The New Jersey Supreme Court has dismissed claims against several defendants as a sanction for spoliation in a case alleging a defective window system in a commercial establishment, because they were not given the opportunity before or during remediation to evaluate the system, its installation or the cause of the alleged window leaks. Robertet Flavors, Inc. v. Tri-Form Constr., Inc., No. A-70/71-08 (N.J., decided August 3, 2010).  

Concluding that the plaintiff, a food, beverage and pharmaceutical flavorings company that owned the building, had engaged in spoliation of the evidence, the trial court granted the defendants’ motions to exclude evidence relating to the window system installation. The court’s action was based on findings that the plaintiff (i) failed to notify defendants about the proposed remediation before starting the work, (ii) failed to respond to defendants’ initial requests to conduct an inspection, (iii) first notified the defendants about the remediation work when there was insufficient time for them to perform an independent evaluation, and (iv) completed repairs when there was no real emergency.

The trial court determined that monetary sanctions or an adverse-inference jury instruction would be insufficient and ineffective, and also determined that dismissing the complaint would be too extreme. Accordingly, the court barred plaintiff’s experts from giving any opinion testimony against the defendants, concluding that this would create a level playing field for the parties. The court later granted defendants’ motions for summary judgment because the plaintiff lacked expert proof as to both liability and damages. An intermediate appellate court reversed, finding the remedy of preclusion and dismissal too harsh. Instead, the appellate court decided to limit the plaintiff’s expert proofs “to those based only on evidence obtained and observations made prior to the disassembly of the windows and the remediation.

That limitation would permit defendants to engage an expert who could rely on that evidence and other evidence in their control to rebut plaintiff’s expert.”  

The state supreme court took the appeal, limited to “the extent of the remedy available on the spoliation claim,” and explained that it was setting a standard to guide similarly-placed litigants, noting how common it is in a large construction project, for the building owner to try to solve a problem and prevent it from getting worse “without waiting for a resolution by the contractor whose work the owner believes is the cause.… Even if the parties act with the purest motives, evidence of the extent or the cause of any claimed defect may be compromised or destroyed as testing and investigations are undertaken and as repair, retrofitting, or replacement of affected building systems or components is completed.”

Providing an overview of remedies available in the event of spoliation of evidence and exploring case law in New Jersey and other jurisdictions on the issue, the court adopted a three-part test from the Third Circuit Court of Appeals. Under that test, the court conducts “an inquiry into the spoliator’s degree of fault, the prejudice caused to the other party, and the availability of lesser sanctions that will both avoid unfairness to the non-spoliator and deter future acts of spoliation.”

The court then added to the test a consideration of (i) the spoliator’s identity (plaintiff, defendant or third party), (ii) why, how and when the spoliation occurred, and (iii) whether information about the matter can be found in the vast materials a commercial building project generates. The court must then balance these considerations “with an appreciation for the ways in which the construction industry itself provides them with tools with which to ‘level the playing field’ and achieve an appropriate remedy for spoliation.”  

In this case, the court agreed with the appellate court that the plaintiff could proceed against the defendant that actually installed the window system and undertook at various times to address the leaking problems, but limited the plaintiff’s claims “to the conditions that were observable prior to remediation and its experts to a review of only those conditions.” As to the remaining defendants who were deprived of an opportunity to inspect the windows before remediation, the court dismissed the claims outright.