ELECTRONIC DISCOVERY LAW:  e-discovery
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SANCTIONS & SPOLIATION

The concept of spoliation applies generally to the destruction of evidence and, like perjury, goes to the heart of the judicial process. By statute and procedural rules, states and the FRCP provide various sanctions for failing to comply with discovery obligations to produce evidence which cover most problems and provide remedies ranging from monetary compensation or penalties to entry of judgment. In addition or to complete the coverage, states and the federal courts provide remedies by application of the spoliation concept either as a procedural remedy within the case or as a separate tort. In California, the independent tort of spoliation was eliminated in favor of applying the remedy within the pending litigation as a discovery sanction. Cedars-Sinai Medical Ctr. v. Superior Court (1998), 18 Cal.4th 1, 12. In federal courts, the spoliation concept was recognized as early 1817 in The FORTUNA---Krause et.al.Claimants, infra, is based on the inherent power of courts to control abuses in litigation, and often arises from a request for a jury instruction re adverse inference. Lewy v. Remington Arms (8th Cir 1988), 836 F.2d 1104 , 1111.

Counsel and the courts should not overlook the powerful and often easier to apply and more effective remedies available in normal discovery sanctions. For example, the threat of a future jury instruction that will permit contrary evidence, argument and jury decisions is not as significant or as immediate as a court ordered sanction that enters judgment, establishes facts or issues, precludes evidence by one side, or orders production and monetary compensation.  Of course, relatively minor sanctions applied early in a case send a message as to how the court expects discovery to be conducted and  may  prevent  more serious problems from developing in the litigation.  See Sanctions Case Outline.

Creative Science Systems, Inc. v. Forex Capital Markets, LLC.   (N.D.Ca. 2006.Slip Copy), 2006 WL 870973 A broad protective order was issued in a software copyright case involving installation of software on too many computers. The requested adverse inference sanctions were considered excessive but monetary sanctions were imposed.

JEREMY FOGEL,
"District Judge.District courts may impose sanctions as part of their inherent power “for willful disobedience of a court order.” Chambers v. NASCO, Inc., 501 U.S. 32, 45 (1991) (quoting Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 420, 258 (1975)). In the Ninth Circuit, spoliation of evidence raises a presumption that the destroyed evidence goes to the merits of the case, and further, that such evidence was adverse to the party that destroyed it. Phoceene Sous-Marine, S.A. v. U.S. Phosmarine, Inc., 682 F.2d 802, 806 (9th Cir.1982) (discussing Hammond Packing Co. v. Ark., 212 U.S. 322, 349-54 (1909)); Nat'l Ass'n of Radiation Survivors v. Turnage, 115 F.R.D. 543, 557 (N.D.Cal.1987) (“Where one party wrongfully denies another the evidence necessary to establish a fact in dispute, the court must draw the strongest allowable inferences in favor of the aggrieved party”); Computer Assoc. Intern., Inc. v. American Fundware, Inc., 133 F.R.D. 166, 170 (D.Colo.1990). Additionally, “[t]he obligation to retain discoverable materials is an affirmative one; it requires that the agency or corporate officers having notice of discovery obligations communicate those obligations to employees in possession of discoverable materials.” National Ass'n of Radiation Survivors, 115 F.R.D. at 557-58.
*6 Because of their potency, these inherent powers must be exercised with restraint and discretion. Roadway Express, Inc. v. Piper, 447 U.S. 752, 764 (1980). A primary aspect of that restraint and discretion is fashioning a sanction appropriate to the conduct in question. Id. at 765. When choosing among possible sanctions, the Court should consider a sanction designed to: (1) penalize those whose conduct may be deemed to warrant such a sanction; (2) deter parties from engaging in the sanctioned conduct; (3) place the risk of an erroneous judgment on the party who wrongfully created the risk; and (4) restore a prejudiced party to the same position he or she would have been in absent wrongful destruction of evidence by the opposing party. See Nat'l Hockey League v. Metro. Hockey Club, Inc., 427 U.S. 639, 643 (1976); Wyle v. R.J. Reynolds Indus., Inc., 709 F.2d 585, 589 (9th Cir.1983); West v. Goodyear Tire and Rubber Co., 167 F.3d 776, 779 (2d Cir.1999). In evaluating the propriety of sanctions, the Court may consider all incidents of prior misconduct, including prior misconduct that already has been subject to sanction. Henry v. Gill Indus., Inc., 983 F.2d 943, 947 (9th Cir.1993)."

PRESERVATION DUTY [Spoliation and Sanctions]

General background
Elements
Scope of Preservation Duty

SANCTIONS IN CALIFORNIA FOR FAILURE TO PRESERVE DATA

SANCTIONS FOR CREATING, FABRICATING, ALTERING EVIDENCE

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PRESERVATION DUTY

Recognized by early case law in the United States:

See The FORTUNA---Krause et.al.Claimants (March 17, 1817), 15 U.S. 161, 4 L.Ed. 209, 2 Wheat 16 [ship seizure; concealment of documents may result in adverse inference or adverse determination]


GENERAL-

What is its source?
What is it ?
When does it arise ?
What does it include?
What are the consequences for violations?



ALTERNATIVE SOURCES giving rise to duty to preserve potential relevant evidence

Case law duty arising from potential litigation based on court's inherent power  [Chambers v. NASCO, 5O1  U.S.32 (1991)]
Statutory or regulatory obligations to preserve
Statutes of limitations  [see Lewy v. Remington Arms (8th Cir.1988), 836 F.2d1104 re doc retention policy based on Sof L]
A.B.A. Civil Discovery Std. 10 & 29(a)(i) (1999) see also Nov. 2003 draft proposals
Duty created by knowledge when key players reasonably anticipate litigation. [See Zubulake IV, SDNY. 10/22/03]
Duty created by preservation letter [See Wigington v. CB Richard Ellis (10/24/03 N.D.Ill)doesn't create; provides notice of duty]
Duty created by discovery request [See Stevenson v. Union Pac.Ry. (8th Cir. 1/5/04) 2004 U.S. App. LEXIS 6]
Duty created by court's protective order or injunction

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PRESERVATION DUTY [Spoliation and Sanctions]

The FORTUNA---Krause et.al.Claimants (March 17, 1817), 15 U.S. 161, 4 L.Ed. 209, 2 Wheat 16 [ship seizure; concealment of documents may result in adverse inference or adverse determination]

A.B.A. Civil Discovery Std. 10 & 29(a)(i) (1999)

10. The Preservation of Documents. When a lawyer who has been retained to handle a matter learns that litigation is probable or has been commenced, the lawyer should inform the client of its duty to preserve potentially relevant documents and of the possible consequences of failing to do so.
29. Preserving and Producing Electronic Information.
a. Duty to Preserve Electronic Information.
i. A party's duty ... also applies to information contained or stored in an electronic medium or format, including a computer word-processing document, storage medium, spreadsheet, database and electronic mail.

