Spoliation of Evidence: What Are Ethics Issues?

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By Barbara S. Gillers
[Originally published in NYPRR November 1999]


What do you tell a client who wants to destroy documents or other real evidence? What if preserving the evidence could harm the client in the event of a lawsuit but no lawsuit is pending? Before giving any advice, you should consider the ethics rules and the law on spoliation, including two important decisions by the Second Circuit this year.

Obligations to Courts & Judicial System

Obstruction of justice statutes may apply even when no proceeding has begun and no subpoena has been served. New York Penal Law §215.40 makes it a Class E felony to conceal or alter “physical evidence” that is “about to be produced or used in an official proceeding or a prospective official proceeding.” Physical evidence includes any document “which is or is about to be produced or used as evidence in an ‘official proceeding.” [O]fficial proceeding’ includes any judicial or administrative proceeding in which evidence may be properly received.” [New York Penal Law §215.35.] Even destroying documents relevant to a future proceeding that may “readily be contemplated” violates Penal Law §215.40. [People v. Nicholas, 417 N.Y.S.2d 495 (1st Dept 1979).]

Federal obstruction of justice statutes also apply even in the absence of a formal proceeding or a subpoena. [See, e.g., United States v. Solow, 138 F.Supp. 812 (S.D.N.Y. 1956) (Weinfeld, J.), destroying documents to prevent their production before a grand jury is obstruction of justice even though no subpoena has been served.] Consequently, even when no subpoena has been served and no proceeding has been formally commenced, obstruction of justice statutes may require that you advise the client to retain the documents.

Effect of Disciplinary Rules & Ethics Opinions

Disciplinary rules and ethics opinions also limit the advice a lawyer may give on document destruction when no proceeding has begun and no subpoena served. ABA Model Rule 3.4(a) prohibits unlawful obstruction of another party’s access to evidence or unlawfully destroying or concealing documents that have “potential evidentiary value.” This rule “requires a lawyer to consider the course of lawsuits that have not yet been, and may never be, filed.” [Hazard & Hodes, The Law of Lawyering (2d Ed.) §3.4:201.]

As adopted in the District of Columbia, Rule 3.4 is even more explicit. It prohibits obstructing another party’s access to, or destroying, evidence “if the lawyer reasonably should know that the evidence is or may be the subject of discovery or subpoena in any pending or imminent proceeding.” [D.C. Rule 3.4(a).] This rule applies even when the criminal obstruction rules and civil discovery rules do not. [See, D.C. Rule 3.4(a), Comment 4, “the provisions [of 3.4(a)] may overlap with criminal obstruction provisions and civil discovery rules, but they apply whether or not the prohibited conduct violates criminal provisions or court rules. Alteration of evidence by a lawyer, whether or not such conduct violates criminal law or court rules, constitutes a violation of D.C. Rule 3.4(a).”] [See also, Legal Ethics Committee of the D.C. Bar, Op. 119 (1983), a lawyer may not destroy a memo that may be the subject of discovery in pending or imminent litigation.]

Other states have rules that apply before any proceeding is pending as well. For example, Florida Rule 3.4(a) applies to evidence that a lawyer “knows or reasonably should know is relevant to a … reasonably foreseeable proceeding.” Texas Rule 3.04(b) states that a lawyer may not “in anticipation of a dispute unlawfully alter, destroy or conceal a document or other material that a competent lawyer would believe has potential or actual evidentiary value; or counsel or assist another person to do any such act.”

Rules in New York

New York has not adopted the ABA Model Rules, but the New York disciplinary rules have analogous provisions. DR 7-102(A)(3) prohibits knowingly failing to disclose that which a lawyer is required by law to reveal. Disclosure obligations of the Federal Rules of Civil Procedure are obligations “required by law.” [See, Assn. of the Bar of the City of New York Committee on Professional and Judicial Ethics, Formal Op. No. 1990-2.]

New York DR 7-102(A)(7) prohibits counseling or assisting a client in conduct that the lawyer knows to be illegal or fraudulent. New York DR 7-109(A) prohibits suppressing any evidence that the lawyer or the client has a legal obligation to reveal or produce. A violation of New York Penal Law §215.40 or the civil discovery rules could trigger all of these provisions.

Whether the Model Rules or the New York Code applies can be a tricky question. Under the amendments to the New York Code adopted by the four Appellate Divisions as of July 1, 1999, DR 1-105 says, “for conduct in connection with a proceeding in a court before which a lawyer has been admitted to practice (either generally or for purposes of that proceeding), the rules to be applied shall be the rules of the jurisdiction in which the court sits, unless the rules of the court provide otherwise.” Consequently, when a New York lawyer is in an out-of-state court, that courts rules may apply.

