By Mike Hamilton, J.D.
The threat of evidence spoliation doesn’t only affect private parties but also extends to government organizations, such as cities or municipalities. Case in point is DMAC LLC and Fourmen Construction, Inc. v. City of Peekskill (S.D.N.Y Sept. 12, 2012). The district court ruled that the defendant, City of Peekskill, spoliated evidence by deleting relevant emails. This failure was due largely in part to the defendant not maintaining a “formal e-mail retention policy,” which left “sole discretion” to the defendant’s employees to decide for themselves whether to keep or dispose of emails. Along with awarding the plaintiffs, DMAC and Fourmen Construction, with costs and fees arising from bringing this motion, the court granted an adverse inference instruction, which allowed jurors to infer “that the City (defendant) negligently destroyed e-mails similar in nature to the ones produced, and that said e-mails would have been favorable to plaintiffs’ case.”
In this case, the plaintiffs brought suit against the defendant for stopping their real estate project allegedly due to illegal political reasons. During the discovery process, the defendant informed the plaintiffs that they had no formal email retention policy in place. As a result, a majority of the defendant’s employees had deleted pre-litigation emails concerning the subject matter relevant to the case. In response, the plaintiffs made discovery requests to third parties that surfaced several relevant emails from the defendant. Based on this finding, the plaintiffs filed a motion for sanctions against the defendant for spoliation of evidence under Federal Rules of Civil Procedure (FRCP).
As a reminder, the spoliation of evidence is “the destruction or significant alteration of evidence, or failure to preserve property for another’s use as evidence in pending or reasonably foreseeable litigation.” Within the magistrate judge’s opinion, the court utilized a familiar three prong test to analyze whether the moving party met its burden to prove that the spoliation of evidence occurred. The three prong step is as follows:
- (1) The spoliating party had control over the evidence in question, and a duty to preserve it at the time it was destroyed, lost or significantly altered
- (2) That said evidence was destroyed, lost or significantly altered with a culpable state of mind
- (3) That said evidence was relevant to the moving party’s claims or defenses
The defendant did not contest factor 1, so at issue within the court’s analysis were factors 2 and 3. In regards to factor 2, the key issues centered on what accounted for a culpable state of mind, and did the defendant’s actions meet this threshold? According to the court, a culpable state of mind ranges from “willful destruction in bad faith to simple negligence.”
The court deemed a failure to maintain a “formal e-mail retention policy” as de facto negligent. But beyond this, the court ruled that the defendant was grossly negligent because (1) the defendant ignored its obligation to preserve relevant emails when the duty to preserve was triggered, and (2) even with the defendant’s assurances that a legal hold was implemented when litigation began, testimony from one of the defendant’s employees refuted that claim. The employee stated that “at no time was she ever advised to preserve communications, including e-mails.”
Apart from having a culpable state of mind, according to factor 3 the spoliated evidence must have been relevant to the case. The plaintiffs proved that the emails were relevant and favorable to their case by issuing production requests to third parties. The information produced from these third parties showed that the emails were relevant based on the similarity in nature and proximity between the emails produced by the defendant.
As a result of the plaintiffs proving that all three factors had been met, the court ruled against the defendant and issued an adverse inference and charged the defendant with the plaintiffs’ costs and fees which arose from bringing the motion.
THE E-DISCOVERY BEAT’S TAKE
DMAC reminds us of a few important foundational points that legal teams should never forget:
- The trigger to preserve potentially relevant information starts when litigation is reasonably foreseeable, not when litigation is filed.
- Not employing a document retention policy can be held at minimum as negligent, meeting the culpable state of mind burden for issuing spoliation sanctions.
- The same discovery rules apply to all entities (private, government) in civil litigation at the Federal level.
It is imperative that government organizations, like the City of Peekskill, to have knowledge concerning what steps or processes are needed to be taken during e-discovery to maintain defensibility. Once educated, the next step is to identify what processes are needed to stay compliant with the FRCP. When formulating these processes, organizations need to incorporate workflows and monitoring protocols to ensure the processes are actually being followed. For example, an established, routine document retention policy needs to incorporate legal preservation requirements. When issuing a legal hold notice to all potentially relevant custodians, this should include suspension of the routine document retention policy along with scheduled, automatic reminders and re-issuance notices to custodians on legal hold. Without these basic functions, legal teams within government agencies, along with their corporate counterparts, will remain lost in the sophisticated technological world that they must now live in under the FRCP.
To learn more about legal hold best practices during e-discovery, read Exterro’s white paper, “Understanding the Duty to Preserve,” here.
Mike Hamilton, J.D. is a Sr. E-Discovery Analyst at Exterro, Inc., focusing on educating Exterro customers, prospects and industry experts on how to solve e-discovery issues proactively with technology. His e-discovery knowledge, legal acumen and practical experience give him a valuable perspective on bridging the gap between IT and legal teams. You can find him on Google+, Twitter and Linkedin.