Party’s Attempt to Rely on Its Document Retention Policy Crashes and Burns
PCrews v. Avco Corp., No. 70756-6-I, 2015 WL 1541179 (Wash. Ct. App. Apr. 6, 2015).
In this wrongful death and products liability lawsuit that arose out of a deadly plane accident, the Washington Court of Appeals affirmed “death penalty” sanctions that ended the liability phase of the case.
The plaintiffs, the husband of the pilot and the representative of a passenger’s estate, sued companies involved in the manufacture and care of the plane, alleging that an engine failure caused the crash. They claimed the defendants knew the parts installed in the engine were defective and failed to issue a warning about those defects.
During discovery, engine manufacturer Avco repeatedly objected to nearly all of the plaintiffs’ interrogatories and requests for production. The plaintiffs filed motions to compel, attaching a chain of e-mails from another defendant’s document production indicating that Avco knew of the defects. The court granted the motions, held Avco in contempt, and ordered it to comply with the discovery requests.
Instead of producing documents, Avco claimed it had purged many responsive documents under its document retention policy. In support of this contention, Avco provided an affidavit from its counsel, who explained that “certain categories of documents (such as engineering documents and regulatory correspondence) are kept into perpetuity whereas other categories of documents are not required to be retained on a permanent basis but are retained only for fixed periods of time.”
Ultimately, the plaintiffs filed a motion seeking a default judgment, which the court granted on the first day of trial. Though Avco showed the court its document retention policy, the judge ruled the policy was “overly vague,” because, without more evidence, she could not tell whether it governed the allegedly lost documents. Then, finding Avco’s “continued disregard and violation of the discovery and contempt Orders is without reasonable excuse and is willful” and prejudicial, she deemed all the plaintiffs’ allegations admitted and struck Avco’s defenses. With liability and causation determined, the judge turned the case over to the jury for an assessment of damages. One plaintiff settled, and the jury returned a verdict of more than $17 million in compensatory and punitive damages for the other.
Avco appealed, arguing that the trial court order abused its discretion. The appellate court evaluated the appeal based on three factors—willfulness, prejudice, and the availability of lesser sanctions that would cure the prejudice—and agreed with the remaining plaintiff.
First, Avco’s discovery violations were willful. The company’s document retention policy—presented without clear evidence relating to its scope and operation—could not excuse the nonproduction. As the trial court noted, concluding that the policy covered the evidence “would require a ‘leap of faith.’”
Second, the appellate court agreed with the trial court that Avco’s discovery transgressions hindered the plaintiffs’ ability to depose witnesses and present documents at trial. The length of Avco’s “continued contempt”—more than 16 months—contributed to this finding. Even though the plaintiffs obtained some documents from a co-defendant, the prejudice remained because not all documents were provided.
Third, lesser sanctions would not “adequately punish, deter, or educate.” Other sanctions had not deterred Avco, and limiting Avco’s ability to produce evidence would not remedy the prejudice.
The appellate court also approved the trial court’s award of punitive damages and its decision to strike other defenses. However, the court remanded the case to issue Avco an offset of settlement amounts that the plaintiff received from the other defendants.
To defend the loss of documents under a records retention program, parties must be able to demonstrate that they faithfully adhere to the terms of their policy. Merely having a policy is insufficient.
Moreover, courts have little patience for parties that seek to use the existence of a document retention policy to cloak bad discovery behavior. Here, Avco’s failure to provide supplementary evidence supporting the operation of its policy was telling. Even though the plaintiffs received some important documents from another defendant, the court likely punished Avco as a way of similar misbehavior by sending a message to other litigants.