Obligations to Client

The lawyer has an ethical obligation to explain what spoliation is and what the consequences may be. ABA Model Rule 2.1(a) directs that a lawyer shall consult with the client about the means to pursue the client’s objectives. The Restatement of the Law Governing Lawyers (Third) states that a lawyer must explain decisions that need to be made. [See, Restatement of the Law Governing Lawyers (Third) Proposed Final Draft No. 1 (3/29/1996) §31(3).] This is especially true where an attorney has reason to believe that there could be some adverse consequences from the destruction, such as an instruction permitting a negative inference, dismissal, or other sanction, or a separate plenary action for spoliation of evidence. In these circumstances, the lawyer is obligated to discuss the consequences of the destruction of evidence with the client.

What Is Spoliation

Spoliation is “the destruction or significant alteration of evidence, or the failure to preserve property for another’s use as evidence in pending or reasonably foreseeable litigation.” [West v. Goodyear Tire & Rubber Company, 167 F.3d 776 (2d Cir. 1999).]

Spoliation can result in a variety of sanctions, including an adverse presumption, the exclusion of certain evidence, or dismissal. [See, e.g., Kronisch v. United States, 150 F.3d 112 (2d Cir. 1998), intentional destruction of evidence may result in an adverse inference; Ferraro v. Koncal Association, 467 N.Y.S.2d 284 (2d Dept. 1983), preclusion for destruction of evidence.] In some states, an injured party may bring a separate plenary action for spoliation of evidence. [See, e.g., Johnson v United Services Automobile Association, 67 Cal.App.4th 626 (Cal. App.1998), recognizing a cause of action for negligent spoliation of evidence by persons who are not parties to the primary action; Federated Mut. Ins. Co. v. Litchfield Precision Components, Inc., 456 N.W.2d 434 (Minn. 1990), recognizing a cause of action for negligent spoliation; Hazen v. Municipality of Anchorage, 718 P.2d 456 (Alaska 1986), recognizing the tort of “intentional spoliation of evidence”; Bondu v. Gurvich, 473 So.2d 1307 (Fla. Ct. App. 1984), recognizing a cause of action for negligent spoliation of evidence.]

[See also, Temple Community Hospital v. Superior Court of Los Angeles County, 976 P.2d 223, 228 (Cal. Sup. Ct. 1999), rejecting a third-party cause of action for intentional spoliation of evidence but leaving open whether a “tort cause of action will lie for negligent spoliation of evidence”; Cedars-Sinai Medical Center v. Superior Court of Los Angeles County, 954 P.2d 511, 521 (Cal. Sup. Ct. 1998), rejecting the tort of intentional spoliation when the alleged spoliation is committed by a party to the underlying litigation and the spoliation has or reasonably should have been discovered before the conclusion of the litigation; other remedies, e.g., adverse inferences, provide a “substantial deterrent” to spoliation and “substantial protection” to the victim.]

Important Cases on Spoliation in Second Circuit

The Second Circuit decided two important cases on spoliation this year (1999). They are: Reilly v. NatWest Markets Group, Inc. [181 F.3d 253 (2d Cir. 1999)] and West v. Goodyear Tire & Rubber Company [167 F.3d 776 (2d Cir. 1999)]. Relying on these cases, in September 1999, the U.S. District Court for the Southern District of New York dismissed a race discrimination case on spoliation grounds: Miller v. Time-Warner Communications Inc. [97 Civ. 7286 (S.D.N.Y. 9/1999)]. It’s important that New York lawyers be familiar with these cases.

In West v. Goodyear, the Second Circuit explained the variety of sanctions that may follow from spoliation, and outlined the factors trial courts should use in deciding how to respond.

The facts in West v. Goodyear are simple. In 1991, Ronald West, who owned and operated an auto repair shop, mounted two 16-inch tires on 16.5-inch rims. He mounted one of the tires without incident, but was injured when the other tire exploded while he was inflating it. After recovering from his injuries, West gave his lawyers both the successfully inflated tire and the tattered remains of the other one. One of the lawyers photographed the inflated tire and then deflated it. [167 F.3d at 778.] The lawyer later claimed that he deflated the tire because he was afraid that it would explode and cause more injuries. Before deflating the tire, however, he did not notify Goodyear, the manufacturer of the tire, or the Budd Company, the manufacturer of the rims.

One year later, West sued Goodyear and the Budd Company. After discovery began, the defendants asked to inspect the tire-mounting machine and the air compressor that West had used to inflate the tire that exploded. An inspection was scheduled for June 1993. In May 1993 West sold the tire-changing machine and the air compressor. The defendants were thereafter able to locate the machine and the compressor, but both had deteriorated because they were left outdoors. Budd moved to dismiss the complaint for spoliation of the wheel that had been deflated, the tire-changing machine and the air compressor. Goodyear moved for an order excluding the spoliated evidence, but did not seek dismissal. District Judge Richard Owen nevertheless dismissed the complaint entirely, as a sanction for spoliation of evidence.

Court Issues Guidelines

On appeal, the Second Circuit vacated the dismissal and remanded for consideration of a lesser sanction. In doing so, the Court set forth guidelines for the district courts. Noting that the district courts “have broad discretion in crafting a proper sanction for spoliation,” the Court said, “the applicable sanction should be molded to serve the prophylactic, punitive, and remedial rationales underlying the spoliation doctrine.” [167 F.3d at 779.] The Court continued:

The sanction should be designed to: (1) deter parties from engaging in spoliation; (2) place the risk of an erroneous judgment on the party who wrongfully created the risk; and (3) restore ‘the prejudiced party to the same position he would have been in absent the wrongful destruction of evidence by the opposing party.’ [167 F.3d at 779 (quoting Kronisch, 150 F.3d at 126).]