Wigington v. CB Richard Ellis (10/24/03 N.D.Ill) [p.7 slip opinion. "A party has  a duty to preserve evidence over which it had control and 'reasonably knew or could reasonably foresee was material to a potential legal action.' ..."A party must preserve evidence that is properly discoverable under Rule 26. Discoverable evidence includes electronic data such as e-mail."..."A party does not have to go to extraordinary measures to preserve all potential evidence...It does not have to preserve every single scrap of paper in its business...But a party must preserve evidence that it has notice is reasonably likely to be the subject of a discovery request even before a request is actually received.... Notice may be received befoe a complaint is filed if a party knows that litigation is likely to begin, or a party may be alerted by the complant...."]


Linnen v.A.H. Robins Company, Inc
(Mass. 1999), 10 Mass.L.Rptr. 189, 1999 WL 462015 ["A litigant has a duty to preserve evidence." Townsend v. American Insulated Panel Co., Inc., 174 F.R.D. 1, 3 (D.Mass.1997); Corales v. Sea- Land Service, Inc., 172 F.R.D. 10 (D.P.R.1997). Spoliation of evidence occurs when there has been negligent or intentional destruction of physical evidence which results in some unfair prejudice to the opposing party. Kippenham v. Chaulk Services, Inc., 428 Mass. 124, 127, 697 N.E.2d 527 (1998). Potential sanctions for the destruction of evidence may include dismissal of the case, the exclusion of evidence, or a jury instruction on the "spoliation inference." Townsend, 174 F.R.D. at 2."]

See also Trigon Ins. Co. v. United States (E.D.Va. 2001), 204 F.R.D. 277 [Duty from knowledge that documents would have to be produced and from informal and formal requests. The court carefully examined the facts and awarded full monetary sanction for consequences of spoliation including payment for computer forensic expert to recover documents, excluded expert when spoliation prevented adequate cross examination, and allowed adverse inferences against another expert when recovery of spoliated documents permittted cross exam. At page 291, "Considering the degree of culpability, the quantum of prejudice and the least severe but most effective, sanction...."]

Zubulake v. UBS Warburg (SDNY 10/22/03) aka Zubulake IV. [Spoliation was found when backup tapes containing emails of key players were lost and emails were deleted. Preservation duty arose, 10 months prior to litigation and 4-5 months prior to filing of formal complaint with EEOC, at the time the immediate supervisor and other key employees reasonably anticipated litigation. At that time "...it must suspend its routine document retention/destruction policy and put in place a “litigation hold” to ensure the preservation of relevant documents." ]

United States v. Koch Industries Inc.(N.D. Okl.1998), 197 F.R.D. 463, 482

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California

See Spoliation in case outline on Sanctions

Smith v. Superior Court (1984), 151 Cal.App.3d 491 [Original Calif. independent tort spoliation case. Car dealer that had altered vehicle and to whom it was towed after the accident agreed to maintain the vehicle pending further investigation.]

Cedars-Sinai Medical Ctr. v. Superior Court
(1998), 18 Cal.4th 1, 12 [Independent cause of action for tort rejected in favor of resoving matter in pending litigation. Dictum: "Destroying evidence in response to a discovery request after litigation has commenced would surely be a misuse of discovery within the meaning of section 2023, as would such destruction in anticipation of a discovery request." ]

See Willard v. Caterpillar (1995), 40 Cal.App.4th 892 [In pre Cedars-Sinai case, trial court reversed for allowing claim against defendant for intentional spoliation of design documents to go to jury; After discussing cases, the court notes at page 922 that "these cases demonstrate the 'common understanding of society' regarding the wrongfulness of evidence destruction is tied to the temporal proximity between the destruction and the litigation interference and the foreseeability of the harm to the nonspoliating litigant resulting from the destruction." The court noted at p. 919 that there was no statutory or regulatory duty to preserve documents and that defendant acted in good faith pursuant to a reasonable document destruction policy. Court balances various elements of tort and cites many of the federal sanction cases in discussing theoretical basis for spoliation; Intentional spoliation by party as separate tort no longer viable in California per Cedars-Sinai case infra]

Temple Community Hospital v. Superior Court (1999) 20 Cal.4th 464, 476-7 [In holding that an independent tort of spoliation as to 3d parties does not exist in California, the Supreme Court observed the limited statutory sanctions available against 3rd parties and suggests that any duty of a non-party to preserve must be based on contract or statute:

"We observe that to the extent a duty to preserve evidence is imposed by statute or regulation upon the third party, the Legislature or the regulatory body that has imposed this duty generally will possess the authority to devise an effective sanction for violations of that duty. To the extent third parties may have a contractual obligation to preserve evidence, contract remedies, including agreed-upon liquidated damages, may be available for breach of the contractual duty. Criminal sanctions, of course, also remain available. If existing remedies appear limited, that may well be because third party spoliation has not appeared to be a significant problem in our courts. After all, the nonparty who is not acting on behalf of a party but is independently motivated to destroy evidence with the intent to interfere in the outcome of litigation between other parties must be a rarity, perhaps because such destruction can subject the nonparty to criminal prosecution."]

Evidence Code §412, 413 jury inferences

Penal Code §135 obstruction of justice

See Smith v. Superior Court (1984), 151 Cal.App.3d 491 at p.497 [Original spoliation case in Calif. discussing principle that criminal statute does not create civil right but that civil and criminal prohibitions may apply to the same acts]

See Agnew v. Parks(1959), 172 Cal.App. 2d 756, 766 re no civil case for perjury after prior trial for med mal.

Spoliation exception to litigation privilege. Civil Code §47(b)(2)

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ELEMENTS OF PRESERVATION DUTY
Federal rule for adverse inference jury instruction based on inherent power


Know or should know importance---continuum of notice that gives rise to duty:

Wigington v. CB Richard Ellis (10/24/03 N.D.Ill) [p.7 slip opinion. "A party has  a duty to preserve evidence over which it had control and 'reasonably knew or could reasonably foresee was material to a potential legal action.' ..."A party must preserve evidence that is properly discoverable under Rule 26. Discoverable evidence includes electronic data such as e-mail."..."A party does not have to go to extraordinary measures to preserve all potential evidence...It does not have to preserve every single scrap of paper in its business...But a party must preserve evidence that it has notice is reasonably likely to be the subject of a discovery request even before a request is actually received.... Notice may be received befoe a complaint is filed if a party knows that litigation is likely to begin, or a party may be alerted by the complant...."]

