“No Harm, No Foul” – Showing of Prejudice Necessary to Obtain Sanctions for Spoliation of Evidence

Sierra J. Spitzer, Esq.
Schwartz Semerdjian Ballard & Cauley LLP
Published:  11.01.2012

In Chin v. Port Authority of New York & New Jersey (2d Cir. 2012) 685 F.3d 135, 140, eleven Asian Americans currently or formerly employed as police officers by a bi-state transportation agency brought action against the agency under Title VII, alleging that they were passed over for promotions because of their race. After a jury trial, the United States District Court for the Southern District of New York determined that the agency violated Title VII by failing to promote seven plaintiffs, and awarded those plaintiffs back pay, compensatory damages, and equitable relief. The agency appealed, and the four plaintiffs who did not prevail at trial cross appealed.

On appeal, the United States Court of Appeals examined, among other things, whether the agency's failure to institute a ‘litigation hold’ regarding certain evidence constituted gross negligence per se and whether the district court abused its discretion by concluding that an adverse inference instruction was inappropriate.  Ultimately, the Court answered in the negative to both of these issues, holding that the failure to maintain documents was negligent, but not grossly negligent, abrogating the decision in Pension Comm. of Univ. of Montreal Pension Plan v. Banc of Am. Secs., LLC, 685 F.Supp.2d 456, 464–65 (S.D.N.Y.2010), and concluding that an adverse inference instruction was not warranted under the circumstances.      

The specific matter at issue involved the Port Authority’s failure to implement a document retention policy which, in turn, resulted in the destruction of at least thirty-two promotion folders used to make promotion decisions between August 1999 and August 2002. The Port Authority did not dispute that, upon receiving notice of the filing of plaintiffs' EEOC charge in February 2001, it had an obligation to preserve the promotion folders yet failed to do so. Based on same, the plaintiffs moved for sanctions, seeking an adverse inference against the Port Authority for spoliation. The district court, however, denied the motion, reasoning that the plaintiffs had ample alternative evidence regarding the relative qualifications of the plaintiffs and that the Port Authority's destruction of the documents was “negligent, but not grossly so.” Port Auth. Police Asian Jade Soc'y of N.Y. & N.J. Inc. v. Port Auth. of N.Y. & N.J. (Port Auth. I), 601 F.Supp.2d 566, 570 (S.D.N.Y.2009).  

Cross-appealing plaintiff Howard Chin argued that the district court erred in denying the plaintiffs' motion requesting an adverse inference instruction due to the Port Authority's admitted destruction of the promotion folders.  “[A] party seeking an adverse inference instruction based on the destruction of evidence must establish (1) that the party having control over the evidence had an obligation to preserve it at the time it was destroyed; (2) that the records were destroyed with a culpable state of mind; and (3) that the destroyed evidence was relevant to the party's claim or defense such that a reasonable trier of fact could find that it would support that claim or defense.” Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 107 (2d Cir.2002).  If these elements are established, a district court may, at its discretion, grant an adverse inference jury instruction insofar as such a sanction would “serve [ ] [the] threefold purpose of (1) deterring parties from destroying evidence; (2) placing the risk of an erroneous evaluation of the content of the destroyed evidence on the party responsible for its destruction; and (3) restoring the party harmed by the loss of evidence helpful to its case to where the party would have been in the absence of spoliation.” Byrnie v. Town of Cromwell, 243 F.3d 93, 107 (2d Cir.2001).

In Pension Comm. of Univ. of Montreal Pension Plan, 685 F.Supp.2d at 464-65, the court held that the failure to institute a “litigation hold” constitutes gross negligence per se.  Relying on same, cross-appellant Howard Chin argued that the Port Authority's failure even to issue a litigation hold regarding the promotion folders at any point between 2001 and 2007 amounted to gross, rather than simple, negligence.  However, the appellate court sided with the district court in rejection of this argument, stating that the “better approach is to consider [the failure to adopt good preservation practices] as one factor” in the determination of whether discovery sanctions should issue. Orbit Comm'ns, Inc. v. Numerex Corp., 271 F.R.D. 429, 441 (S.D.N.Y.2010).  The Court also agreed with the district court that a finding of gross negligence merely permits, rather than requires, a district court to give an adverse inference instruction, and a district court’s discretionary “case-by-case approach to the failure to produce relevant evidence” is appropriate. See, Residential Funding Corp., 306 F.3d at 108-09; Byrnie, 243 F.3d at 108.

Here, the district court concluded that an adverse inference instruction was not appropriate or necessary in light of the limited role of the destroyed folders in the promotion process and the plaintiffs' ample evidence regarding their relative qualifications when compared with the officers who were actually promoted. See Port Auth. I, 601 F.Supp.2d at 570–71.  In making such determination, the court considered the fact that, at trial, Howard Chin was able to establish his service record and honors, and Chief Charles Torres testified that Howard Chin was very smart and a good employee. Accordingly, under these circumstances, the appellate court found that the district court did not abuse its discretion in concluding that an adverse inference instruction was inappropriate.

As the Chin case demonstrates, the courts appear to be trending toward a “no harm, no foul” approach when it comes to issuing sanctions and other penalties related to spoliation.  Thus, even in cases of a negligent or grossly negligent failure to preserve evidence, in order to secure sanctions, there must be a showing of prejudice.