Spoliation

You own a business and have a document retention policy pursuant to which documents are deleted periodically. Somewhere in the wind that always surrounds your business is the prattle of discontent – some company is unhappy with yours. Will the company sue, or is it more likely just shaking its fist in some ongoing or anticipated negotiation? Is a lawsuit probable, possible, or unlikely? These are critical questions. If it is “probable” your company will be sued, your company has an obligation to slam the brakes on its document retention policy – eliminate nothing. If it is merely “possible” then according to a single justice of the Massachusetts Appeals Court, you’d better slam on the brakes then too.

This issue was recently played out in a case involving a failed real estate development in the Back Bay. The plaintiff alleged that its erstwhile partner destroyed text messages that may have been relevant to their dispute, and asked the court to instruct the jurors that they can infer the defendant did so to hide evidence. In the trial court’s words, “consistent with their general practice of deleting emails and text messages after reading them Defendants routinely eliminated texts and continued to do so until it was apparent that litigation was probable.” The trial court rejected the argument that defendants had spoliated documents after determining that the defendants would not “reasonably have expected to be sued” when the texts were deleted. According to the trial court, the duty to preserve evidence does not arise until a party knows that it is “likely be involved” in litigation. Fletcher v. Dorchester Mut. Ins. Co., 437 Mass. 544, 549 (2002). That means, the trial court held, the duty to preserve information does not arise until “[t]he potential litigation [is] probable … and not merely possible.”

The appellate judge disagreed and ruled, at least implicitly, that a mere possibility of litigation was sufficient to trigger the obligation to preserve documents and other discoverable information. It remanded the matter for the trial court to “determine if the defendants knew or reasonably should have known that evidence might have been relevant to a possible action.” (Emphasis added).

The decision on remand notes that “[i]n its prior decision, the Court had understood ‘might be relevant to a possible action’ standard and the ‘will likely be involved’ in litigation to which the evidence may be relevant as meaning the same thing.” However, if “likely” is replaced by “possible,” the trial court concluded, then the plaintiffs should be permitted to argue that defendants spoliated evidence even though they did nothing more insidious than follow their established practice. Plainly troubled, the trial court concluded that “[a] future lawsuit is ‘possible’ if it is ‘within the limits, of ability, capacity, or realization.’” In contrast, said the court, litigation is “likely” only if it has “a high probability of occurring.” “Possible” litigation, at least according to the single justice, triggers the retention obligation. Because everything is possible, the trial court reluctantly concluded, then any documents that may possibly be relevant to a possible suit must be preserved.

Every single day, companies following their document retention policies discard documents (emails often) that are no longer relevant to running their businesses. Undoubtedly, some of those documents are relevant to a dispute that may or may not result in litigation. If one logically extends the single justice’s “possibility” standard, then in all those business disagreements because litigation is “possible” the company runs the risk of a spoliation instruction if it deletes documents.

This will be a very complicated standard to litigate and enforce, and I imagine very complicated for a jury to disentangle. I’m reminded of Mark Twain’s quip that “I am an old man and have known a great many troubles, but most of them never happened.” If Twain had an obligation to preserve documents on the “many troubles” that never happened – even the remote ones – he’d have been fine. Companies that employ thousands of employees and generate millions of email and text messages, not so much. If “possible” litigation triggers the preservation obligation, then it is unclear to me how any company is safe discarding business information if there is even a waft of a threat.

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