Testa v. Wal-Mart Stores, Inc. 144 F.3d 173, 177-78 (1st Cir.1998)
The proponent of the adverse "inference must proffer evidence sufficient to permit the trier to find that the target knew of (a) the claim (that is, the litigation or the potential for litigation), and (b) the document's potential relevance to that claim."   "...evidence that documents were destroyed in the ordinary course of business, pursuant to routine practice, is material to the inquiry, but the mere introduction of such evidence neither removes the question from the jury's ken nor precludes the jury from drawing a negative inference. See Nation-Wide Check, 692 F.2d at 219. Whether the[p.178] particular person who spoils evidence has notice of the relationship between that evidence and the underlying claim is relevant to the factfinder's inquiry, but it does not necessarily dictate the resolution of that inquiry. The critical part of the foundation that must be laid depends, rather, on institutional notice--the aggregate knowledge possessed by a party and its agents, servants, and employees. See Blinzler, 81 F.3d at 1158-59; Nation-Wide Check, 692 F.2d at217-18. ... We hold that, on these facts, the district court properly told the jury that it could (but need not) draw a negative inference if the plaintiff proved by a preponderance of the evidence that, when Wal-Mart destroyed the documents, it had notice both of a potential lawsuit and of the documents' relevance to the claim that underlay such a suit."


Destruction years prior to litigation

Willard v. Caterpillar (1995), 40 Cal.App.4th 892 [tr ct rev'd for allowing claim of intentional spoliation of design documents to go to jury; After discussing cases, the court notes at page 922 that "these cases demonstrate the 'common understanding of society' regarding the wrongfulness of evidence destruction is tied to the temporal proximity between the destruction and the litigation interference and the foreseeability of the harm to the nonspoliating litigant resulting from the destruction. There is a tendency to impose greater responsibility on the defendant when its spoliation will clearly interfere with the plaintiff's prospective lawsuit...."

Zubulake v. UBS Warburg (SDNY 10/22/03) aka Zubulake IV. [Spoliation was found when backup tapes containing emails of key players were lost and emails were deleted. Preservation duty arose, 10 months prior to litigation and 4-5 months prior to filing of formal complaint with EEOC, at the time the immediate supervisor and other key employees reasonably anticipated litigation. At that time "...it must suspend its routine document retention/destruction policy and put in place a “litigation hold” to ensure the preservation of relevant documents." ]

Stevenson v. Union Pac.Ry. (8th Cir. 1/5/04) 2004 U.S. App. LEXIS 6 [prelitigation destruction of critical voice records pursuant to 90 day recycling policy sanctionable and in bad faith when death and serious injury occurred from major accident, when the need to preserve evidence was recognized as to other evidence and in other cases as to voice records, and when the facts support a strong inference of an intent to destroy and suppress evidence.]

Prelitigation discussions, demands, and agreements

Zubulake v. UBS Warburg (SDNY 10/22/03) aka Zubulake IV  [Spoliation was found when backup tapes containing emails of key players were lost and emails were deleted. Preservation duty arose, 10 months prior to litigation and 4-5 months prior to filing of formal complaint with EEOC, at the time the immediate supervisor and other key employees reasonably anticipated litigation.  At that time "...it must suspend its routine document retention/destruction policy and put in place a “litigation hold” to ensure the preservation of relevant documents."]

Broccoli v. Echostar Communications Corp., 229 F.R.D. 506 (D.Md.,2005) Duty to preserve arises when actual notice is received of claim that is likely to or could result in litigation.  Decision suggests complaint to direct supervisors was sufficient notice to trigger preservation hold duty. As sanctions, the court limited evidence, gave an adverse inference instruction and imposed monetary sanctions for spoliations when defendant  failedto suspend normal destruction and preserve documentss when notice of a potential claim was  received, failed to preserve any e-mails, failed to send company wide notice to preserve and failed to preserve basic personnel documents e.g. employee evaluations, investigative files, and company plans affecting employees. "Echostar clearly acted in bad faith in its failure to suspend its email and data destruction policy or preserve essential personnel documents in order to fulfill its duty to preserve the relevant documentation for purposes of potential litigation. These bad faith actions prejudiced Broccoli in his attempts to litigate his claims and measurably increased the costs for him to do so."  Although Echostar had an extremely short period for destruction of all e-mail  and records of terminated exployees, the retension policy alone did not give rise to sanctions though the court observed "under normal circumstances, such a policy may be a risky but arguably defensible business practice undeserving of sanctions."
"Echostar clearly acted in bad faith in its failure to suspend its email and data destruction policy or preserve essential personnel documents in order to fulfill its duty to preserve the relevant documentation for purposes of potential litigation. These bad faith actions prejudiced Broccoli in his attempts to litigate his claims and measurably increased the costs for him to do so."

Consol. Aluminum Corp. v. Alcoa, Inc., 2006 WL 2583308 (M.D. La. July 19, 2006) [Fn.8. The Court previously recognized, in its December 19, 2005 Ruling in this matter, that the November 2002 demand letter is the point in time when this litigation should have become "reasonably anticipated" by Alcoa. The propounding of a demand letter has been found to be the point when litigation should be reasonably anticipated in Housing Rights Center v. Sterling, 2005 WL 3320739 (C.D.Cal.2005).]

Smith v. Superior Court (1984), 151 Cal.App.3d 491 [Original Calif. spoliation case. Car dealer that had altered vehicle and to whom it was towed after the accident agreed to maintain the vehicle pending further investigation.]

Preservation letter: notice of duty to preserve and basis for claim for sanctions or spoliation

Stevenson v. Union Pac.Ry. (8th Cir. 1/5/04) 2004 U.S. App. LEXIS 6 [court's analysis emphasized notice and knowledge of potential litigation as a major factor in finding "bad faith" to support sanction. slip opinion p.
Wiginton v. CF Richard Ellis (N.D.Ill. 10/24/03) [preservation letter did not create duty but placed opponent on notice]

Claim

Zubulake v. UBS Warburg (SDNY 10/22/03) aka Zubulake IV. ["...the duty to preserve evidence arose at the latest... when Zubulake filed her EEOC charge."]

Broccoli v. Echostar Communications Corp., 229 F.R.D. 506 (D.Md.,2005) Duty to preserve arises when actual notice is received of claim that is likely to or could result in litigation.  Decision suggests complaint to direct supervisors was sufficient notice to trigger preservation hold duty.



