December 28, 2017 Practice Points

Acting with Intent to Deprive Opposing Party of Relevant Evidence Required for Adverse-Inference Instruction

In Mueller v. Swift, the court determined that “unjustifiably careless” conduct did not warrant an adverse-inference instruction but did warrant lesser sanctions.

Andrew M. Toft

A court will consider the degree of culpability and prejudice to determine appropriate sanctions for the loss of relevant evidence. In Mueller v Swift, 15-cv-1974 (D.Colo. July 19, 2017), the court determined that “unjustifiably careless” conduct did not warrant an adverse-inference instruction but did warrant lesser sanctions.

Plaintiff Mueller surreptitiously recorded a conversation with his superiors that lasted about two hours. The plaintiff was terminated the next day. After being terminated, and after having contacted an attorney regarding potential legal action, the plaintiff edited the audio recording of the conversation and sent only “clips” of the entire audio file to his attorney. Thereafter, the laptop on which plaintiff had the complete audio was damaged and replaced, but the hard drive was discarded with no attempt to transfer or otherwise preserve the audio file. An external hard drive to which the audio file was backed up “stopped working.” The plaintiff was not certain what happened to the external hard drive but it was never produced. Months after litigation over his termination was filed the plaintiff “threw out” his cell phone, which may have been the device used to originally record his conversation with his superiors. The court stated in part that “On the whole, the present record leaves the Court with the view that Plaintiff was unjustifiably careless in his handling of evidence that he had a clear duty to preserve, particularly evidence that he himself had taken the trouble to create.” With regard to sanctions:

A spoliation sanction is 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,”(citations omitted). In deciding whether to sanction a party for the spoliation of evidence, courts have considered a variety of factors, but two "generally carry the most weight: (1) the degree of culpability of the party who lost or destroyed the evidence; and (2) the degree of actual prejudice to the other party." (citation omitted).

The court went on to state “the negligent loss or destruction of evidence may still warrant imposition of lesser sanctions, "so long as the party seeking sanctions can show it suffered prejudice and the other side was on notice that the evidence should be preserved."”

It was undisputed that the plaintiff knew or should have known he had a duty to preserve the evidence, and the court concluded the recorded conversation was relevant to disputed facts and issues. The court also found that the defendants were prejudiced by the loss of the evidence because preservation of the entire recording could have resolved the litigation. Finally, the court found that the degree of the plaintiff’s culpability warranted a sanction. However, the court rejected the defendants’ request that it make a finding of bad faith and give an adverse-inference instruction. Rule 37(e)(2)(B). Instead, the court permitted the defendants to cross-examine the plaintiff in front of the jury regarding the record of defendant’s spoliation of the evidence. The court also stated in a footnote that it would “take a relaxed approach” to the application of hearsay rules when the plaintiff’s superiors testified about the critical conversation.

While the sanctions may seem lenient, the court’s ruling is consistent with the spirit of the notes accompanying the 2015 amendments to subdivisions (e), (e)(1) and (e)(2) of Rule 37.

 

Andrew M. Toft is an attorney in Denver, Colorado.


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