February 28, 2017 Articles

Spoliation Complicates Remediation: Consider the Duty to Preserve

The point at which the duty to preserve attaches should now be of greater concern to prospective plaintiffs who engage in remediation prior to filing an environmental contamination lawsuit.

By H. Joseph Drapalski – February 28, 2017

As in other realms of litigation, the duty to preserve evidence applies with equal force in environmental litigation, yet property owners often find it necessary to remediate contamination prior to filing a lawsuit against potentially responsible parties. Owners of contaminated property must therefore walk a fine line not to violate their duty to preserve evidence prior to seeking cost recovery. This line may have just narrowed further due to recent decisions in the U.S. District Court of Connecticut and the New Jersey Superior Court Appellate Division holding that the duty to preserve attached, and was subsequently violated, when environmental consulting firms engaged in prelitigation remediation in anticipation of cost recovery litigation. 

The Duty to Preserve
Courts consistently hold that the duty to preserve evidence attaches when a party has reason to anticipate litigation. This duty applies with equal force in environmental contamination lawsuits. See, e.g., Innis Arden Golf Club v. Pitney Bowes, Inc., 257 F.R.D. 334, 339–40 (D. Conn. 2009), aff’d,629 F. Supp. 2d 175 (D. Conn. 2009) (holding that the duty to preserve applies in Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) litigation despite arguments that its application would discourage remediation); see also Weyerhaeuser Co. v. Petro-Hunt LLC,No. 04-2177, 2008 WL 4425466, at *2–3 (W.D. La. Sept. 30, 2008) (imposing sanctions for spoliation caused by remediation); AmeriPride Servs., Inc. v. Valley Indus. Serv., Inc., No. 00-113, 2006 WL 2308442, at *9–10 (E.D. Cal. Aug. 9, 2006) (same).

Violating this duty to preserve constitutes spoliation and, in some cases, warrants that sanctions be imposed. Courts have imposed wide-ranging sanctions for spoliation in environmental contamination lawsuits, including permitting a jury to draw an adverse inference against the party or witness responsible, preclusion of evidence, and even dismissal. See, e.g., Innis Arden, 257 F.R.D. at 343 (precluding all use of destroyed soil samples and electronic data packages associated with testing of the same); Weyerhaeuser, 2008 WL 4425466, at *2–3 (holding that spoliation caused by remediation was deliberate and finding that an adverse inference was an appropriate sanction); AmeriPride,2006 WL 2308442, at *9–10 (holding that “drawing an adverse inference against [plaintiff] was an appropriate sanction” for its failure to preserve evidence from the contaminated property); Pollitt Drive, LLC v. Engel, No. A-4833-13T3, 2016 WL 6407280 (N.J. App. Div. Oct. 31, 2016) (affirming trial court’s finding that plaintiff spoliated evidence during remediation prior to and during lawsuit, but remanding to reconsider whether dismissal as ordered by the trial court was the most appropriate sanction).

The Duty to Preserve Attaches During Remediation
Although it is indisputable that the duty to preserve attaches in environmental contamination lawsuits, many property owners beginning remediation may give little thought as to whether samples or infrastructure need to be preserved after their removal. Recent cases out of the U.S. District of Connecticut and New Jersey’s Appellate Division indicate that plaintiffs should now give preservation more than a passing thought.

In the most recent decision, Pollitt Drive, LLC v. Engel, New Jersey’s Appellate Division affirmed the imposition of sanctions on plaintiff property owners because the plaintiff during remediation destroyed a corroded pipe before filing its complaint and an acid sump pit and concrete slab during the discovery period.

Prior to buying the property in 2006, Pollitt hired an environmental consultant to perform an environmental site assessment, which revealed that the property was adjacent to the Fair Lawn Well Field Superfund site and contaminated with volatile organic compounds (VOCs) caused by prior owners’ decades of commercial printing activities. The consultant recommended that Pollitt investigate before any demolition or renovation activities that might disturb the subsurface. After purchasing the property, Pollitt again hired an environmental consultant, this time to further investigate and then remediate the property. Between January and April 2008, Pollitt’s consultant performed multiple soil, groundwater, and air quality tests at various locations on the property and confirmed extensive VOC contamination, including perchloroethylene and trichloroethylene, in the soil and groundwater. On February 26, 2008, Pollitt reported the contamination to the New Jersey Department of Environmental Protection (DEP) and then assumed responsibility for remediation under a July 2008 memorandum of agreement with the DEP. At about the time Pollitt reported the contamination to DEP, several potentially responsible parties at the adjacent Superfund site demanded contribution from Pollitt for cleanup costs. In September 2009, Pollitt demanded indemnification and contribution for remediation costs from several of the prior property owners. Pollitt then filed its original complaint in April 2010 and an amended complaint in January 2011 asserting several claims against the defendant prior property owners, including contribution under CERCLA and New Jersey’s Spill Compensation and Control Act, nuisance, and negligence. Pollitt, 2016 WL 6407280, at *2–3.