Wigington v. CB Richard Ellis (10/24/03 N.D.Ill) [filing claim with EEOC]

Complaint

Skeete v. McKinsey & Company, Inc., 1993 U.S.D. LEXIS 9099, *10 (SDNY 1993)]
Danis v. USN, 2000WL 1694325 (N.D.Ill,2000)
United States v. Koch Industries Inc.(N.D. Okl.1998), 197 F.R.D. 463 [deposition testimony in other cases; Congressional inquiry]
Tulip Computers International B.V. v. Dell Computer Corporations (D.Del.2002), 2002 WL 818061 ["...once Dell had knowledge of this case, it had an affirmative obligation to preserve potentially responsive documents...." In denying an order preventing Dell from destroying any further documents the court noted that "...there is no evidence of bad faith on Dell's part...."]

Discovery request

Stevenson v. Union Pac.Ry. (8th Cir. 1/5/04) 2004 U.S. App. LEXIS 6 [While prelitigation destruction of track maintenance records pusuant to a document destruction policy may not constitute bad faith and justify an adverse inference instruction, after litigation commences and a formal document request is served party cannot continue destruction . "Sanctioning the ongoing destruction of records during litigation and discovery by imposing an adverse inference instruction is supported by either the court's inherent power or Rule 37 of the Federal Rule of Civil Procedure, even absent an explicit bad faith finding ...." p.14 slip opinion]

Cedars-Sinai Medical Ctr. v. Superior Court (1998), 18 Cal.4th 1, 12 [Dictum: "Destroying evidence in response to a discovery request after litigation has commenced would surely be a misuse of discovery within the meaning of section 2023, as would such destruction in anticipation of a discovery request." Independent spoliation tort rejected.]

Linnen v.A.H. Robins Company, Inc
(Mass. 1999), 10 Mass.L.Rptr. 189, 1999 WL 462015 [The language of the document request makes it clear that the plaintiffs sought the production of items such as the system back-up tapes and, after receiving this request, the defendants had an obligation to preserve any such documents or materials.]

Discovery motion
Discovery order

Prudential Ins. Co. of Am. Sales Practices Lit., 169 F.R.D.598;

Linnen v.A.H. Robins Company, Inc (Mass. 1999), 10 Mass.L.Rptr. 189, 1999 WL 4620151997)

AdvantaCare Health Partners, LP v. Access IV, 2004 U.S. Dist. LEXIS 16835 (N.D.Ca.2005) Former employees copied files prior to leaving to start competing business. They violated a TRO and preliminary injunction to preserve evidence and to return confidential or proprietary information. Prior to producing hard drives, defendants had search for and downloaded wipe software to delete files and had deleted thousands of files. While imposing evidentiary and monetary sanctions for spoliation, the court reviewed 9th Circuit law on spoliation. The Court's inherent power to sanction may be invoked in response to destruction of evidence: a default judgment, instruct the jury that it may draw an inference adverse to the party responsible for destroying the evidence, civil contempt sanctions, and attorney's fees. "When choosing among possible sanctions, the Court should consider a sanction designed to: (1) penalize those whose conduct may be deemed to warrant such a sanction; (2) deter parties from engaging in the sanctioned conduct; (3) place the risk of an erroneous judgment on the party who wrongfully created the risk; and (4) restore the prejudiced party to the same position he would have been in absent the wrongful destruction of evidence by the opposing party."

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Relevance:

Reasonably likely to be subject of discovery request
Degrees of relevance: critical, central issue, discovery relevance
Degree of relevance likely to affect ultimate severity of sanction

Potential litigation

Computer Assoc. Intn'l. v American Fundware Inc.(Colo.DC 1990), 133 F.R.D. 166 [def. common practice was to only retain current source code; continued destruction even after discovery request; default judgment entered for destroying source code in copywrite case]

Wm. T. Thompson v. General Nutrition Corp (CD Cal. 1984) 593 F.Supp.1443, 1455.

Capellupo v. FMC Corp., 126 F.R.D.545, 551 (D. Minn.1989)

Zubulake v. UBS Warburg (SDNY 10/22/03) aka Zubulake IV.[ Spoliation was found when backup tapes containing emails of key players were lost and emails were deleted. Preservation duty arose, 10 months prior to litigation and 4-5 months prior to filing of formal complaint with EEOC, at the time the immediate supervisor and other key employees reasonably anticipated litigation. At that time "...it must suspend its routine document retention/destruction policy and put in place a “litigation hold” to ensure the preservation of relevant documents."]

Stevenson v. Union Pac.Ry. (8th Cir. 1/5/04) 2004 U.S. App. LEXIS 6

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SCOPE OF PRESERVATION DUTY
SUBJECT MATTER PROTECTED

Potential evidence re potential issues and potential c/a
Subject matter relevancy
Obvious evidence vs peripheral evidence may affect sanction

DUTY TO NOTIFY EMPLOYEES AND AGENTS

Creative Science Systems, Inc. v. Forex Capital Markets, LLC.   (N.D.Ca. 2006.Slip Copy), 2006 WL 870973 A broad protective order was issued in a software copyright case involving installation of software on too many computers. The requested adverse inference sanctions were considered excessive but monetary sanctions were imposed.  "However, while the record does not contain convincing evidence that the reinstallations were motivated by bad faith, the Court does conclude the failure of FXCM and its counsel to take affirmative steps to comply with the Preservation Order-which would have caused FXCM not to reinstall the operating systems on the servers at issue-is evidence of at least some degree of bad faith."

National Ass'n of Radiation Survivors v. Turnage, 115 F.R.D. 543, 557 (N.D. Cal. 1987). ["The obligation to retain discoverable materials is an affirmative one; it requires that the agency or the corporate officers having notice of discovery obligations communicate those obligations to employees in possession of discoverable materials." The court imposed the following guidelines, restrictions and sanctions to govern future discovery:

Monetary sanctions & special discovery obligations imposed
Discovery signed by specified attorney & gen'l counsel
Discovery compliance plan
Notice of action to be circulated to all employees
Notice of obligation to preserve evidence and cooperate circulated to all employees
Special Master to oversee discovery

Procter & Gamble v. Haugen, 179 F.R.D. 622 (D. Utah 1998). [Monetary sanctions for failing to preserve e-mail messages of 5 employees known to be likely to have relevant information]

Prudential Ins. Co. of America Sales Practices Litigation (N.J.D. 1997) 169 F.R.D. 598 [effective notice to employees required]

Linnen v.A.H. Robins Company, Inc (Mass. 1999), 10 Mass.L.Rptr. 189, 1999 WL 462015 [employees notified by email and voice mail]

United States v. Koch Industries Inc.(N.D. Okl.1998), 197 F.R.D. 463 [duty to notify persons in tape library]

Zubulake v. UBS Warburg (SDNY 10/22/03) aka Zubulake IV. [In house counsel notified employees when complaint filed with EEOC and outside counsel reiterated instructions to preserve]

Broccoli v. Echostar Communications Corp., 229 F.R.D. 506 (D.Md.,2005) Defendant  failedto suspend normal destruction and preserve documentss when notice of a potential claim was  received, failed to preserve any e-mails, failed to send company wide notice to preserve and failed to preserve basic personnel documents e.g. employee evaluations, investigative files, and company plans affecting employees. 

