“Dog Ate My Emails” No Defense Against Spoliation Sanction

On a motion for spoliation sanctions, it makes no difference that a party destroyed emails without “malevolent” purpose. For a sanctions motion to be granted, it is necessary only to demonstrate that the evidence was destroyed deliberately.

In an article, August 19, 2013, titled “Sanctions Imposed for Non-Malevolent Destruction of Emails,” the New York Law Journal  reported on a decision handed down by the Hon. Shira Scheindlin in the Southern District of New York on August 15, 2013 in Sekisui Medical America v. Hart, 1:12-cv-03479, 2013 U.S. Dist. LEXIS 115533 (S.D.N.Y. 2013).

In that case, plaintiff, a Japanese medical equipment manufacturer, was sanctioned by Judge Scheindlin for deliberately destroying electronic records found relevant to a dispute over its acquisition of a business from the former owners, Richard Hart and Marie Louise Trudel-Hart. As federal court practitioners are well aware, Scheindlin decided the Zubulake case which, along with several other decisions, created the modern standard for preservation of electronic materials. Although her holding rests on established Second Circuit precedent, Judge Scheindlin’s analysis provides important guidance to practitioners.

It emerged during discovery that Sekisui had not placed a litigation hold on the relevant business unit’s electronically stored information (“ESI”) until fifteen months after a Notice of Claim was received. During that period, the business unit’s HR director ordered deleted the relevant emails because they were cluttering the company’s servers.

 Not one, but multiple missteps appear to have haunted Sekisui in the run-up to the ruling. For example, before directing the permanent deletion of the defendant’s ESI, the HR director apparently “identified and printed any emails that she deemed pertinent to the company,” which emails were produced in discovery. However, these “pertinent” emails were not backed up before being deleted; they were merely printed out in hard copy. Eventually, Sekisui was able to search alternative sources and produced 36,000 emails to and from defendant Hart. However, the court determined that it was impossible to say how many emails were permanently deleted and remained unrecoverable. Due to a cognitive disorder, defendant Hart could not testify or be deposed in the action.

By now, federal court practitioners know the importance of issuing a litigation hold as early as possible. However, it is not enough to have the client merely distributing the litigation hold to the staff. It is necessary to ensure that the correct individuals are sent the notice and that they completely understand their legal obligations with regard to ESI preservation. Following up with the client on preservation compliance after the litigation hold is sent is essential in avoiding potentially catastrophic result.

The court recognized that Sekisui had made a real effort to minimize the harm done by the destruction of emails. However, it was still not able to rebut the presumption of prejudice because of the unknowable amount of ESI that was permanently destroyed.  Judge Scheindlin advised the parties that she would give the following jury charge in the case: 

The Harts have shown that Sekisui destroyed relevant evidence. This is known as the "spoliation of evidence."

Spoliation is the destruction of evidence or the failure to preserve property for another’s use as evidence in pending or reasonably foreseeable litigation. To demonstrate that spoliation occurred, several elements must be proven by a preponderance of the evidence:

First, that relevant evidence was destroyed after the duty to preserve arose

Second, that the evidence lost would have been favorable to the Harts.

As to the first element I instruct you, as a matter of law, that Sekisui failed to preserve relevant evidence after its duty to preserve arose. This failure resulted from an employee’s intentional directive given to ADI’s information technology vendor to destroy the email files of— at least— Richard Hart and Leigh Ayres. Moreover, this failure resulted from Sekisui’s gross negligence in performing its discovery obligations. I direct you that I have already found as a matter of law that this lost evidence is relevant to the issues in this case.

As to the second element, you may presume, if you so choose, that such lost evidence would have been favorable to the Harts. In deciding whether to adopt this presumption, you may take into account the egregiousness of the plaintiffs’ conduct in failing to preserve the evidence.
Sekisui offered evidence that, although evidence was lost and it may have been relevant, nevertheless such evidence would not have been favorable to the Harts.

If you decline to presume that the lost evidence would have been favorable to the Harts, then your consideration of the lost evidence is at an end, and you will not draw any inference arising from the lost evidence.

However, if you decide to presume that the lost evidence would have been favorable to the Harts, you must next decide whether Sekisui rebutted that presumption. If you determine that Sekisui rebutted the presumption that the lost evidence was favorable to the Harts, you will not draw any inference arising from the lost evidence against Sekisui. If, on the other hand, you determine that Sekisui has not rebutted the presumption that the lost evidence was favorable to the Harts, you may draw an inference against Sekisui and in favor of the Harts – namely that the lost evidence would have been favorable to the Harts.

Without question, spoliation of evidence will become a major trial theme for the defense in Sekisui. As is often the case when the jury is given a charge of this nature, jurors will assume the worst of the party responsible for the spoliation–a challenging scenario for any trial lawyer or jury consultant to deal with.

No FIFRA Preemption, No Problem!

In Gresser v. Dow Chemical Co., Ind. Ct. App., No 79A02-1111-CT-1014, 4/30/13, the plaintiffs in this toxic tort case alleged that their children developed a variety of illnesses after a purported exposure to Dursban TC in their home following a pesticide application by the co-defendant pesticide applicator.

Plaintiffs alleged that defendants Dow Chemical Company and Dow Agrosciences (collectively, “Dow”) failed to use reasonable care to instruct about the use of the product; warn about its danger; and appropriately test the design of the product. Following discovery, both plaintiffs and Dow filed motions for summary judgment.

On April 13, 2013, the Indiana Court of Appeals reversed a trial court order granting Dow summary judgment on FIFRA preemption grounds, but granted Dow summary judgment on the basis of the rebuttable presumption in Indiana’s product liability statute (the “IPLA”) that a product is not defective if it complies with federal or Indiana standards or regulations. Thus, Dow obtained from the IPLA presumption relief that it could not obtain by preemption.

Ind. Code § 34-20-5-1  provides a rebuttable presumption that a product which caused physical harm is not defective, and the manufacturer or seller of the product is not negligent, if before the sale by the manufacturer, the product “complied with applicable codes, standards, regulations, or specifications established, promulgated, or approved by the United States or by Indiana, or by an agency of the United States or Indiana.”

In determining that Dow was entitled to the statutory presumption, the court held that Dursban TC’s compliance with both FIFRA and Indiana law had a significant impact under IPLA’s consumer expectation-based product liability regime because the risk of harm had been evaluated by agencies with the duty of monitoring the effects of Dursban TC. Furthermore, Dursban TC’s labeling and warnings had been approved by experts.

On the basis of this ruling, the appellate court determined that the trial court correctly granted Dow summary judgment motion on plaintiffs’ failure to warn claims

This decision is significant because Dow was able to obtain through the use of the statutory presumption the same end result that it would have obtained had the appellate court found that the plaintiff’s claims were subject to preemption. Other states, including New Jersey, have similar provisions in their statutes in varying contexts.  In New Jersey, the New Jersey Product Liability Act, N.J.S.A. 2A:58C-1 et seq., specifically provides an evidentiary presumption in the favor of drug manufacturers against failure-to-warn claims:

"If the warning or instruction given in connection with a drug or device or food additive has been approved or prescribed by the federal Food and Drug Administration under the Federal Food, Drug and Cosmetic Act, 52 Stat. 1040, 21 U.S.C. Sec. 301 et seq., … rebuttable presumption shall arise that the warning or instruction is adequate."

Thus, product liability practitioners, in both the FDA and FIFRA contexts, should be mindful of the importance of developing evidence in discovery and at trial concerning the regulatory approval process and the  evaluations performed by the agency of the appropriateness of the product warnings, directions for use, and of the product’s safety and efficacy.