Bradley Ayers Morrison Sund PLLC

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1 Bradley Ayers Morrison Sund PLLC

2 Spoliation is the destruction of evidence or the failure to preserve property for another s use in pending or future litigation. Federated Mutual Ins. Co. v. Litchfield Precision Components, Inc., 456 N.W.2d 434, 436 (Minn. 1990)

3 Spoliation is the loss, destruction, or material alteration of an object or document that is evidence or potential evidence in a legal proceeding by one who has the responsibility for its preservation. NFPA 921, Guide for Fire and Explosion Investigations, 2011 Edition, Section

4 Serious Problem Harvard Survey* 50% litigators found spoliation to be frequent/regular problem. Modern courts have taken harsh view toward litigants who spoil evidence Nationwide Anti-Spoliation Trend. Doctrine of spoliation is evolving over 80% of cases addressing spoliation have been reported in the past decade. Spoliation is not limited to physical evidence includes documents, photos, electronically stored information ( ESI ), etc. *Nesson, Charles R. "Incentives to Spoliate Evidence in Civil Litigation: The Need for Vigorous Judicial Action," 13 Cardozo Law Review 793 (1991).

5 Adams, Charles, Spoliation of Evidence: Sanctions versus Advocacy, The University of Tulsa College of Law, May 5, 2011.

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7 1. Inherent power to regulate litigation and to sanction litigants for abusive practices. Telectron, Inc. v. Overhead Door Corp., 116 F.R.D. 107 (S.D. Fla. 1987) 2. Rule 37(d), Federal Rules of Civil Procedure. Party's Failure to Attend Its Own Deposition, Serve Answers to Interrogatories, or Respond to a Request for Inspection. Exception 37(e) Safe Harbor for ESI destruction.

8 1. Rule 3.4, Rules of Professional Conduct A lawyer shall not:(a) unlawfully obstruct another party s access to evidence or unlawfully destroy or conceal a document or other material having potential evidentiary value. A lawyer shall not counsel or assist another person to do any such act. 2. Rule 8.4(d), Rules of Professional Conduct It is professional misconduct for a lawyer to engage in conduct that is prejudicial to the administration of justice.

9 1. Evidence Destruction or Alteration a. Need not show intentional act or bad faith, negligence is enough. b. Standard: party knew or should have known of evidence relevance to potential litigation. Dillon v. Nissan Motor Co., 986 F.2d 263, 267 (8th Cir.1993)

10 2. Prejudice to Aggrieved Party a. Examine nature of item lost in context of claims asserted and potential for remediation of prejudice. Patton V. Newmar Corp., 538 N.W.2d 116 (Minn. 1995) b. Expert affidavit usually necessary. * The extent of the sanction is dependent on the culpability of the spoliator and the degree of prejudice to the aggrieved party.

11 Federated Mutual Insurance Company v. Litchfield Precision Components, Inc., 456 N.W.2d 433 (Minn. 1990) (Court declines to recognize independent tort of spoliation under facts of case.)

12 1. Criminal Federal 18 U.S.C Prohibition Against Obstruction of Justice State Minn. Stat, , Subd. 1, 2 (1992) Forgery

13 2. Civil Court has broad discretion to render any sanction it deems fit. a. Dismissal of Case (partial or complete) i. Spoliator acted negligently/willfully/bad faith ii. iii. Aggrieved/party prejudiced Alternative sanctions fail to remedy prejudice Marrocco v. General Motors Corp., 966 F.2d 220 (7 th Cir. 1992) (Plaintiff s case dismissed when experts disassembled axle bearing assembly and damaged bearings.)

14 b. Exclusion of Spoliated Evidence Smothers v. Insurance Restoration Specialist, 2005 WL (Minn.Ct.App. March 17, 2005) (Court excludes evidence gathered from plaintiff s home as spoliation sanction.) c. Exclusion of Expert Patton v. Newmar Corporation, 538 N.W. 2d 116 (Minn. 1995) (Court excludes plaintiff s expert who lost remains of vehicle.)

15 d. Extraordinary Discovery of Expert Lundell v. Ford Motor Co., 120 A.D. 2d 575, 502 N.Y.S. 63, (1986) (Defendant entitled to plaintiff s expert reports.) e. Aggrieved Party Permitted to Speculate on Significance of Spoliated Evidence

16 f. Adverse Inference Instruction If a party fails to preserve evidence which is under its control and reasonably available to it and not reasonably available to the adverse party, then you may infer that the evidence is unfavorable to the party who could have preserved it and did not. 3 E. Devitt, C. Blackmar & M. Wolff, Federal Jury Practice and Instructions (1987); Dillon v. Nissan Motor Co., Ltd., 986 F.3d 263, 269 (8 th Cir. 1993)

17 g. Monetary Sanctions Capellupo v. FMC Corp., 126 F.R.D. 545 (D. Minn. 1989) (Court assessed wrongdoer twice the amount of innocent parties attorney s fees and costs.)

18 Facts Moisture intrusion case Purchaser of home (Miller) sues seller (Lankow) and remediation contractors and realtor (TSC, Donnelly, Betz). Lankow discovers moisture intrusion during ownership of home and had it fixed Lankow puts the home on the market and discloses the damage to Miller March 2004, Miller buys home Miller lists home for sale. Prospective buyer has inspection and discovers additional moisture intrusion. September 2005 Miller meets with remediation contractors, tells them about concern with mold exposure and they conduct inspection. December 27, 2005, Miller sends formal notice letter. March 15, 2007, Miller sends letter informing parties that he is going to repair damage and in March 2007, Donnelly inspects site and discovers that repairs had started before the March 15 letter. April 2007, lawsuit filed. TSC, Donnelly, Lankow and Betz move for summary judgment alleging spoliation. District court grants defendants summary judgment, Court of Appeals affirms.