Testa v. Wal-Mart Stores, Inc. 144 F.3d 173, 177-78 (1st Cir.1998)
Records were destroyed before suit was brought pursuant to a standard record-retention policy by an employee who "stated that she did not know about the accident at the time and no one instructed her to preserve either the purchase order or the telephone records." The issue on appeal was whether a jury could be permitted to draw a negative inference from the unavailability of documents. The appellate court affirmed the instruction and jury verdict.

The proponent of the adverse "inference must proffer evidence sufficient to permit the trier to find that the target knew of (a) the claim (that is, the litigation or the potential for litigation), and (b) the document's potential relevance to that claim.""...evidence that documents were destroyed in the ordinary course of business, pursuant to routine practice, is material to the inquiry, but the mere introduction of such evidence neither removes the question from the jury's ken nor precludes the jury from drawing a negative inference. See Nation-Wide Check, 692 F.2d at 219. Whether the[p.178] particular person who spoils evidence has notice of the relationship between that evidence and the underlying claim is relevant to the factfinder's inquiry, but it does not necessarily dictate the resolution of that inquiry. The critical part of the foundation that must be laid depends, rather, on institutional notice--the aggregate knowledge possessed by a party and its agents, servants, and employees. See Blinzler, 81 F.3d at 1158-59; Nation-Wide Check, 692 F.2d at217-18. ... We hold that, on these facts, the district court properly told the jury that it could (but need not) draw a negative inference if the plaintiff proved by a preponderance of the evidence that, when Wal-Mart destroyed the documents, it had notice both of a potential lawsuit and of the documents' relevance to the claim that underlay such a suit."

DUTY TO INVESTIGATE

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DUTY TO SUSPEND NORMAL BUSINESS PROCEDURES THAT ALTER OR DESTROY

Mosaid Technologies Inc. v. Samsung Electronics (D.N.J.2004), 348 F.Supp.2d 332 [Spoliation based on failure to impose litigation hold]

Turner v. Hudson Transit Lines(SDNY 1991), 142 FRD 68,72[self inflicted inability to produce]

Wm. T Thompson v. General Nutrition Corp., Inc 593 F.Supp. at 1457

Broccoli v. Echostar Communications Corp., 229 F.R.D. 506 (D.Md.,2005)  Although Echostar had an extremely short period for destruction of all e-mail  and records of terminated exployees, the retension policy alone did not give rise to sanctions though the court observed "under normal circumstances, such a policy may be a risky but arguably defensible business practice undeserving of sanctions." However, the failure to suspend that policy upon notice of a potential claim was spoliation.


Prudential Ins. Co. of America Sales Practices Litigation (N.J.D. 1997) 169 F.R.D. 598 ["No comprehensive document retention policy with informative guidelines and lacks a protocol that promptly notifies senior management of document destruction. These systemic failures impede the litigation process and merit the imposition of sanctions."]

Testa v. Wal-Mart Stores, Inc. 144 F.3d 173, 177-78 (1st Cir.1998)
Records were destroyed before suit was brought pursuant to a standard record-retention policy by an employee who "stated that she did not know about the accident at the time and no one instructed her to preserve either the purchase order or the telephone records." The issue on appeal was whether a jury could be permitted to draw a negative inference from the unavailability of documents. The appellate court affirmed the instruction and jury verdict.

Whether the[p.178] particular person who spoils evidence has notice of the relationship between that evidence and the underlying claim is relevant to the factfinder's inquiry, but it does not necessarily dictate the resolution of that inquiry. The critical part of the foundation that must be laid depends, rather, on institutional notice--the aggregate knowledge possessed by a party and its agents, servants, and employees. See Blinzler, 81 F.3d at 1158-59; Nation-Wide Check, 692 F.2d at217-18. ... We hold that, on these facts, the district court properly told the jury that it could (but need not) draw a negative inference if the plaintiff proved by a preponderance of the evidence that, when Wal-Mart destroyed the documents, it had notice both of a potential lawsuit and of the documents' relevance to the claim that underlay such a suit."

Wm. T. Thompson Co. v. General Nutrition Corp., Inc., 593 F. Supp. 1443,1455 (C.D. Cal. 1984)[details duties of corp and counsel to comply with discovery obligations generally]

National Ass'n of Radiation Survivors v. Turnage, 115 F.R.D. 543, 557(N.D. Cal. 1987)[details duties of corp and counsel to comply with discovery obligations generally]

Cedars-Sinai Medical Center (1998), 18 Cal.4th 1 [eliminates intentional spoliation as separate tort; 3d party destruction or late discovery open ques]

Zubulake v. UBS Warburg (SDNY 10/22/03) aka Zubulake IV. Spoliation was found when backup tapes containing emails of key players were lost and emails were deleted. Preservation duty arose, 10 months prior to litigation and 4-5 months prior to filing of formal complaint with EEOC, at the time the immediate supervisor and other key employees reasonably anticipated litigation. At that time "...it must suspend its routine document retention/destruction policy and put in place a “litigation hold” to ensure the preservation of relevant documents."

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ALTERNATIVE SANCTIONS

JUDGEMENT

Leon v. IDX Systems Corp. (9th Cir. 2006),  464 F.3d 951,   2006 WL 2684512  Case dismissed and $65,000 awarded for deleting e-mails.   In a whistle blower retaliation case, the 9th circuit affirmed dismissal of all claims with prejudice because plaintiff deleted 2,200 files from his company issued laptop computer during the pendency of the litigation despite requests by the opposition to preserve all files.. The court also imposed a $65,000 monetary spoliation sanction for the cost of investigating and litigating the spoliation issue.
The employee admitted deleting entire directories of personal files after he was placed on leave, wiping deleted files from the unallocated space in the hard drive including some with pornographic content. The Court noted there was no way of knowing what might have been stored on the laptop's hard-drive but also "no reliable way of recreating what might have been there." The district court discussed the types of "personal" files that could have helped the employer with its case, including correspondence with realtors and financial institutions (relevant to the timing of his decision to resign ); communications with health care providers regarding work-related illness (relevant to his ADA claim); and the timing of and efforts to find other employment. Lesser sanctions were not sufficient because excluding evidence would be "futile, as the most salient evidence has been destroyed, a jury presumption in favor of the employer would be ineffectual because it "would leave Defendants equally helpless to rebut any material that Plaintiff might use to overcome the presumption" and a fine would not "arm the Defense with evidence to counter Plaintiff's claim."
The 9th circuit noted that "...courts have inherent power to dismiss an action when a party has willfully deceived the court and engaged in conduct utterly inconsistent with the orderly administration of justice" considering the following factors: "(1) the public's interest in expeditious resolution of litigation; (2) the court's need to manage its dockets; (3) the risk of prejudice to the party seeking sanctions; (4) the public policy favoring disposition of cases on their merits; and (5) the availability of less drastic sanctions." A finding of "willfulness, fault, or bad faith" is required for dismissal.
The district court concluded that the employee's behavior amounted to willful spoliation because he knew he was under a duty to preserve all data on the laptop, but intentionally deleted many files and then wrote a program to write over deleted documents. The court concluded that the extraordinary measures to which the employee resorted to destroy evidence relevant to this litigation merit a finding of bad-faith."

