Don’t Delay: Sanctions for Spoliation Denied as Untimely

Travelers Prop. Cas. Ins. Co. of Am. v. Mountaineer Gas Co., No. 2:15-cv-0959 (S.D.W. Va. Mar. 16, 2018).

In this subrogation claim, the court denied both parties’ motions for sanctions as untimely where neither alleged spoliation until years after the fact.

On June 25, 2013, a boiler exploded at St. Mary’s Medical Center in Huntington, West Virginia. At the time, a technician for Mountaineer Gas Company was testing the boiler, which had been malfunctioning. Representatives from the hospital and Mountaineer were “onsite immediately” after the incident. Both were able to photograph the scene before cleanup.

Hospital employees “immediately cleared the debris” to prevent it from affecting the operation of the remaining boilers. They also found debris in the gas piping and gas trains, which they discarded. Mountaineer’s employees examined the regulators, found them to be contaminated, and “discarded the debris” after their inspection.

The hospital’s insurer, Travelers Property Casualty Company of America, allowed the parties to test the boiler’s electrical components onsite. Travelers later removed the boiler and preserved it for litigation.

Travelers filed suit against Mountaineer Gas Company in June 2015. The parties exchanged “substantial written discovery” and conducted “additional examination and inspection” of the involved boiler. Mountaineer visited the explosion site at least four times and inspected the boiler at least three times during discovery.

Mountaineer’s expert provided an initial report in September 2016, offering “nineteen different causes” for the explosion. He made no mention of missing evidence.

On April 27, 2017, Mountaineer’s expert submitted another report. This report came almost four years after the incident and at least six months past the close of discovery. In it, he “raised the specter of spoliation of evidence” for the first time.

On June 12, 2017, shortly before trial, Mountaineer moved for spoliation sanctions. That motion sought summary judgment or an adverse inference jury instruction. Travelers subsequently filed its own motion for sanctions, also requesting a jury instruction.

The court began by noting that Federal Rule of Civil Procedure 37 does not specifically address when a party should move for spoliation sanctions. However, a party concerned about spoliation should file its motion “as soon as reasonably possible” after discovering the loss of evidence. The court cited five “nonexhaustive factors” for assessing timeliness. Those included the relationship between the time of filing and the close of discovery, “whether the spoliation motion was made on the eve of trial,” and any local rules.

Here, neither party conferred about spoliation during discovery. Both waited until long after the close of discovery to advise the court about the spoliation. Nor, the court noted, did either “bring a proper motion to compel” before moving for sanctions.

This “lack of diligence runs contrary to the Local Rules” of court. Those rules require the parties to meet in good faith regarding discovery issues. Instead, “Mountaineer actively litigated this matter for two years without ever raising this discovery dispute” to the court. Nor did Mountaineer explain its delay.

The court concluded that the “timing of Mountaineer’s motion…belies its true intention.” It surmised that Mountaineer was “frustrated by a lack of evidence…in the days winding down to trial,” leading to the spoliation claim. Therefore, the court denied Mountaineer’s motion as untimely filed.

The court then continued, finding that even if it had considered the merits, it would deny sanctions. The removal of debris by both parties was a “react[ion] to exigent circumstances,” not an attempt to destroy evidence. The parties were simply “attempting to resolve a problem in the aftermath of a dangerous” explosion. Nor did Mountaineer show that “any bad faith conduct” occurred. Rather, Travelers made “concerted efforts” to preserve evidence and allow testing.

The court also concluded that Travelers’ motion was purely “reactionary” and denied it as untimely filed. The court opined that it would be suspicious of “any spoliation motion raised on the eve of trial” where the facts had been known for years.

Takeaways on Assessing Potential Spoliation Claims

While the court here considered physical evidence, the same logic would apply to electronically stored information (ESI). Telling the court about spoliation of ESI long after the fact is similarly unlikely to result in sanctions. The distinction is that it can be harder to realize what ESI ever existed and thus what’s been destroyed. Work with your IT department to assess the ESI you receive in discovery and attempt to resolve any missing evidence promptly.

Questions about mastering ediscovery? We’re here to help you understand your data so you can make timely, well-informed decisions.

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