Are You Prepared to Avoid Spoliation? The Duty to Preserve Begins Sooner Than You Might Think
April 11, 2023
Few terms make litigators shudder like the dreaded spoliation; and for good reason. The consequences of a company’s failure to preserve evidence that might be relevant in prospective litigation can be severe. What many non-litigators (including in-house counsel) may not realize, however, is that decisions made before litigation counsel is engaged can profoundly affect the chances that spoliation will later become a significant issue during litigation. A recent decision in the Business Litigation Session, JFF Cecilia LLC v. Weiner Ventures, LLC, highlights that very risk.
In JFF Cecilia, Weiner Ventures and its principals, Stephen and Adam Weiner, agreed to partner with Suffolk Construction owner, John Fish, to develop a luxury, high-rise tower on Boylston Street over the Massachusetts Turnpike in Boston. Just as construction was set to begin, the Weiners abruptly backed out of the project, which had been over a decade in the making. Four days later, on August 20, 2019, Fish sent the Weiners a formal notice, claiming that they had breached their agreement and stating that he was reserving all rights. While Fish ultimately filed suit, he did not do so until two months later. During the period between Fish’s August 20th notice letter and the commencement of litigation in October, the Weiners not only failed to implement document preservation measures, but they actively deleted emails and text messages, and performed a “factory reset” to wipe data from their cellphones.
After Fish learned through discovery about the defendants’ conduct, he moved for sanctions. Judge Salinger initially denied that motion based on his finding that Fish’s August 20th letter did not put the Weiners on notice that litigation was “likely.” Fish appealed, and a single justice of the Appeals Court determined that the issue was not whether litigation was likely, but whether the August 20th letter put the Weiners on notice that litigation was “possible.” Not surprisingly, when Judge Salinger reconsidered Fish’s motion in light of that standard, he found that the August 20th letter had put the Weiners on notice that litigation was possible, and therefore, triggered their obligation to preserve evidence going forward. Because the Weiners failed to do so, and their spoliation of evidence was prejudicial to Fish, Judge Salinger ruled that:
The appropriate sanction is to permit plaintiffs to offer evidence at trial of the Weiners’ alleged spoliation of emails and text messages, and to order that plaintiffs are entitled to a jury instruction that the jury may, but are not required to, infer from the Weiners’ deletion of emails and texts that the message contents were unfavorable to the defendants.
As JFF Cecilia highlights, failing to take pre-litigation measures to prevent the destruction of evidence can be costly. When rumblings of a dispute first arise, rather than quibble over whether litigation is “possible” versus “likely,” in-house counsel should strongly consider (i) circulating an internal “litigation hold” notice to business colleagues, instructing them to retain all hard-copy and electronic files relevant to the business deal at issue, and (ii) ensuring that routine auto-delete functions related to emails and other electronic files concerning the substantive matter are at least paused. Waiting to take such steps until litigation has formally commenced may be too little too late.
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