Covucci v. Keane Consulting Group, Inc., 2006 WL 2004215 (Mass. Sup.Ct.2006)
Plasse v. Tyco Elecs. Corp   (D.Mass.2006), 2006 WL 2623441



ADVERSE INFERENCE

Optowave Co., Ltd. v. Nikitin (M.D.Fla.,2006), 2006 WL 3231422   "While the undermining of the judicial integrity of the court by intentionally destroying evidence could subject the guilty party to the most severe sanction available, a finding on liability in favor of the non-spoliating party, so severe a sanction is inappropriate in the instant action. The Court finds that the appropriate sanction for Nikitin's spoliation is an adverse inference instruction to the jury directing that the destroyed evidence would have supported the Plaintiff's case on the following two issues: 1) the parties understood that acceptance tests, or the contract specifications, were incorporated into the Contract, and 2) the Contract must be construed against PTG, who drafted the Contract. The language of the adverse inference instruction must be left to the discretion of the District Judge to determine, depending on the issues remaining in the case at the time of trial."

O'Brien v. Ed Donnelly Enters., Inc.,  2006 WL 2583327 (S.D.Ohio 9/5/06)  Routine recycling and overwriting before litigation of backup tapes containing relevant records normally printed and maintained in hard copy and the loss of a few records would not support adverse inference instructions that the lost or destroyed documents would have been unfavorable to defendants. Nor, does such loss justify a hearing to determine efforts made to preserve and produce evidence

APPROPRIATE  SANCTIONS

Leon v. IDX Systems Corp. (9th Cir. 2006), 464 F.3d 951,  2006 WL 2684512  Case dismissed and $65,000 awarded for deleting e-mails.  Lesser sanctions were not sufficient because excluding evidence would be "futile, as the most salient evidence has been destroyed, a jury presumption in favor of the employer would be ineffectual because it "would leave Defendants equally helpless to rebut any material that Plaintiff might use to overcome the presumption" and a fine would not "arm the Defense with evidence to counter Plaintiff's claim."  The 9th circuit noted that a finding of "willfulness, fault, or bad faith" is required for dismissal.The district court concluded that the employee's behavior amounted to willful spoliation because he knew he was under a duty to preserve all data on the laptop, but intentionally deleted many files and then wrote a program to write over deleted documents. The court concluded that the extraordinary measures to which the employee resorted to destroy evidence relevant to this litigation merit a finding of bad-faith."

Crandall v. City and County of Denver, Colorado (D.Colo.,2006), Slip Copy, 2006 WL 2683754.  Mere destruction of documents by itself, absent some showing of harm, is insufficient to justify spoliation sanctions. Defendant permitted overwriting of e-mail every 7 days and made no effort to suspend that policy or otherwise preserve e-mail despite opposing counsel's admonition to do so at the time of filing another action three years prior, the subsequent filing of this lawsuit one year prior, and the production pursuant to a request for documents including email six months prior. When plaintiff suggested spoliation of e-mails had occurred due to the inadequate production, "Defendant stopped the computer protocol for overwriting e-mails (they were previously overwritten every seven days), purchased software to recover overwritten e-mails, and identified and produced 91,000 e-mails that were generated between March 27, 2000 and March 30, 2006. Prior to March 6, 2006, Defendant had a policy of preserving e-mails that related to "regulatory compliance issues or environmental issues requiring responsive action."

The Court concluded on the record before it that defendant had proceeded in good faith though it permitted further limited discovery on the issue included expert analysis of the email system. It rejected as unsupported by 10th Circuit law "a presumption in favor of spoliation whenever a moving party can prove that records that might have contained relevant evidence have been destroyed." "Only the bad faith loss or destruction of evidence will support the kind of adverse inference that Plaintiffs seek, i.e., that the supposedly deleted e-mails would in fact have been unfavorable to Defendant.[citation]"Mere negligence in losing or destroying records is not enough because it does not support an inference of consciousness of a weak case."

In re Napster, Inc. Copyright Litigation (N.D.Cal.2006), Slip Copy, 2006 WL 3050864.  The Court granted an adverse inference instruction, evidence preclusion and monetary sanctions for spoliation of e-mail, with details to be determined. Entry of judgment was denied subject to reconsideration when plaintiff failed to establish either the degree of prejudice justifying such sanctions or that defendant acted wilfully giving rise to the presumption of such prejudice. The court first found spoliation and then evaluated the appropriate sanctions.  The court relied upon its inherent power to impose spoliation sanctions stating: "A party's destruction of evidence need not be in "bad faith" to warrant a court's imposition of sanctions.[citation] District courts may impose sanctions against a party that merely had notice that the destroyed evidence was potentially relevant to litigation.[citation] However, a party's motive or degree of fault in destroying evidence is relevant to what sanction, if any, is imposed."

Optowave Co., Ltd. v. Nikitin (M.D.Fla.,2006), 2006 WL 3231422   "While the undermining of the judicial integrity of the court by intentionally destroying evidence could subject the guilty party to the most severe sanction available, a finding on liability in favor of the non-spoliating party, so severe a sanction is inappropriate in the instant action."

