If you are involved in litigation in federal courts within the Sixth Circuit (covering Kentucky, Michigan, Ohio, and Tennessee), you should be aware of a significant change in the law governing claims of destruction of evidence (spoliation). This change may also affect pending appeals of spoliation rulings.
The United States Court of Appeals for the Sixth Circuit recently determined in an en banc opinion that claims of spoliation in federal courts are governed by federal common law, not state law, independent of the basis of federal jurisdiction. See Adkins v. Wolever, 554 F.3d 650 (6th Cir. 2009) (en banc); see also Chrysler Realty Co. v. Design Forum Architects, Inc., No. 08-1771 (June 30, 2009). Read together, Adkins and Chrysler Realty overrule decades of Sixth Circuit decisions and bring the Circuit into line with the majority of other Circuits.
Adkins was a federal question case. In Adkins, the Sixth Circuit broadly observed that (1) sanctions for spoliation are within the inherent authority of the court and that (2) sanctions are primarily evidentiary in nature, and federal courts apply their own rules to evidentiary issues. From these two observations, the court concluded that state law has nothing to say about spoliation disputes in federal court. On June 30, 2009, the Sixth Circuit expressly applied the Adkins principle in a diversity case. In Chrysler Realty, it remanded a spoliation issue to the district court because the opinion in Adkins issued after the trial court's ruling based on state law. Chrysler Realty will likely be followed by a reported decision involving diversity jurisdiction.
Although federal common law on spoliation is generally similar to state common law on the subject, there is relatively little to establish the content of federal common law of spoliation in the Sixth Circuit. Until the localized case law develops, your adversaries may call on precedent from other federal districts and circuits potentially exposing you to extremely stringent standards of behavior (for example, one federal district court has concluded that under the right circumstances, simply using a computer can lead to spoliation of evidence). Cases from other federal jurisdictions are not controlling authority, but be aware that federal courts borrow freely from one another when it comes to issues involving electronic evidence. Of course, the landmark cases in point are the 2003-2004 Zubulake v. UBS Warburg LLC line of decisions, all originating in the Southern District of New York but considered persuasive by many federal (and state) courts.
In a broad sense, the law of spoliation in civil cases bears some resemblance to the law governing discovery sanctions, which is the subject of Federal Rule of Civil Procedure 37. The duty to preserve arises when a party knows or has reason to know that information will be relevant to a claim or defense, and corrective sanctions range from evidentiary rulings to negative inferences to dispositive relief. That said, there is a significant difference in required culpability. Discovery sanctions, at least as they relate to the automatic deletion of electronic data, can be avoided where a party has taken reasonable steps to stop such deletion, i.e., has avoided acting negligently. This is the "safe harbor" that Rule 37(e) provides for certain failures to follow discovery orders. But spoliation sanctions are premised on something more like strict liability the key question being whether relevant evidence was destroyed. Mental state (particularly intentional destruction) serves mainly to enhance the severity of sanctions. In government investigations, spoliation also presents the risk of criminal penalties.
With Adkins and Chrysler Realty injecting some uncertainty into the legal landscape, this is an excellent time to verify that your organization has measures in place to mitigate the risks of spoliation or discovery sanctions. The following precautions can help mitigate risk:
- Ensuring that record retention policies are in place and are being followed;
- Confirming that data policies and system configurations serve, rather than antagonize, record retention policies;
- Establishing mechanisms for creating, distributing and enforcing litigation holds; and
- Making sure that company data systems are capable of preventing the destruction of data covered by a litigation hold.