Finding that dismissal was too harsh, the West Court remanded “for an appropriate sanction, short of dismissal, which will serve the punitive, remedial and prophylactic aims of the spoliation rules.” [167 F.3d at 780.]

Court’s Decision in Reilly

Four months after the West decision, the Second Circuit decided Reilly v. Nat West Markets Group, Inc. [181 F.3d 253 (2d Cir. 1999)]. Signaling the importance of this decision, the Court stated: “The law in this Circuit regarding the level of fault necessary to justify an adverse inference instruction is unsettled … We hold that a finding of bad faith or intentional misconduct is not a sine qua non to sanctioning a spoliator with an adverse inference instruction.” [Id. at 267.] The facts of Reilly are compelling.

In 1997 a jury found that NatWest had improperly fired Michael Reilly. During discovery on damages, Reilly asked for all documents concerning his activities while at NatWest. In response, NatWest produced some 15 boxes of documents. After reviewing the files, Reilly notified NatWest that his personal deal files (the Deal Files) were missing. [181 F.3d at 258.] Reilly claimed the Deal Files were important because they demonstrated his work on transactions for which he had not been compensated. NatWest “refused to produce the Deal Files, insisting it did not have them.” [Id.] During a pre-trial conference Reilly again asked for the Deal Files. NatWest’s counsel insisted that NatWest had produced “every relevant document that is in our possession.” [181 F.3d at 259.]

Seven months later Reilly filed a motion seeking, among other things, “an adverse inference jury instruction based on NatWest’s failure to produce the Deal Files.” [Id.] Three days before the trial was to begin, NatWest “suddenly found the Deal Files.” [Id.] A NatWest investment banker stated in an affidavit that he had discovered the Deal Files — “some seven linear feet of documents — while getting a cup of coffee in a 10 x 12 foot kitchen adjacent to Reilly’s old office.” [181 F3d at 259.]

Court Instructs Jury

The trial judge instructed the jury to draw an adverse inference against NatWest if it concluded “that (1) NatWest had failed to deliver the Deal Files in a timely fashion or that it delivered them incomplete and (2) that such ‘nondelivery’ prejudiced Reilly.” [181 F.3d at 267.] The Second Circuit declined to reverse the trial judge’s ruling, affirming the earlier “case by case” approach discussed in West v. Goodyear and announcing, for the first time, that a court may give an adverse inference instruction for spoliation even in the absence of bad faith or intentional misconduct. [181 F.3d at 267.] Gross negligence in failing to preserve and produce documents could suffice.

Three months later, in Miller v. Time-Warner Communications, Judge John S. Martin, Jr. dismissed an employment discrimination case for spoliation of evidence, even though the defendants were not harmed by the plaintiff’s conduct. Explaining the decision, the Court stated:

[T]he Court has found that plaintiff acted willfully and in bad faith [in altering the documents]. However, defendants were not prejudiced by plaintiff’s action since enough traces of the writing remained to permit defendants to determine the substance of the erased writing. Thus despite the willfulness of plaintiffs conduct, the lesser sanction of requiring the plaintiff to pay all the defendant’s attorney fees incurred as a result of the spoliation might be appropriate. But here plaintiff’s deliberate attempt to destroy evidence was exacerbated by her repeated perjury on that subject. [Slip Op. at 6.]

Balancing the factors set forth in West v. Goodyear, the Court concluded that dismissal was the only appropriate sanction because the plaintiff had deliberately testified falsely — at both her deposition at the hearing before the Court — about the spoliation. [Slip Op. at 6–7.]

So what should you do when a client wants to destroy documents or other evidence? Explain to the client that there can be serious consequences, even when no litigation is pending and no subpoena has been served.

Barbara Gillers is of counsel, Fried, Frank, Harris, Shriver & Jacobson, New York. She is a member of the ABCNY Committee on Professional and Judicial Ethics and has served as Member of the ABCNY Committee on Professional Discipline (1995–98) and NYS Task Force on the Profession (1994-95).

DISCLAIMER: This article provides general coverage of its subject area and is presented to the reader for informational purposes only with the understanding that the laws governing legal ethics and professional responsibility are always changing. The information in this article is not a substitute for legal advice and may not be suitable in a particular situation. Consult your attorney for legal advice. New York Legal Ethics Reporter provides this article with the understanding that neither New York Legal Ethics Reporter LLC, nor Frankfurt Kurnit Klein & Selz, nor Hofstra University, nor their representatives, nor any of the authors are engaged herein in rendering legal advice. New York Legal Ethics Reporter LLC, Frankfurt Kurnit Klein & Selz, Hofstra University, their representatives, and the authors shall not be liable for any damages resulting from any error, inaccuracy, or omission.

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