O'Brien v. Ed Donnelly Enters., Inc.,  2006 WL 2583327 (S.D.Ohio 9/5/06)  Routine recycling and overwriting before litigation of backup tapes containing relevant records normally printed and maintained in hard copy and the loss of a few records would not support adverse inference instructions that the lost or destroyed documents would have been unfavorable to defendants. Nor, does such loss justify a hearing to determine efforts made to preserve and produce evidence

Consol. Aluminum Corp. v. Alcoa, Inc., 2006 WL 2583308 (M.D. La. July 19, 2006) Sanctions must be appropriate and adverse inference must be justified by evidence. Inadequate preservation efforts and loss of some documents alone does not support significant adverse inference or other spoliation sanctions. Lesser sanctions to compensate for the costs of investigating and presenting discovery deficiencies and correcting them by further depositions or other discovery were awarded.
"In sum, Consolidated has failed to convince the Court that the email deletions at issue were motivated by "fraud or a desire to suppress the truth" or that Alcoa "intended to prevent use of the [emails] in this litigation." Concord, at *6. At most, Consolidated has shown that Alcoa negligently failed to preserve emails, which might have had some relevance to this lawsuit, by failing to timely inform employees of their duty to preserve....However, even assuming that bad faith could be inferred from Alcoa's negligent destruction of emails,... Consolidated is not entitled to the requested adverse inference instructions because it has failed to provide sufficient evidence that the destroyed emails were "relevant" to Consolidated's claims and defenses as alleged in its proposed adverse inferences.
"The "relevance" factor of the adverse inference analysis is generally broken down into three subparts: (1) whether the evidence is relevant to the lawsuit; (2) whether the evidence would have supported the inference sought; and (3) whether the non-destroying party has suffered prejudice from the destruction of the evidence. [citation] The party seeking the sanction of an adverse inference "must adduce sufficient evidence from which a reasonable trier of fact could infer that the 'destroyed or [unavailable] evidence would have been of the nature alleged by the party affected by its destruction'." [citing Residential Funding case] In other words, some extrinsic evidence of the content of the emails is necessary for the trier of fact to be able to determine in what respect and to what extent the emails would have been detrimental. [citing Concord case] Thus, before an adverse inference may be drawn, there must be some showing that there is in fact a nexus between the proposed inference and the information contained in the lost evidence. Id.
"Although Consolidated has generally asserted that the destroyed information is relevant to this litigation "based simply on the time frame and the individuals involved," a court cannot infer that destroyed documents would contradict the destroying party's theory of the case, and corroborate the other's party's theory, simply based upon temporal coincidence. While Consolidated is not held to "too specific a level of proof" regarding the destroyed documents, it must provide some evidence that the documents would have aided it in the manner alleged in their inferences in order for such sanction to be imposed."

SANCTIONS IN CALIFORNIA FOR FAILURE TO PRESERVE DATA

See Spoliation outine as part of Sanctions Case Outline
See  comment on spoliation including California rule annotated
California spoliation: Annotated summary of Spoliation Rule
See spoliation based on inadequate document retention policies

To avoid sanctions based on document retention practices

adopt reasonable document retention / destruction policy
enforce policies and procedures
provide for suspension of purging in documents retention / destruction policy


Evidentiary Inference

Evidence Code §413 inference from wilful suppression of evidence

California discovery sanctions

CCP §2023 may provide broader sanction powers than under prior law

CCP §2023(7) disobeying court order to provide discovery might cover violation of preservation order

Sherman v. Kinetic Concepts (1998), 67 Cal.App.4th 1152 [Court did not refer to matter as a "spliation" case but imposed sanctions for concealment of documents discovered a week after trial; tr ct denied new trial and sanctions; ct ap rev'd, granted a new trial and mandated monetary sanctions to at least cover all trial costs and atty fees + consideration of additional sanctions short of default judgment pursuant to CCP§2023]

Cedars-Sinai Medical Ctr. v. Superior Court (1998), 18 Cal.4th 1, 12 [Rejection of separate tort of intentional spoliation, may provide case law basis and expansion of discovery sanctions. "...defendant hospital was unable to locate certain records...." Court decision based on preference for sanctions over separate tort as remedy for destruction or inability to produce potential evidence. Court observes that the plaintiff is free to seek full panoply of discovery sanctions due to defendant's inability to produce medical records. Dictum: "Destroying evidence in response to a discovery request after litigation has commenced would surely be a misuse of discovery within the meaning of section 2023, as would such destruction in anticipation of a discovery request." At p.9 "...we have favored remedying litigation-related misconduct by sanctions imposed within the underlying lawsuit rather than by creating new derivative torts." At p.9, rather than a separate c/a, "...preferring instead the increased use of sanctions within the underlying lawsuit...." ]

Electronic Funds Solutions v. Murphy (2005),134 Cal.App.4th 1161, 36 Cal.Rptr.3d 663  Terminating discovery sanctions were affirmed but judgment in excess of the amount requested in complaint was reversed.  Terminating sanctions appear to have been based on the destruction of evidence on a computer hard drive after the court ordered its production and warned of more severe sanctions. The data was destroyed by using Data Eraser to wipe the hard drive after the order to produce but before production. The erasure of data also appeared to be a violation of a prior order requiring production of all requested data including e-mail contained on the hard drive. Because of the history of thwarting discovery, and of requiring motions, orders and the imposition of monetary sanctions on prior motions, the court was not required to impose a lesser sanction. In upholding terminating sanctions, the court stressed its limited review standard and the record of abuse to conclude a lesser sanctions might not be adequate to remedy the abuse.

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California spoliation

There is a remedy for spoliation in California but the exact nature, findings and procedures await further guidance. Cedars-Sinai established that the remedy must be found within the existing litigation rather than in a separate cause of action. It did not specify whether the tort elements must be established, what if any findings would be rquired, or whether punitive sanctions could be included

R.S. Creative Inc. v. Creative Cotton Ltd.
(1999), 75 Cal.App.4th 486 [Concealment and destruction of evidence on hard drive of PC. Although the court considered this to a be spoliation case, it did not apply traditional tort analysis; appellate court found spoliation of evidence and upheld the dismissal as punishment for conduct as well as sanction for violating court order;. Monetary sanctions and dismissal sanctions imposed for failure to comply with stipulated court orders and "because of the conduct of the witness and the plaintiff..." was not an abuse of discretion where there was a history of egregious conduct, failure to submit to discovery, destruction of evidence, forgery, violation of stipulations to preserve and not use computers and suggestion of perjury; court interprets Cedars-Sinai as authorizing additional sanctions including punishment for spoliation and other misconduct]

See Spoliation outline in Sanctions Case Outline

Attorney professional responsibility

Discipline for suppression of evidence
Bus. & Prof. Code §6106
Rules of Prof. Conduct rule 5-220

Adverse inference permissible due to failure to produce

Evidence Code §413 "wilful supression" not unexplained absence
Cedars-Sinai Medical Ctr. v. Superior Court (1998), 18 Cal.4th 1, 12
BAJI No.2.03 (8th Ed. 1994)

Zubulake v. UBS Warburg (SDNY 10/22/03) aka Zubulake IV.In fashioning a remedy the court rejected further cost shifting for restoration of backup tapes since the facts had been previously considered by the court in its prior cost shifting order; it awarded payment of costs for redeposing people on the missing tapes and emails; but, it rejected a request for adverse inference instruction, “that the evidence, if available, would have been favorable to Zubulake and harmful to UBS.” as too extreme because the jury would be 'instructed that it may “infer that the party who destroyed potentially relevant evidence did so ‘out of a realization that the [evidence was] unfavorable.’” The injured party was required to prove relevance and damages i.e. that the destroyed evidence would have been favorable to her case. The court concluded: "“In sum, although UBS had a duty to preserve all of the backup tapes at issue, and destroyed them with the requisite culpability, Zubulake cannot demonstrate that the lost evidence would have supported her claims. Under the circumstances, it would be inappropriate to give an adverse inference instruction to the jury.”

