How to Avoid Spoliation: Communication and Preservation
Brent P. Smith, Johns, Flaherty & Collins, S.C.

While spoliation motions are probably not a part of a defense lawyer’s everyday practice, the consequences to a defendant if a spoliation issue raised by the plaintiff is successful can be catastrophic. Therefore, it is imperative that the defense lawyers know how to defend a spoliation issue when raised and, even more importantly, to advise their clients so that the issue never gets to the courtroom.

I can say that in over 40 years of doing defense work, I do not know if I have ever had a spoliation of evidence motion regarding a client of mine. I have been part of cases that have had spoliation motions filed, but they have not involved my clients. Within the last year, I was involved in a case where the plaintiff’s counsel indicated several times that he might file such a motion, but the case settled, and no motion was ever brought. In that case, I represented a bar owner in La Crescent, Minnesota, and its insurer. The plaintiff, while visiting from Texas (and wearing a Dallas Cowboys football jersey!), entered the bar, sat in the bar area, and had a drink. She then got up and was going into a room behind the bar where several of her friends (hopefully not all Dallas Cowboys fans) were gathering. She fell as she walked by the bar with allegations of either a slip or some kind of defect in the floor.

Like many bars, there is a camera running 24/7 that probably captured her fall. Like many systems, you can usually go back and capture the video for thirty days before it is taped over. This was the case here and by the time the lawsuit was filed, there was no video of the incident.

My bar owner knew that the plaintiff had fallen and was injured. I believe there would have been testimony that his insurance company was notified, and that the insurer had at least talked to him over the phone about the circumstances surrounding the fall. We never really got around to the details of that conversation and whether a potential claim was discussed.

Under these circumstances—and we should assume Minnesota law is similar to Wisconsin law—would there be a spoliation issue? Did the insured have enough knowledge of a potential claim that he should have retained the video of the fall? If so, what would is the remedy? A finding of liability? A jury instruction? A monetary fine?

As a general rule, parties are required to take action to preserve evidence and this includes not only physical evidence, but also documents and electronically stored information. Spoliation has been defined as the “destruction or withholding of critically probative evidence resulting in prejudice to the other party.” [1] The purpose of having a doctrine or remedy for spoliation of evidence is to uphold the judicial system’s truth-seeking function and deter parties from destroying evidence.[2]

Spoliation can occur both pre- and post-litigation. Perhaps it is obvious, but the duty to preserve evidence exists before a lawsuit is filed. Also, it applies not just to parties, but can also apply to the conduct of an expert witness retained by one of the parties.

So, is the law that you can never destroy evidence without incurring some type of penalty? No, that is not the law in Wisconsin. A party can destroy evidence after giving notice to the other party and giving the other party an opportunity to inspect or test the evidence.

What are the penalties for spoliation? It can range from a jury instruction to the striking of evidence to monetary fines to the ultimate sanction of dismissal of the case or a finding of liability.

Wisconsin Civil Jury Instruction 400 is the pattern jury instruction for spoliation. It provides:

SPOLIATION:  INFERENCE

[Describe the conduct the court has found to constitute spoliation of evidence.]

You may, but are not required to, infer that (plaintiff) (defendant) (describe spoliation) because producing that evidence would have been unfavorable to (plaintiff)'s (defendant)'s interest.

(For example: The defendant destroyed all of his medical records for patient care provided prior to 2005.  You may, but are not required to, infer that the defendant destroyed his medical records from prior to 2005 because producing that evidence would have been unfavorable to defendant's interest.)

This jury instruction permits, but does not require, the jury to infer that the party who committed spoliation did so because producing the evidence would have been unfavorable to that party’s interest.

Wisconsin appellate courts have issued several decisions setting forth guidelines for judges to consider when deciding whether spoliation The first case is Milwaukee Constructors II v. Milwaukee Metropolitan Sewerage District,[3] which held that for a finding of spoliation of evidence, the court would have to find intentional and egregious conduct or a knowing disregard of judicial process. Another early case was William K. Garfoot v. Fireman's Fund Insurance Company,[4] which again required a finding of egregious conduct, which consists of a conscious attempt to affect the outcome of litigation or a flagrant knowing disregard of the judicial process.

These two cases and others stood for several principles. First was the idea that the duty to preserve evidence exists whether litigation is pending or not. In evaluating an allegation of document destruction, a court should examine whether the party knew or should have known at the time it caused the destruction of the documents that litigation against (the opposing parties) was a distinct possibility. The second test that the court should consider was whether the offending party destroyed documents which they knew or should have known would constitute evidence relevant to the pending or potential litigation.

