Section Review

Now you see it, now you don’t: Evidence and the spoliation thereof in employment law cases

©2006

 

Introduction

Employment lawyers, defense as well as plaintiff-side, acknowledge one distinguishing feature of employment law disputes: All or nearly all the cards (that is, the evidence) are usually in the hands of employers.

This is generally true of witnesses, few of whom, if still employed, are willing to risk jeopardizing their employment by testifying voluntarily on behalf of a fired co-worker. The rule applies to an even greater degree with respect to records and other documents, the great majority of which are usually under the firm control of the employer. Indeed, this employer-control of the bulk of evidence challenges employees and their advocates as to how to develop sufficient evidence to get the matter before a jury.

This problem for plaintiffs has been complicated by the increasing reliance on electronic media by employers. Communications and documents bearing on the employment relationship are often maintained solely in electronic form,[1] whether as electronic mail, electronic drafts of memoranda, letters, rules, policies, employee handbooks and personnel manuals (many of which are available to employees today only on a proprietary, secure Web site.)

Plaintiff-side employment lawyers must be prepared to litigate to compel production of this “soft-copy” evidence, and also be in a position to assure that such material continues to be available. Precious evidence in the form of electronic mail messages, draft memoranda, sales and other performance data are routinely destroyed by employers who believe they are doing nothing wrong by merely following an established record retention policy. Indeed, most businesses have policies of routinely destroying electronic materials as their usefulness declines, usually after a year or less.

In vigorously contested employment cases, preservation of records relating to plaintiff-employee performance, as well as to defendant-employer grounds for its adverse action, become crucial. Proving discrimination requires a showing that non-protected-class employees were treated better than protected-class employees. This can be a heavy evidentiary burden that plaintiffs often cannot bear in the absence of documents controlled exclusively by the employer, because it requires access not only to the plaintiff-employee’s own records but to comparator co-worker records as well.

Sales personnel offer a particularly clear example. Organizations that engage in sales usually evaluate staff on the basis of volume of sales and gross margin, or proportion of sales revenue over company cost. This information, particularly as it relates to comparator personnel, is available only from the organization itself.

Given the crucial importance of such evidence, the temptation can be strong to place it beyond the reach of an adversary. This can occur indirectly, by means of data re-organization or changes in data handling, or by adopting record destruction policies that assure swift destruction of potentially damaging records. Or it can happen more overtly simply by destroying (or the electronic equivalent, deleting) the materials.

Because employers possess the power of exclusive possession of evidence combined with the power of easy destruction of electronic data, employee advocates must be prepared to respond appropriately when records they anticipate will be available from the employer suddenly disappear. The doctrine of spoliation offers a tool for advocates to address such a disappearance.

 

Spoliation

 

Spoliation is the destruction of records or other evidence that is or may be relevant to a dispute that may result in litigation, or to a government investigation or an audit. Spoliation occurs whenever documents or objects which may assist the court in reaching an informed, just result are rendered unusable or beyond the ability of the court to use them. See, e.g., The Sedona Guidelines: Best Practice Guidelines & Commentary for Managing Information & Records in the Electronic Age, Guideline 3.

Early cases of spoliation arose in admiralty law and involved the destruction of cargo and shipping manifests necessary to resolve disputes over shipping of cargoes and the loss of goods. See The Amiable Isabella, 19 U.S. 1; 5 L. Ed. 191; 1821 U.S. LEXIS 380; 6 Wheat. 1, February 22, 1821. In Massachusetts, some cases have involved the destruction of furniture alleged to have caused serious injury, or the destruction of an ambulance involved in a traffic accident. See Kippenhan v. Chaulk Services, 428 Mass. 124 (1998); Townsend v. American Insulated Panel Company, Inc., 174 F.R.D. 1 (D.Mass 1997).

Courts have differed as to the level of intent required before sanctions will be warranted. The doctrine of spoliation has formed the basis for substantial sanctions even where a spoliator appeared to have acted with good intentions. In that case, an investment brokerage house was accused of unfair practices based on representations made in a promotional brochure. The defendant destroyed all copies of the offending brochure ostensibly to prevent further instances of the unfair and deceptive practice being repeated. Despite this apparently innocent motivation, the court imposed a $1 million cash sanction on the defendant, because the defendant’s actions had left the plaintiff in an untenable position in the complete absence of any examples of the deceptive statements. See In Re: Prudential Ins. Co. Sales Practices Litigation, 169 F.R.D. 598 (D.N.J. 1997).

