     - key to the manufacturer’s defense is an
  one, but four separate torts: (1) inten-    ation of evidence as an actionable tort        accident reconstruction that will require
  tional spoliation by a party to underly-    (Louisiana, Indiana, Ohio, and West            an expert inspection of the truck.
  ing litigation; (2) negligent spoliation    Virginia), while three (the District of        Thankfully, leading courts, including
  by a party to underlying litigation; (3)    Columbia, Illinois, and Pennsylvania)          the New York Court of Appeals, have
  intentional spoliation by a third party     only recognize negligent first party spo-      been increasingly hesitant to permit
  not a party to underlying litigation; and   liation as a distinct cause of action.         independent spoliation theories against
  (4) negligent spoliation by a third party   Florida recognizes both.                       third parties like BTC in this setting.
  not a party to underlying litigation. See       Since an adverse inference against a           The principles enunciated in two
  Bart S. Wilhoit, “Spoliation of Evi-        third party may not be used to determine       recent cases set forth this majority view.
  dence: The Viability of Four Emerging       liability in an underlying case, tradi-        In Temple Community Hosp. v. Superior
  Torts,” 46 UCLA L.Rev. 631 (1998).          tional remedies for spoliation are             Court, 976 P.2d 223 (Cal. 1999), the
     Regardless, the vast majority of         wholly ineffective in dealing with both        California Supreme Court (which had,
  courts have held that intentional and/or    intentional and negligent third party          in fact, been the first court to recognize
                                              spoliation. This perspective is critically     both intentional and negligent spoliation
                                              important to corporate counsel, as it          as independent torts) held that inten-
   Jeffrey L. O’Hara is a certified civil
   trial attorney and Partner in the firm’s   may create a situation where the corpo-        tional third party spoliation was not
   Litigation practice group. He can be       ration (or even its in-house lawyer) may       actionable. In Temple, a former patient
   reached at the firm’s New Jersey tele-     not be conscious of its negative effect        sued a hospital for intentional spoliation
   phone number (see below) or by email at    on future litigation, yet find itself          after it destroyed medical equipment Matthew I.        dragged into court defending a civil           that had allegedly caused her injuries
   Gennaro is an Associate in the Litiga-     claim for spoliation of evidence.              and was needed as evidence to substan-
   tion practice group.                           For example: Jill is corporate counsel     tiate a product liability claim against its

                                  Connell Foley LLP (973) 535-0500
Volume 12, No. 9                         © 2004 The Metropolitan Corporate Counsel, Inc.                                  September 2004