Every discussion of evidence spoliation in Wisconsin cites as a major case American Family Mutual Insurance Company v. Golke.[5] In Golke, a house insured by American Family was destroyed by a fire on February 13, 2000 (allegedly caused by negligent repair of the roof). American Family notified the roofers of the fire damage by letter dated March 13, 2000, and the conclusion that their negligence caused the loss. Furthermore, American Family indicated that they should contact their liability carrier to provide time for investigation, testing, etc. A second letter was sent out by certified mail on April 6, 2000. Sometime after April 11, 2000, the home was razed and rebuilt. American Family brought suit against the roofers and the insurance company for damages arising from the fire. The case was dismissed at the circuit court level based upon a finding of spoliation (the home being razed and rebuilt).

Reversing the trial court’s decision, the Wisconsin Supreme Court held that a party or litigant with a legitimate reason to destroy evidence discharges its duty to preserve relevant evidence within its control by providing the opposing party or potential litigant with reasonable notice of possible claim, basis for that claim, existence of evidence relevant to the claim, and reasonable opportunity to inspect the evidence.

The five-step process for evaluating the destruction of evidence post-Golke is as follows:

1.     Identification, with as much specificity as possible, of the evidence destroyed;

2.     The relationship of that evidence to the issues in the action;

3.     The extent to which such evidence can now be obtained from other sources;

4.     Whether the party responsible for the evidence destruction knew or should have known at the time it caused the destruction of evidence that litigation against the opposing party was a distinct possibility; and

5.     Whether, in light of the circumstances disclosed by the factual inquiry, sanctions should be imposed upon the party responsible for the evidence destruction and, if so, what those sanctions should be.

There are two recent appellate cases involving evidence spoliation in Wisconsin. In Gundersen v. Franks,[6] an unpublished opinion from District IV of the Court of Appeals, the question was whether failure to download and preserve evidence from an electronic control module (black box) in a truck constituted spoliation in an auto accident case. Although liability was not at issue, the speed of the truck was potentially relevant to damages. The court of appeals ruled that the data could have easily been downloaded and should have been preserved, even though it was not requested until three years after the accident. The court levied sanctions in the amount of a monetary fine of $3,852.00. The five-part test mentioned above was applied. The court stressed that the speed of the vehicle related to the claimed injuries, the device or preservation of evidence was clearly identified, the relationship to the case was clearly “yes” (you did not need an expert), the eyewitnesses could not provide this type of analysis and a reasonable anticipation of litigation in the case should have alerted the parties to the fact that this type of evidence should have been preserved.

In Mueller v. Bull's Eye Sport Shop, LLC,[7] another decision from the District IV of the Court of Appeals, the court considered a case where discharge of a gun during a hunting trip resulted in injury to the plaintiff. After the accident, the gun owner, whose knowledge of the incident and the potential for litigation, had the gun materially altered and, indeed, part of the gun was missing. A spoliation motion for sanctions followed. The court found that the gun owner had intentionally altered and destroyed the evidence (the gun). The court determined that the sanction was going to be an instruction to the jury that it could draw an adverse inference against the gun owner for the spoliation of the evidence. This decision was appealed on the basis that the sanction was not sufficient, and the court should have dismissed some or all of the claims. The court again went through the five-part test in reviewing the trial court’s decision. It did find that the conduct was intentional, but not egregious! Therefore, the trial court’s decision on sanctions was upheld.

Several federal court decisions have addressed the issue of destruction of electronic data. Overall, courts have required additional efforts by parties to preserve electronically stored information.

A key concept in these cases has been a “litigation hold.” This was discussed in the case of Zubulake v. UBS Warburg, LLC.[8] In Zubulake V, the court indicated counsel should put a hold on the regular retention/destruction policy and to communicate this to key players when litigation is occurring. Counsel should also make sure that all backup media with relevant information is identified and stored as well. Finally, counsel must also take affirmative steps to monitor compliance with the above.

What event(s) trigger a litigation hold?

1.         The filing of a complaint.

2.         A preservation of evidence demand letter.

3.         Discovery requesting particular documents or information.

4.         Letter from opposing counsel indicating that litigation is likely.

5.         A demand letter requesting a particular settlement.

In sum, counsel must focus on making sure that the documents potentially related to a litigation are preserved, that the custodians of those documents are communicated with as to the duty to preserve, and that monitoring of that litigation hold is done by counsel to make sure of ongoing compliance.

