Unjustified Delay Renders Spoliation Motion Spoiled Rotten

According to a federal district court decision rejecting two requests for sanctions based on a party’s failure to preserve electronically stored information, spoliation motions themselves have an expiration date, and a spoliation issue not timely raised may curdle and sour with the court. ABA Litigation Section leaders suggest that the timeliness of a motion for spoliation sanctions may be as important as its merits in determining whether the court will grant any relief.

Out of the Sewers and into the Courtroom

In CSX Transportation, Inc. v. Spiniello Global, Inc., CSX Transportation, Inc. (CSX) owned and operated a coal shipment facility in Maryland. In 2014, CSX and the City of Baltimore entered into a Right of Entry Agreement, which allowed the city to update and repair sewage lines under the facility. The city hired Spiniello Global, Inc., and Spiniello Companies, Inc., as subcontractors to clean and reline these sewage lines. In 2018, a Spinello employee mistakenly discharged contaminated water that worked its way into the CSX facility’s water filtration system. The contamination spread throughout the facility, forcing CSX to take action to prevent adverse environmental impacts and eliminate potential hygiene and human safety risks.

Following its remediation efforts, CSX sued the city and Spiniello, seeking approximately $2.3 million in damages. After the close of discovery, the defendants filed four motions to dismiss, including two motions for sanctions due to CSX’s alleged spoliation of electronically stored information.

The first spoliation motion concerned data from CSX’s Supervisory Control and Data Acquisition system (SCADA), which was overwritten after 30 days in the normal course of business. One of Spiniello’s experts explained that the SCADA data would have helped the defendants understand how the water made it through CSX’s sewer system, how long the water sat in each tank, and which way the water had traveled—all of which were potentially relevant to CSX’s claimed damages. The second spoliation motion related to CSX’s communications with coal owners in the aftermath of the incident.

Court Flushes the Spoliation Motions

The U.S. District Court for the District of Maryland denied both spoliation motions. In doing so, the court referenced Federal Rule of Civil Procedure 37(e) and cited Jennings v. Frostburg State University, which held that a party seeking sanctions for electronically stored information (ESI) spoliation must establish that: “(1) ESI should have been preserved; (2) ESI was lost; (3) the loss was due to a party's failure to take reasonable steps to preserve the ESI; and (4) the ESI cannot be restored or replaced through additional discovery.” The court determined that it did not need to consider whether these threshold requirements were met, however, because the defendants had failed to show that CSX “acted with the intent to deprive” them of the ESI.

The defendants, the court opined, did not meet their burden to show CSX “acted with the requisite heightened culpability” by failing to preserve the ESI, much of which was deleted in the regular course of business. Further, the court noted that the timing of the defendants’ motions “well after the close of discovery” made it difficult to determine what relevant ESI existed and “whether CSX’s efforts to find them were adequate.”

The court suggested that these difficulties “could have been sorted out during the discovery phase, rather than raised as grounds for dismissal more than a year after fact discovery had closed, and some eighteen months after Spiniello became aware of the issue.” Citing Goodman v. Praxair Servs., Inc., the court emphasized that “[t]he lesson to be learned from the cases that have sought to define when a spoliation motion should be filed in order to be timely is that there is a particular need for these motions to be filed as soon as reasonably possible after discovery of the facts that underlie the motion.”

Strategic Delay Risks an Overripe Motion

Litigation Section leaders recognize the importance of timeliness in seeking spoliation relief. “If you’re going to seek a terminating sanction, you really should be doing that during the discovery process,” explains Joseph V. Schaeffer, Pittsburgh, PA, cochair of the Litigation Section’s Pretrial Practice & Discovery Committee. Considering the defendants’ failure to seek terminating sanctions until after discovery had ended, the court may not have had a great deal of sympathy towards them. “A mentor of mine used to say, ‘in litigation, it’s critical to seize the high ground from the start and never cede it,’” counsels Schaeffer.

Section leaders note that the court emphasized the untimely nature of the spoliation claims. “It is hard to know if [bringing up the spoliation claims earlier] would have affected the outcome, but the court made a point of saying that: (1) this was taking place beyond the discovery period and (2) that the defendant’s knew about the spoliation and so they should have raised it earlier—specifically—during discovery,” observes Jeanne M. Huey, Garland, TX, cochair of the Section’s Ethics & Professionalism Committee.

A successful spoliation claim requires thoroughness and timing. “When you seek a terminating sanction, you’re best if raising it early and seeking a motion to compel, thereby forcing the other party to respond,” Shaeffer adds. “Diligence and competence require prompt action on discovery issues; the longer you wait to raise a discovery issue, the less important it seems to the court,” comments Huey. “This court also pointed out that the intense factual inquiry required to resolve an allegation of spoliation needs to take place at or near the time of the action complained about,” she adds.