California "inherent authority" of courts to sanction generally rejected

CCP §§128 et. seq.
Transaction Commercial Vendors v. Firmaterr (1997), 60 Cal.App.4th 352 ["We conclude rule 227 is invalid to the extent it fails to conform with the statutory conditions for an award of attorney's fees as sanctions. The sanctions order before us does not meet the conditions of any statute, and therefore must be reversed.."]
In re Lemon(1981), 113 Cal.App.3d769, 779 [The courts power to impose sanctions in connection with discovery proceedings rests exclusively upon statutory grants of authority.]
Fabricant v. Superior Court(1980), 104 Cal.App.3d 905 [criminal case; generally need statutory authority to impose attorneys's fees on opponent]
Poe v. Diamond(1987) [prior law; award to atty re'vd because no stat authority]
Richards v. Superior Court (1978) 86 Cal.App.3d 265, 270.
Bauguess v. Paine (1978), 22 Cal.3d 626.
Williams v. Travelers Ins. Co .(1975), 49 Cal.App.3d 805, 810
Yarnell & Associates v. Superior Court (1980),106 Cal.App.3d 918 [Sanctions award for frivolous motion vacated as not authorized]
Carly Richards, Inc. v. Superior Court (1961), 188 Cal.App.2d 300.
Sigerseth v. Superior Court (1972), 23 Cal.App.3d 427, 434.(Sanctions may be awarded in connection with motion for further answers over initial objections.)
Cf. Fairfield v. Superior Court (1966) 246 Cal.App.2d 113, 120.
Petersen v. City of Vallejo (1968) 259 Cal.App.2d 757, 781. [former CCP. § 2034(b) sanctions may be imposed for refusal to obey a court order]
Lund v. Superior Court (1964), 61 Cal.2d 698
Fairfield v. Superior Court (1966), 246 Cal.App.2d 113 [inherent authority]

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California Spoliation tort eliminated as separate tort

Cedars-Sinai Medical Center (1998), 18 Cal.4th 1 [no separate tort for intentional spoliation by party; seek remedy within case by discovery sanctions or evidentiary inferences]
Temple Community Hospital v. Superior Court (1999), 20 Cal.4th 464 [No separate tort aginst 3rd party for intentional spoliation of evidence]
Willard v. Caterpillar (1995), 40 Cal.App.4th 892 [Def. spoliation issue. Case analysis relevant to sanctions in exiting action. Error to submit to jury intentional spoliation of design documents in products liability case when destruction occurred prior to injury and after 25 years with negligible accident history; theoretical analysis ]
Johnson v. United Service Automobile Assoc.(1998), 67 Cal.App.4th 626 [No negligent spoliation against 3d party absent further element of agreement, request & offer to bear costs, or assumption of duty and justifiable reliance. ]
Farmers Ins. Exch. v. (2000), 79 Cal.App.4th 1400 [Negligent spoliation against 3rd part rejected as independent tort]; Cf. Velasco v. Commer.Bldg. Maint (1985),169 Cal.App.3rd 874 [neg. spoliation against 3rd party recognized though not reasonably forseeable in this case]
Smith v. Superior Court (1984), 151 CA3d 491
Reid v. State Farm Auto Ins. Co.(1985), 173 Cal.App.3d 557
Coprich v. Superior Court(2000), 80 Cal.App.4th 1081
Velasco v. Commercial Bldg Maintenance (1985), 169 Cal.App.3d 874

SANCTIONS FOR CREATING, FABRICATING, ALTERING EVIDENCE

Cedars-Sinai Medical Ctr. v. Superior Court (1998), 18 Cal.4th 1, 12 [Independent cause of action for tort rejected in favor of resoving matter in pending litigation. The Court's language suggests a liberal or braod apprach to remedying discovery abuses within the pending litigation.  Dictum: "Destroying evidence in response to a discovery request after litigation has commenced would surely be a misuse of discovery within the meaning of section 2023, as would such destruction in anticipation of a discovery request." ]

Munshani v. Signal Lake Venture Fund II (Mass. App. Ct. 3/26/04), 805 N.E.2d 998; 2004 Mass. App. LEXIS 323, 60 Mass. App. Ct. 714; When a court appointed neutral determined that an e-mail offered by plaintiff to avoid a statute of frauds was not authentic, plaintiff took the 5th and then appealed the dismissal of its case on the grounds that the sanction was excessive. Dismissal affirmed based on commission of fraud on the court and also as appropriate sanction based on inherent power of court.  The court entered judgment that dismissed the complaint in an action seeking $25 million for breach of oral promise on theories of breach of contract and unjust enrichment; credibility was a major issue. The judge found plaintiff committed a fraud on the court by manufacturing evidence, swearing to its authenticity, and continuing to insist on its authenticity for more than seven months while an expert investigated the matter. The court ordered plaintiff to pay the costs and fees of the court's expert and the defendants' attorney's fees and costs in connection with fraud investigation. On appeal, plaintiff argued the sanction was excessive for an isolated act of perjury that did not go to the merits.

'As the trial court judge pointed out:
"All courts are at the mercy of litigants and their advocates . . . in the often difficult search for truth. The ability to discover fraud in the process, particularly sophisticated computer fraud, is greatly limited. Thus, the imposition of strong sanctions is one of the very few ways of deterring such activity in the future. This Court intends such a message here."'

Here, the judge's utilization of the dismissal sanction was not only appropriate on the facts of this case, but was a realistic measure undertaken to protect the integrity of the pending litigation and the Superior Court, as well as to send an appropriate message to those who would so abuse the courts of the Commonwealth. To limit, as Munshani suggests, punishment for such conduct to repayment of the costs of uncovering the fraud could actually encourage similar fraud in other high stakes cases. A devious litigant might embark on a scheme to engage in complex electronic fraud calculating the possibility that, even if caught, he or she  [*16]  could simply pay the bill and proceed with the litigation. The judge here imposed a sanction that allowed zero tolerance for sophisticated computer fraud and evidence tampering. That sanction was within the judge's discretion.”

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