Courts have often taken a particularly severe approach to spoliation of evidence because they see it as a direct threat to their ability to dispense justice. See, e.g., In Re: Prudential Ins. Co. Sales Practices Litigation, 169 F.R.D. 598 (D.N.J. 1997); Kippenhan v. Chaulk Services, 428 Mass. 124 (1998); Townsend v. American Insulated Panel Co., 174 F.R.D. 1 (D.Mass. 1997).[2]

It is well recognized that the existence of a legal dispute imposes a duty on parties to safeguard materials that might be of assistance to the court in resolving the issues. Recent decisions in the 4th and other circuits reiterate this doctrine. See Silvestri v. General Motors Corp., 271 F. 3rd 583 (4th Cir. 2001). A leading case, Zubulake v. UBS Warburg, LLC, 382 F. Supp. 2d 536, 2005 WL 627638 (SDNY March 19, 2005), states not only that evidence must be preserved, but that it is counsel’s duty to assure its preservation.

Law in the 1st and other circuits appears to be quite broad with respect to the obligation of parties to preserve evidence. When the evidence indicates that a party is aware of circumstances that are likely to give rise to future litigation and yet destroys potentially relevant records without particularized inquiry, a fact finder may reasonably infer that the party probably did so because the records would harm its case. See Blinzler v. Marriott International, Inc., 81 F.3d 1148 (1st Cir. 1996); Vodusek v. Bayliner Marine Corp., 71 F.3d 148, 156 (4th Cir. 1995); Partington v. Broyhill Furn. Indus., Inc., 999 F.2d 269, 272 (7th Cir. 1993); Nation‑Wide Check Corp., Inc. v. Forest Hills Dist., Inc., 692 F.2d 214, 219 (1st Cir. 1982).

The court in Blinzler v. Marriott International, Inc., 81 F.3d 1148 (1st Cir. 1996) upheld an inference permitted by the trial court that defendant was aware of the importance of a document that it destroyed, and that it was liable to sanctions even though litigation had not begun. “Although no suit had yet been begun when the defendant destroyed the document, it knew of both [plaintiff’s decedent’s] death and the plaintiff's persistent attempts ... to discover [certain information thought to be contained in the document].” Id. at 1149. This knowledge gave the defendant ample reason to preserve the report in anticipation of a legal action.

The Massachusetts Superior Court has also adopted this position, holding that a litigant has a duty to preserve evidence. See Franco Attardo v. Boston, 12 Mass. L. Rep. 321, 2000 Mass. Super. LEXIS 437, 96‑3690B (July 27, 2000), citing Townsend v. American Insulated Panel Co., Inc., 174 F.R.D. 1, 3 (D. Mass 1997). Massachusetts law also specifically requires the maintenance of personnel records by employers. See M.G.L. c. 149 § 52C.

In employment cases, countless varieties of spoliation arise, from routine overwriting of backup media to destruction of hard drives in the course of upgrading office computer systems. In one recent case, a defendant who had failed to produce evidence of sales productivity for comparator sales representatives to the plaintiff claimed it had upgraded its computer software system, which meant that the crucial months of sales data were destroyed or otherwise inaccessible. See Cleary v. Sonepar, Norfolk C.A. No. 03-01531. Larger organizations that employ outside contractors to maintain their backup materials may assert that a change of contractor has had the same effect.

 

Initial steps in combating spoliation

Under these circumstances, it is important for employment lawyers to take measures to prevent the destruction or loss of evidence. One prudent first step for those representing employees is to place the employer on notice, in the initial contact or demand letter, that litigation is likely and that all evidence relating to an employee’s employment must accordingly be preserved. Expressly identifying electronic materials may make the job of the court easier should its intervention become necessary. The Zubulake court’s instruction regarding the obligations of defense or employer counsel buttresses their traditional ethical duty in this regard.