During discovery, defendants discovered that Pollitt had destroyed three pieces of evidence that were offered to establish the timing and source of discharges at the property. The first item was a corroded section of a pipe that Pollitt removed, took pictures off, and then discarded in May 2008—two years before Pollitt filed its complaint. The second and third items were an acid dilution sump pit and a section of concrete slab floor that were removed in July 2011. Defendants filed two motions for sanctions: first, when they discovered that plaintiffs discarded the pipe; second, when they discovered that plaintiffs discarded the sump pit and concrete slab. The trial court ordered sanctions for both violations and in both instances found that litigation was foreseeable when Pollitt disposed of the items. The trial court found that the removal and destruction of the pipe so departed from accepted remediation protocols and prejudiced defendants’ ability to mount a proper defense that it dismissed the amended complaint with prejudice on spoliation grounds. Id. at *3–4.

Pollitt appealed this dismissal, arguing that it was not required to save the pipe because it had no plan to bring suit at the time it disposed of the pipe. The Appellate Division disagreed and affirmed the trial court’s finding that spoliation occurred, but it did remand the case to determine whether a lesser sanction could cure the prejudice caused by Pollitt’s spoliation of evidence. Id. at *5–6. In the Appellate Division’s words,

given the extent of the contamination on the subject property, plaintiff’s sophistication and access to remediation experts, and the clean-up occurring at the superfund site, plaintiff should have anticipated that it could become involved in litigation. . . . Thus, the trial court reasonably concluded that the plaintiff had a legal duty to preserve the lateral pipe.

Id. at *6.

Similarly, in Innis Arden Golf Club v. Pitney Bowes, Inc., the court held that sanctions were appropriate because plaintiff property owners did not preserve soil samples, nor electronic data associated with testing of those samples, taken prior to litigation but after plaintiff retained an environmental consulting firm and legal counsel. In Innis Arden, the plaintiff golf club owners sued an adjacent prior property owner under CERCLA to recover costs the plaintiff incurred while removing polychlorinated biphenyls from its property. In January 2005, prior to filing its complaint, Innis Arden engaged an environmental consulting firm to remediate the property. The consultant’s engagement letter included a “Cost Recovery” section stating that it would “conduct work in anticipation [of cost recovery]” and would “provide whatever assistance is required to pursue cost recovery.” The consultant and Innis Arden thereafter exchanged numerous emails discussing sampling plans and when additional sampling would be necessary to identify PCB sources and further cost recovery. In March 2005, Innis Arden retained legal counsel to continue its cost recovery activities and by July 2005 was “actively laying the groundwork for a cost-recovery action against Pitney Bowes and other PRPs.” Specifically, on July 7, 2005, Innis Arden’s counsel emailed Innis Arden and the environmental consultant, “outlining the strategy for going after other property owners” and suggesting additional sampling. Innis Arden’s counsel then sent demand letters to various potentially responsible parties in August 2005 that also offered to share some sampling data and advised that remediation of the Innis Arden property was to begin in two weeks. Innis Arden subsequently failed to preserve many of the soil samples, and related electronically stored information, taken from its own property. Innis Arden, 257 F.R.D. at 336–38.

After learning of Innis Arden’s actions, the defendants moved to impose sanctions for spoliation of evidence and requested dismissal. The court found that Innis Arden did violate its duty to preserve and held that the appropriate sanction was “preclusion of evidence based on the soil samples Innis Arden took from its own property and subsequently destroyed.” Id. at 343. Critically, in imposing sanctions, the court suggested that Innis Arden’s duty to preserve evidence may have attached even before it retained counsel to pursue cost recovery. Citing to Innis Arden’s correspondence with its consultant, the court found “[t]he fact that Innis Arden was working to identify the parties responsible for the PCB contamination and then to pursue recovery of costs establishes that litigation was reasonably anticipated from the very beginning of the investigation and remediation process.” The court ultimately held that because Innis Arden “knew that [its consultant’s] investigation sampling was a critical part of possible cost-recovery litigation,” the duty to preserve “attached at the latest by mid-2005 by which time counsel was actively involved in the investigation and analysis of the samples in preparation for legal action against Pitney Bowes and other parties.” Id. at 340.

The Threat of Spoliation Warrants Greater Consideration
It should come as no surprise to environmental practitioners that the duty to preserve applies in environmental contamination lawsuits, but the point at which the duty attaches should now be of greater concern to prospective plaintiffs who engage in remediation prior to filing an environmental contamination lawsuit. The decisions in both Pollitt and Innis Arden show that courts are now willing to impose sanctions in environmental contamination cases for the destruction of evidence that occurred even years before litigation actually commences, whether it be soil samples as in Innis Arden or actual infrastructure such as the pipes in Pollitt.

Some might argue, as the plaintiff did in Innis Arden, that this trend will have a chilling effect on environmental cleanups. See, e.g., Innis Arden, Plaintiffs’ Opposition, at 15–18 (“Courts cannot expect, and Congress certainly did not intend, that parties engaging in environmental cleanup preserve every sample they take, and delay remediation until they are certain that any potentially responsible party has been notified before they commence cleanup.”). However, a careful reading of the case law shows that the duty to preserve is not violated by the remediation itself but by the failure to preserve samples and other evidence taken during remediation. The duty to preserve need not delay remediation, but it does require that prospective plaintiffs comply with the rules governing preservation of evidence prior to filing a lawsuit against other potentially responsible parties.

H. Joseph Drapalski is an associate in Norton Rose Fulbright’s Los Angeles, California, office.

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