  manufacturer. While sympathetic to            would be virtually impossible to mea-          court held that a party capable of estab-
  victims of spoliation, the Temple court       sure the degree of harm and the precise        lishing negligent or intentional spoliation
  held, in the final analysis, “the benefits    extent of damages, and any attempt to          is entitled to a rebuttable presumption
  of recognizing a tort cause of action, in     do so would involve inherent and irre-         that, but for the spoliation, the victim
  order to deter third party spoliation of      ducible speculation.” MetLife, 303             would have succeeded in the underlying
  evidence and compensate victims of            A.D.2d at 39, 42. In affirming this deci-      lawsuit. Thus, the potential for damages
  such misconduct, are outweighed by the        sion, the New York Court of Appeals            in these cases is enormous, potentially
  burden to litigants, witnesses, and the       concluded that the potential burdens on        encompassing every conceivable type of
  judicial system that would be imposed         third parties weighed against recogniz-        civil case. Hannah followed other cases
  by potentially endless litigation over a      ing an independent claim for negligent         that contained similar reasoning. See,
  speculative loss, and by the cost to soci-    third party spoliation, but appeared to        e.g., Smith v. Atkinson, 771 So.2d 429
  ety of promoting onerous records and          leave the door open in other instances:        (Ala. 2000); Holmes v. Amerex Rent-A-
  evidence retention policies.” 976 P.2d        “The burden of forcing a party to pre-
                                                                                               Car, 710 A.2d 846 (D.C. 1998); Boyd v.
  at 233. The court was not concerned           serve [evidence] when it has no notice
                                                                                               Travelers Ins. Co., 652 N.E.2d 267 (Ill.
  that the majority of sanctions for spolia-    of an impending lawsuit, and the diffi-
  tion were ineffective in deterring third      culty of assessing damages militate            1995).
  parties, reasoning that this “may well be     against establishing a cause of action for         Although courts have been loathe to
  because third party spoliation has not        spoliation in this case, where there was       recognize spoliation as an independent
  appeared to be a significant problem in       no duty, court order, contract or special      cause of action, case law in this area is
  our courts.” Id. at 232. In addition, the     relationship.” MetLife, 1 N.Y.3d at 484,       hardly consistent and the concept is
  court was hesitant to “provide disap-         775 N.Y.S.2d at 757.                           replete with danger. While courts rarely
  pointed litigants a second opportunity to         Not all courts have followed the rea-      permit third party spoliation claims, the
  seek the compensation they sought in          soning in Temple. In Hannah v. Heeter,         fact-sensitive nature of any spoliation
  the original lawsuit, even if they            584 S.E.2d 560 (W. Va. 2003), David            claim should make corporate counsel
  [sought] it against a party not involved      Heeter, defendant in a sexual harassment       wary of opening the door with a scenario
  in the original lawsuit.” Id. at 229. The     suit brought by his employee Patricia          that may be the newest arrow in a plain-
  court believed that the spoliation tort       Hannah, brought a counterclaim against         tiff’s quiver. Thus, the safest course, in
  would, in effect, require a retrial to per-   Hannah’s mother (a non-party to the            the face of this uncertainty, is to presume
  mit the plaintiff to demonstrate “in what     harassment case) for negligent and inten-      the law does or will recognize spoliation
  respect the alleged spoliation altered the    tional spoliation for destroying tape          as an independent claim and take pre-
  outcome of the first trial.” Id.              recordings purportedly documenting the         cautions accordingly. First, if a client
      In MetLife Auto & Home v. Joe Basil       harassment. The West Virginia Supreme          has the unfortunate opportunity to pos-
  Chevrolet, Inc., 303 A.D.2d 30 (N.Y.          Court considered the questions of              sess potential evidence, it should be
  App. Div. 2002), aff’d 2004 1 N.Y.3d          whether to recognize an independent tort       safeguarded until it can be confirmed
  478, 775 N.Y.S.2d 754 (2004), MetLife         for negligent first party spoliation, negli-   that the potential claimant does not
  sued an automobile insurer for negligent      gent third party spoliation, and inten-        require it. If one is uncertain, a tele-
  and reckless spoliation of evidence – a       tional spoliation (by either a first or a      phone call and confirming letter advis-
  truck – which it claimed irrevocably          third party). In answering the latter two      ing of the existence of the item and,
  impaired its ability to successfully pur-     questions in the affirmative, the court        most importantly, the intention to dis-
  sue a claim against the installer of the      stated that to do otherwise would be
                                                                                               card it should provide some future pro-
  truck’s remote starter system that            inconsistent “with our policy of provid-
                                                                                               tection. If the potential claimant
  allegedly was the source of a fire in a       ing a remedy for every wrong and com-
  home insured by MetLife. The New              pensating victims of tortious conduct.”        expresses the desire to utilize the item,
  York Supreme Court, relying heavily on        Id. at 568. Further, the Hannah court          depending on its value, give it to the
  Temple, concluded that it would not rec-      held that a duty to preserve evidence          claimant or store it with the expressed
  ognize a cause of action against negli-       does in fact exist in circumstances simi-      understanding that the claimant will be
  gent third party spoliators because the       lar to those noted in MetLife: “A duty to      responsible for the storage costs. While
  potential burdens on third parties may        preserve evidence for a pending or             this suggestion may be easy to articulate
  be too great, noting that “many vehicles      potential civil litigation may arise in a      but difficult to implement, the alterna-
  regulated to a salvage yard would ordi-       third party to a civil action through a        tive is to absorb the value of the item or
  narily constitute relevant evidence of at     contract, agreement, statute, administra-      storage costs. Simply stated, from a
  least a potential property damage             tive rule, voluntary assumption of duty        business and future litigation perspec-
  claim.” Further, “[e]ven if the fact of       by the third party, or special circum-         tive, it may be better to pay now than to
  harm can be ascertained or assumed, it        stance.” Id. at 569. Most important, the       pay later.

                                  Connell Foley LLP (973) 535-0500

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