Another way of putting protection in place is for counsel to demand (plaintiff-side) or advise (defense-side) the imposition of litigation holds on all materials bearing on the dispute. A litigation hold policy enables employers to preserve relevant internal materials. Beyond requesting a litigation hold in the initial demand letter, this policy should be requested as part of initial discovery, to further increase the likelihood that defendants take their obligations seriously and preserve all relevant communications and other documents.

In addition to a formal written demand for preservation of evidence, the complaining party may file a motion for a protective order, ex parte, at the same time the complaint is filed. Acting ex parte may avoid the danger of alerting the defendant regarding materials it may wish to destroy; and while the court may be reluctant to grant such orders without hearing from the other party, the filing of such a motion will leave little doubt concerning notice once it is served.

Of course, the proposed order that should accompany such a motion should identify, with as much precision as possible, the specific records or other items for which protection is sought. While on the employee-side the plaintiff (depending on his or her job) should be in a position to assist with this, it is a situation where a quick deposition of the defendant’s management information systems manager may also be advisable, budget permitting. Language ordering that all evidence, including documents relating to an employee’s employment, must be preserved should be a reasonable starting point. The protective order should require the opposing party to take whatever steps are necessary, including litigation holds, to assure that no further destruction of backup media occurs, and that all existing media will be preserved so as to remain available.[3]

As with other kinds of discovery issues, courts usually prefer to see parties conferring and agreeing between themselves regarding necessary steps to assure the preservation of electronic evidence. In cases involving a larger organization, this may require discussing the restoration of backed-up electronic materials (in particular, e-mails), including sometimes special software; and agreeing on search terms to be used in their review.

Because of the huge volumes of material even smaller businesses accumulate, courts are often hesitant to require maintenance of global backups and it may be necessary to segregate material likely to be useful in proving the case. Both parties should be willing to permit database searches that are focused on retrieving materials of this kind. For plaintiff counsel, the best source for productive search terms is likely to be the plaintiff, who may have been exposed to the e-mail and other electronic documents most likely to be helpful. But defense counsel will also want to locate and preserve exculpatory materials. Again, the client is often the best person to assist in developing such search processes.

 

Sanctions

 

Because of the seriousness of the threat to the judicial process that spoliation poses, courts have been inclined, as noted, to award significant sanctions against spoliators. A jury instruction on spoliation represents one means of effectuating such a sanction. In this step, the court instructs the jury that it may infer from the destruction of the evidence at issue that it would have supported the contention for which the plaintiff sought to use it; or was in some other way damaging to the defense. The jury may thus rely on it in making a decision concerning liability, damages or any other issue on which it bears. Appropriate relief may also consist of exclusion of testimony putatively arising from, or based in, the missing records.

In a Massachusetts case, Linnen v. A.H. Robins Co., Inc., 11 Mass. Law Rptr. 189, 1999 WL 462015 (Mass. Superior Ct. June 16, 1999), the court issued a spoliation charge against a company for failing to preserve evidence in an injury case relating to pharmaceuticals. There, in the extensive litigation over the diet drugs fenfluramine and phentermine, plaintiffs had sought and won an initial ex parte order requiring the defendant drug manufacturers to retain extensive electronic communications, including electronic mail. The manufacturers thereafter succeeded in having the order lifted, in part on the basis of their representations that electronic materials would be preserved and provided. However, it later developed that materials had been nevertheless destroyed and the court, Brassard, J., ordered that the jury be given the spoliation instruction that it may infer that the evidence was disadvantageous to the defendants as part of the charge.

Alternatively, where missing evidence might raise a credibility question or be a basis for contradicting defense testimony, such defense, or the testimony on which it relies, may be barred from admissibility. In a case in which the plaintiff claimed to have been injured by a daybed which was later destroyed by the defendant, the injured party sought to bar from evidence photographs of the offending furniture. The plaintiff argued that unless it could examine for itself the actual daybed that caused injury, it would be prejudiced by the conclusions a jury could draw from the (potentially misleading) photographs. This theory represents an attempt to compensate for the damage done to the truth-finding process that the spoliation represented.

Finally, the court may apply the ultimate sanction of entry of default judgment against the spoliator; or dismissal of the spoliating party’s case. As with other failures to make discovery, these sanctions are available to the court pursuant to Mass. R. Civ. P. 37(B)(2). But application of this sanction has been criticized, particularly where no finding of intent has been made.

