How Much Prejudice is Needed to Warrant an Adverse Inference Instruction?

Schmidt v. Shifflett (D.N.M. Oct. 28, 2019) showcases that, under FRCP 37(e), in order to be granted spoliation sanctions, the moving party must show that they were prejudiced by the spoliation. In this case, the court ruled that the prejudice suffered must be “severe,” leaving us to wonder: what level of prejudice is needed to warrant spoliation sanctions?

Overview:

In this personal injury case involving a car crash, the plaintiff sought spoliation sanctions under FRCP 37(e) for the defendants “intentionally” destroying his personal mobile phone, leading to failed preservation of relevant data.

After the accident, the plaintiffs issued a preservation letter which included the driver’s personal and business cell phone. During discovery, the defendants admitted that the personal cell phone was no longer in their possession because the driver “was not pleased with the quality of service from T-Mobile.”

After reviewing cell phone records produced by the defendants, the plaintiffs’ cell phone expert testified “with scientific certainty that Mr. Shifflett was highly distracted at the time of the accident and this impairment caused by his cell phone use was a substantial cause of the crash.”

Ruling:

• Spoliation Sanctions Granted in Part.
  The court allowed the plaintiffs to introduce evidence that one of the defendants willfully spoliated his personal cell phone but declined to grant an adverse inference instruction.
• No Severe Prejudice.
  With the plaintiffs’ expert testimony based on phone records, the court ruled that the inability to examine the physical phone did not severely prejudice the plaintiffs.
• Balancing of Spoliation Considerations.
  Even though examining the physical phone could have made the expert’s analysis more precise, the court determined that this did not justify severe spoliation sanctions.

Expert Opinion from Mike Hamilton, J.D., Director of Marketing, Exterro:

The court’s decision raises an important question: does Rule 37(e) act as a shield for intentional but ineffective spoliation? If data is not completely lost or irrecoverable, and the requesting party cannot demonstrate severe prejudice, sanctions may not be granted—even if there was an attempt to delete the data.

As a result, some judges are turning to other rules or their inherent authority to impose sanctions for improper behavior when Rule 37(e) does not apply.

Case Law Tip:

Download a guide on FRCP Rule 37(e) to better understand the requirements and standards for e-discovery practices.

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