19 Burden of Proof: Must show court abused its discretion in awarding sanctions. Custodial party has a duty to preserve relevant evidence. Duty is tempered by allowing custodial parties to dispose of or remediate evidence when the situation reasonably requires it.

20 1. Notice provided of potential claim and a full and fair opportunity to inspect evidence. 2. Must have legitimate need to destroy evidence (mold exposure).

21 Court distinguishes Hoffman v. Ford Motor Co., phone call to dealership insufficient. Effective notice whether the noncustodial party had sufficient knowledge to protect themselves.

22 When a custodial party with a legitimate need to destroy evidence gives notice that is sufficient for the noncustodial party to protect themselves by taking steps to inspect or preserve the evidence and the noncustodial parties do nothing to inspect the evidence, sanctions may not be appropriate.

23 A meeting or a letter indicating the time and nature of any action likely to lead to destruction of the evidence, and offering a full and fair opportunity to inspect will usually be sufficient to satisfy our notice rule.

24 1. Whether the party was under a duty to preserve critical evidence, and nevertheless intentionally destroyed that evidence. 2. Whether the party had a legitimate reason to destroy the evidence. 3. Whether notice provided was sufficient to enable defendants to protect themselves by inspecting the relevant evidence.

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26 A. Facts 1. December 6, 2000, a fire caused significant damage to the Decathlon Hotel and Athletic Club in Bloomington, Minnesota. 2. On December 6 and 7, 2000, the fire was investigated by the Bloomington Fire Department and two private investigators for the Decathlon and its insurer. 3. All three investigators determined the fire was caused by a can of Sterno in a conference room. 4. Physical artifacts were retained from scene. 5. June 2003 (2 ½ years after the fire), the subrogating insurer notified Sterno of the potential claim against it.

27 6. October 2003, Sterno s fire investigator inspected scene.

28 7. May 2004, Sterno s fire investigator inspected artifacts.

29 Three Arguments: 1. All relevant evidence was preserved. 2. There is only one viable cause all three experts agreed. 3. There was ample photographs and video of scene that negates prejudice.

30 Although Regent s experts have concluded that only (the Sterno can) could have caused the fire, another investigator examining the fire scene could have reached a different conclusion.

31 The consensus among experts is not dispositive here because those investigators are not now and never (were) aligned with Defendants.. the three investigators largely worked together, casting doubt on the independence of their conclusions.

32 Photos may not be adequate to conduct an investigation. A party presenting testimony without the benefit of having conducted a firsthand investigation will be confronted with the challenge of meeting probative, convincing firsthand evidence with sketchy, relatively speculative secondhand evidence.

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34 A. Facts 1. Fire in a 3-story apartment complex in Independence, Wisconsin on February 15, 2009.

35 2.Three fatalities.

36 3. Building insurance investigator permitted to accompany fire marshal with onscene investigation. 4. Election was to occur following Tuesday. Mayor hired demolition crew to level building and remove debris (without notice to building insurer)

37 5. Fire cause unknown, claim was that fire alarms were not working. 6. Attorney for estate demanded inspection of fire scene. 7. Plaintiff s claimed building owner spoiled scene. 8. Investigation conducted at dump.

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39 A. Facts 1. June 3, 2006 fire at a home under construction at 4158 Furnberg Place, Fargo, North Dakota. 2. Fire originated in garage. 3. June 6, 2006, homeowner s insurer, Auto Owners, hires investigator who conducts non-destructive examination of scene. Preliminary investigation focuses on possible improper disposal of stain rags by Roger s Staining.

40 4. Fargo Fire Department/ATF request insurer provide structural support to scene so investigators can examine scene.

41 5. June 12, 2006, Auto Owners invites Roger s Staining to scene exam for following day. 6. June 13, 2006, members of Fargo Fire Department, ATF and Auto Owners examine scene. Scene disturbed in processing.

42 7. July 24, 2006, scene inspected by Roger s Staining s investigator. 8. Electrical artifacts removed and sent to electrical engineers.

43 9. September 28, 2010, (four years after loss), counsel retained to pursue subrogation action. 10.October 4 October 11, 2011 Trial 11.Roger s Staining contended the scene was spoiled by Auto Owners investigator. 12.Electrical expert could not eliminate items not retained.

44 13. Lack of testing by investigator to prove that conditions existed that could cause spontaneous combustion.

45 14. October 11, 2011 Verdict

46 1. Secure the scene immediately.

47 2. Preserve the scene. 3. Retain competent counsel, experts to assist in scene investigation & preservation. NFPA 1033, Standard for Professional Qualifications for Fire Investigator

48 5. Notify potentially responsible parties.

49 6. Coordinate scene exam with public authorities. 7. Develop a protocol to conduct the scene examination.

50 Recognize the need (identify the problem) Define the problem Collect Data Analyze the Data Develop a Hypothesis (inductive reasoning) Test the Hypothesis (Deductive reasoning) Select Final Hypothesis

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52 9. Collect and preserve artifacts. 10.Test artifacts pursuant to ASME E860 Standard Practice for Examining & Testing Items that are or May Become Involved in Litigation.

53 Bradley Ayers Morrison Sund PLLC 5125 County Road 101 Suite 200 Minnetonka, MN