Pension Committee of the University of Montreal Pension Plan v. Banc of America Securities, LLC,[9] is another federal case where it was found that the plaintiffs failed to implement a legal hold and engaged in careless efforts after the duty to preserve arose. The court found that a failure to issue a written litigation hold letter constituted gross negligence.

Zubulake V and Pension Committee are the framework for analyzing allegations of spoliation involving electronically stored information. Clear guidelines require counsel to take steps to ensure the electronically stored data is preserved during the course of litigation. If these guidelines are not followed, sanctions can be imposed on a graduated basis, depending on the party’s state of mind and the likelihood that relevant data was destroyed. The failure to implement a written legal hold can be, and has been, held to constitute gross negligence.

As I have outlined above, the consequences for a successful spoliation claim can be catastrophic. So, how does a party best avoid a spoliation claim?

1.              Scene: As best as possible, preserve the scene of a particular incident for inspection by all parties (where evidence might well exist).

2.              Communication: There must be communication to all sides that can be identified that there exists evidence as to a potential claim (perhaps explaining the basis of the claim) and you are allowing the other parties to inspect that evidence.

3.              Testing/Inspection/Protocol/Chain of Custody: It is imperative that the party holding the relevant evidence provide the parties with the ability to inspect and potentially test the evidence. Careful consideration should be given to a protocol agreed to by all parties and documentation of the chain of custody with regard to the handling of the evidence.

4.              Preserving Evidence: Even after testing and inspection is done by all parties, the evidence still needs to be preserved unless all parties agree that it can be destroyed.

5.              Litigation Hold for Electronic Evidence/Retention and Destruction Policy: Again, as indicated above, an absolute necessity that, if not done, will often tip the scale for a court to hold that spoliation has occurred, and sanctions should apply.

6.              Notice to All Individuals Impacted by Litigation Hold: This is part of the common litigation hold responsibilities with often the responsibility lying with the lawyer representing the party who potentially has relevant evidence. Any judgment in this regard should reflect erring on the side of caution with any potential individual who could have relevant evidence to be notified of his or her duties to preserve.

The bottom line is that there are many things for counsel to consider and implement to avoid a spoliation claim. Two requirements that are at the core of avoiding such a claim are communication and preservation. If legal counsel can make those two concepts the cornerstone of a policy to avoid spoliation claims, the chances for success of defending any such claim are increased dramatically.

Author Biography:

Brent P. Smith practices at Johns, Flaherty & Collins, S.C. in Madison. He earned his undergraduate degree from the University of Wisconsin-Madison in 1975 and his J.D. from the University of Wisconsin Law School in 1978. He is admitted to practice in Wisconsin, Minnesota, the U.S. District Court for the Western District of Wisconsin, and the U.S. Court of Appeals for the Seventh Circuit. His practice areas include employment and labor law, insurance law, real estate, personal injury, municipal and school law, and general litigation.

[1] Neumann v. Neumann (In re Estate of Neumann), 2001 WI App 61, 242 Wis. 2d 205, 626 N.W.2d 821.

[2] Ins. Co. of N. Am. v. Cease Elec. Inc., 2004 WI 139, 276 Wis. 2d 361, 688 N.W.2d 462.

[3] Milwaukee Constructors v. Milwaukee Metro. Sewerage Dist., 177 Wis. 2d 523, 502 N.W.2d 881 (Ct. App. 1993) (“Milwaukee Constructors II”).

[4] Garfoot v. Fireman's Fund Ins. Co., 228 Wis. 2d 707, 599 N.W.2d 411 (Ct. App. 1999).

[5] Am. Family Mut. Ins. Co. v. Golke, 2009 WI 81, 319 Wis. 2d 397, 768 N.W.2d 729 (“Golke“).

[6] Gunderson v. Franks, 2020 Wis. App. LEXIS 175, 2020 WI App 31, 392 Wis. 2d 380, 944 N.W.2d 347 (unpublished opinion).

[7] Mueller v. Bull's Eye Sport Shop, LLC, 2021 WI App 34, 398 Wis. 2d 629, 961 N.W.2d 112.

[8] Zubulake v. UBS Warburg, LLC, 229 F.R.D. 422 (S.D.N.Y. 2004) (“Zubulake V”) (superseded by statute).

[9] Pension Comm. of the Univ. of Montreal Pension Plan v. Banc of Am. Sec., LLC, 691 F. Supp. 2d 448 (S.D.N.Y. 2010) (“Pension Committee“).