In Menz v. New Holland North America Inc., et al., 440 F.3d 1002; 2006 U.S. App. LEXIS 6385 (8th Cir. 2006), the Court of Appeals considered a district court decision sanctioning spoliation by dismissal of the case where the court omitted to inquire into motivation. Relying on Missouri law and federal decisions, the Menz court held that evidence of intent was necessary, writing,

“[w]e need not decide whether federal or state law governs in this diversity action because the result is the same under both ‑ to warrant dismissal as a sanction for spoliation of evidence there must be a finding of intentional destruction indicating a desire to suppress the truth. ... [A] finding of bad faith is necessary before giving an adverse inference instruction at trial against a plaintiff for the destruction of evidence. It would therefore be unreasonable to excuse a finding of bad faith when imposing a more severe sanction, the outright dismissal of a plaintiff's case.”

 Id. at 1006. See also Stevenson v. Union Pac. R. R. Co., 354 F.3d 739, 746 (8th Cir. 2004); Morris v. Union Pac. R.R., 373 F.3d 896, 901 (8th Cir. 2004) (noting under Stevenson that “a finding of intent is required to impose the sanction of an adverse inference instruction”); and Brown v. Hamid, 856 S.W.2d 51, 56‑57 (Mo. 1993) (“The evidentiary spoliation doctrine applies when there is intentional destruction of evidence, indicating fraud and a desire to suppress the truth”).

anctions can also be imposed in an exemplary manner, as a deterrent to future spoliation, as happened in the Prudential case noted above. Perhaps the simplest sanction is the entry of orders aimed at preventing the spoliating party from receiving an advantage as a result of its misconduct. For example, in employment cases, an order eliminating from the trial any testimony that’s veracity cannot be tested against destroyed records may be one possibility. Such a position may have a hobbling effect on defenses sufficient to deter future spoliation. It may at the same time offer the approach most likely to place the court and the parties in the position closest to the one they would have occupied had the spoliation not occurred.

Conclusion

The advent of electronic documents has vastly increased the array of materials that should be discoverable from defendants in employment cases. At the same time, the fragility of electronic data means it may be more easily spoliated than hard copy materials. Steps taken in a timely manner, however, should aid in minimizing the risk of such spoliation occurring and the damage to the judicial process and the discovering party’s case should it occu



[1] Researchers at the University of California, Berkeley, recently found that 93 percent of all information generated in 1999 was in digital, or electronic, form. Withers, The Discovery of Electronic Evidence: What you Need to Know, Association of the Bar of the City of New York, May 29, 2003, at 2. 

[2] One source of confusion is whether spoliation needs to be addressed solely within the underlying case, or whether a separate cause of action, in the nature of tort, is created by the destruction of evidence.  The 1st Circuit addressed this issue in a recent Rhode Island matter, Malinowski v. Documented Vehicle/Drivers Systems, Inc. et al., 66 Fed. Appx. 216; 2003 U.S. App. LEXIS 10812 (May 30, 2003), where the court wrote in a non-precedential opinion, “We agree with the magistrate judge and the district court that, even supposing the Rhode Island Supreme Court were to recognize a spoliation tort, [plaintiff] has not set forth specific facts making out such a hypothetical cause of action ... . Perhaps most telling is the absence of a factual basis from which to conclude that [defendants] destroyed evidence so as to affect her ability to obtain a favorable judgment in the wrongful death action. ...  In the few states that recognize an independent tort for spoliation of evidence, courts have required, inter alia, that a party show a causal relationship between the act of spoliation and the inability of the complainant to prove her lawsuit.”   See also, Oliver v. Stimson Lumber Co., 1999 MT 328, 993 P.2d 11, 297 Mont. 336 (Mont. 1999); Torres v. El Paso Elec. Co., 1999 NMSC 29, 987 P.2d 386, 401, 127 N.M. 729 (N. Mex. 1999).

 

 

[3] The questions of methods of production for electronic data and, more importantly, how the costs are to be allocated are large topics beyond the scope of this paper.  It is, however, worth noting that costs are frequently divided and that courts encourage negotiation over such matters as media for production, search software and search terms between the parties. 

 

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