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Parties to a Dispute Have a Duty to Preserve Evidence Once Litigation is Reasonably Anticipated

Thomas W. Hartmann
The Hartmann Law Firm LLC
tom.hartmann@gmail.com
908 769 6888

Litigation obligations begin well before a law suit is filed, particularly with regard to preserving evidence. Once a party reasonably anticipates litigation, a duty to preserve evidence arises. This is an "affirmative obligation," which comes about "when the party in possession of the evidence knows that litigation by the party seeking evidence is pending or probable and the party in possession of the evidence can foresee the harm or prejudice that would be caused to the party seeking the evidence if the evidence were to be discarded." Kounelis v. Sherrer, 529 F. Supp. 2d 503, 518 (D.N.J. 2008); MOSAID Techs., Inc. v. Samsung Elecs. Co. 348 F. Supp. 2d 332 (D.N.J. 2004).

A potential litigant "is under a duty to preserve what it knows, or reasonably should know, will likely be requested in reasonably foreseeable litigation." Scott v. IBM Corp., 196 F.R.D. 233, 249 (D.N.J. 2000). Once a duty to preserve arises, the producing party must take reasonable steps to hold onto evidence. This is particularly important as to electronically stored information, which can be lost with the push of a button. Depending on the size of the companies or parties involved, the forms of direction and preservation can be complex or simple, oral or written. A common method of direction is a litigation hold letter directed to all people or entities that could possibly have information about the case. The litigation hold letter directs parties to preserve all evidence in every form that might be related to the controversy, even if litigation has not formally begun.

Sanctions for Failure to Preserve

When a party fails to preserve or allows the "spoliation" (loss, damage or destruction) of evidence, sanctions may include dismissal or suppression of evidence, as well as the award of attorney fees and costs associated with spoliation and a "spoliation" instruction to the jury, which permits the jury to infer that the spoliated evidence "might or would have been unfavorable to the position of the offending party."

The Third Circuit conducts a balancing test to determine the degree of fault and prejudice. MOSAID Techs., Inc. v. Samsung Elecs., 348 F. Supp. 2d at 335. The MOSAID court set forth four factors that must be satisfied for a spoliation inference MOSAID Techs., Inc. v. Samsung Elecs., 348 F. Supp. 2d at 336):

  1. The evidence in question was within the producing party's control;
  2. There is an appearance of actual suppression or withholding of the evidence;
  3. The destroyed or withheld evidence was relevant to the claims or defenses; and
  4. It was reasonably foreseeable that the evidence would later be discoverable.

Because cases rise or fall on the evidence, not just the allegations in a law suit, courts view the care, protection and preservation of evidence as a serious obligation of litigants. Thus, it is wise to consult counsel early in the process of any controversy to avoid the risk that critical evidence is lost.

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