The importance of lit holds
The practice of holding safe evidence relevant to a known claim, especially when that hold is implemented by counsel, is often called a “lit(igation) hold.” Whether or not an actual lit hold is in place, the courts will punish employers who engage in “spoliation.” Four recent federal cases from Colorado (cited below under Sources) illustrate the importance of understanding these concepts.
What is spoliation?
Citing 2015 precedent, the court in Mitcham defined “spoliation” as “the destruction or significant alteration of evidence, or failure to preserve property for another’s use as evidence in pending or reasonably foreseeable litigation.” Note how this includes then not just evidence that supports the party’s own position but also evidence that supports the opposing party’s position. That evidence must also be relevant to the case. As the same court noted, an element of “bad faith” must be proven, something more than “mere negligence in losing or destroying records.” Thus, a company, once aware of pending or reasonably foreseeable litigation has a duty to preserve evidence, which “duty is one of reasonableness under the circumstances.”
When are spoliation sanctions proper?
The court in Mitcham confirmed that sanctions for spoliation are proper “where: ‘(1) a party has a duty to preserve evidence because it knew, or should have known, that litigation was imminent, and (2) the adverse party was prejudiced by the destruction of the evidence.'” Note here the two key requirements that the other party prove the destroyer knew or should have known of the claim and further that the destruction caused prejudice. A party is not sanctionable for spoliation when it destroys evidence unaware of a possible claim. The routine destruction of records according to a recordkeeping policy or practice is not, without more, sufficient to raise a spoliation issue.
What sanctions are appropriate for spoliation?
The courts have discretion to determine an appropriate sanction. Sanctions often include attorney fees and costs, additional deposition opportunities, and the production of requested evidence that would not otherwise be discoverable. Witnesses can be precluded from testifying, and documents can be excluded from evidence. One of the most powerful forms of sanction is a “spoliation instruction” aka an “adverse inference” instruction, in which the jury is informed of the spoliation and advised it may infer that the destroying party did so in order to conceal condemnatory information.
Are there other consequences in the case that might result from spoliation?
The consequences of spoliation do not stop with sanctions. The court in Green for example denied, as a result of spoliation, the employer’s otherwise arguably merited motion for summary judgment, finding that the spoliation was itself evidence of what is called “pretext,” which in turn warranted a jury trial.
Therefore, even if the Postal Service can met its burden to produce legitimate, nondiscriminatory justification for its actions against Plaintiff, the actions of Ms. Ehrenshaft in destroying the relevant personal files after the commencement of this litigation is sufficient, as a matter of law based on my sanctions ruling, for Plaintiff to show pretext in order to rebut the Postal Service’s proffered legitimate reasons.
Is there an independent claim for spoliation?
The courts in Colorado have not yet decided whether a spoliator can independently be sued for the destruction. In Gomez the court dismissed such a claim observing that other states prohibited such claims and concluding there was no reason to believe “the Colorado Supreme Court ‘would buck the national trend'” of not allowing independent lawsuits against spoliators.
Still with the possibility of sanctions and other remedies, there is plenty of reason to consult with counsel about potential claims and develop appropriate lit holds.
You can read more about spoliation in the Colorado federal district court’s decision in Mueller v. Swift, the recently much publicized (and unsuccessful) lawsuit against Taylor Swift (who eventually won no doubt in part to the plaintiff’s having permitted the destruction of evidence).
Source: Green v. Brennan, No. 10-cv-02201-LTB-KMT, 2017 BL 322599, 2017 FEP Cases 322599 (D. Colo. Sept. 13, 2017), Court Opinion; Mitcham v. Americold Logistics, LLC, No. 17-cv-00808-WJM-NYW, 2017 BL 332681 (D. Colo. Sept. 20, 2017), Court Opinion; Gomez v. Sam’s West, Inc., No. 16-cv-02240-CMA-STV, 2017 BL 284853 (D. Colo. Aug. 14, 2017), Court Opinion; Mueller v. Swift, No. 15-cv-1974-WJM-KLM, 2017 BL 250171, 2017 IER Cases 250171 (D. Colo. July 19, 2017), Court Opinion