Practice Tip: A Non-Party Spoliates Key Evidence

At the outset of a medical device product liability case, the device in question may not be in possession of either party. For example, the device may be with a medical examiner, or it could be maintained by a non-party medical facility or medical provider. If the device is somehow damaged, or, worse, lost altogether, the issue of spoliation of evidence could be raised. Many product liability litigators have experience in dealing with first-party spoliation or assertions of spoliation, either when their own clients are alleged to have spoliated evidence, or when the opposing party purportedly has done so. Traditional remedies for first-party spoliation include expenses (including attorneys' fees), adverse inference charges, and, in the extreme, default judgment. On the other hand, when a non-party spoliates evidence, which is referred to as third-party spoliation, traditional remedies may not necessarily be applicable. And yet, third-party spoliation can have just as large an effect on discovery in the underlying lawsuit.

A Case in Point

Consider the recent Arizona Supreme Court case, Lips v. Scottsdale Healthcare Corp. 229 P.3d 1008 (Ariz. 2010). In Lips, the plaintiff had her hip replaced with a prosthesis. After 17 months, the plaintiff's prosthesis purportedly failed, and parts of it were explanted at the hospital. At the time of her operation, the plaintiff believed her prosthesis was defective, and she requested that her surgeons preserve the prosthesis parts they removed. Her surgeons communicated this request to the hospital. A pathologist at the hospital reviewed the explanted prosthesis and concluded that it appeared to have some alleged defects. Less than a year later, the plaintiff sued the manufacturer of the prosthesis, alleging claims of product liability, negligence, and breach of warranty arising out of the purported failure of the original hip prosthesis. The hospital was not included as a defendant. After the lawsuit was filed, however, the hospital could not find the prosthesis parts. Consequently, the plaintiff filed an amended complaint, alleging negligent and/or intentional spoliation by the third-party hospital. The hospital moved to dismiss for failure to state a claim because Arizona did not recognize a third-party cause of action for spoliation.

The trial court dismissed the complaint against the hospital ' which was upheld by the court of appeals. In its decision, the Arizona Supreme Court affirmed the trial court's decision. The court declined to establish a tort of negligent spoliation against a third party, and did not address the plaintiff's intentional third-party spoliation claim because it found that the hospital's actions were clearly not intentional.

Due to the alleged third-party spoliation, both parties in Lips were left without the device at issue, the potentially key piece of evidence in support of their respective claims and defenses. As the Arizona Supreme Court determined that bringing a third-party cause of action was not a viable remedy, the parties must turn to other potential strategies for handling the spoliation. This article investigates some potential claims a party could bring against a third-party spoliator.

Intentional Spoliation

Including Arizona, the majority of states do not recognize a separate action for third-party spoliation. However, there is a small cadre of states that do recognize causes of action for third-party spoliation, which sound in tort. These third-party spoliation actions can be either intentional or negligent.

Ohio, for example, allows for a cause of action against a third party for the intentional “interference with or destruction of evidence.” Smith v. Howard Johnson Co., 615 N.E.2d 1037, 1038 (Ohio 1993). However, the elements of this tort are not easy to prove. The party pursuing the action must establish: 1) pending or probable litigation involving the third-party plaintiff; 2) knowledge on the part of the third-party defendant that litigation exists or is probable; 3) the willful destruction of evidence by the third-party defendant designed to disrupt the pursuing party's case; 4) the disruption of the pursuing party's case; and 5) damages proximately caused by the third-party defendant's acts. Id. “Willful destruction of evidence” is defined as intentional and wrongful destruction of evidence. Owca v. Fed. Ins. Co., 95 Fed. Appx. 742. 746 (6th Cir. 2004).

Similarly, New Mexico recognizes a third-party tort for intentional spoliation. See Coleman v. Eddy Potash, Inc., 905 P.2d 185 (N.M. 1995) (overruled in part on other grounds by Delgado v. Phelps Dodge Chino, Inc., 34 P.3d 1148 (N.M. 2001)). The elements of New Mexico's third-party intentional spoliation claim are similar to those in Ohio: 1) the existence of a potential lawsuit; 2) the third-party defendant's knowledge of the potential lawsuit; 3) the destruction, mutilation, or significant alteration of potential evidence; 4) intent on part of the third-party defendant to disrupt or defeat the lawsuit; 5) a causal relationship between the act of spoliation and the inability to prove the lawsuit; and 6) damages. Coleman, 905 P.2d at 189.

New Jersey, too, recognizes an intentional third-party spoliation cause of action. In that state, third-party spoliation exists where: 1) the spoliator knows the tort action for spoliation affords damages to the third-party plaintiff; 2) that litigation exists or is probable; 3) the spoliator willfully or negligently destroys evidence with a design to disrupt the third-party plaintiff's case, or where such disruption is foreseeable; 4) the third-party plaintiff's case is in fact disrupted; and 5) the third-party plaintiff suffers damages proximately caused by the spoliator's acts. Hewitt v. Allen Canning Co., 728 A.2d 319, 322 (N.J. App. Div. 1999).

Negligent Spoliation

Unlike the exclusive remedy of intentional third-party spoliation available in Ohio, New Mexico, and New Jersey, third-party spoliation claims in Montana can be intentional or negligent. In order to prove negligent spoliation by a third party in Montana, a litigant must prove: 1) the existence of a potential civil action; 2) a legal or contractual duty to preserve evidence relevant to that action; 3) destruction of that evidence; 4) significant impairment of the ability to prove the potential civil action; 5) a causal connection between the destruction of the evidence and the inability to prove the lawsuit; 6) a significant possibility of success of the potential civil action if the evidence were available; and 7) damages. Oliver v. Stimson Lumber Co., 993 P.2d 11, 19 (Mont. 1999). In Montana, a third party may have a duty to preserve evidence where: 1) the spoliator voluntarily undertakes to preserve the evidence and a person reasonably relies on it to his or her detriment; 2) the spoliator entered into an agreement to preserve the evidence; 3) there has been a specific request to the spoliator to preserve the evidence; or 4) there is a duty to do so based upon a contract, statute, regulation, or some other special circumstance or relationship. Id. Of note, while a request to preserve evidence can be sufficient in Montana to create a duty, in Lips, the Arizona Supreme Court specifically held that a mere request for assistance or help does not create a duty. Lips, 229 P.3d at 1011.

Alabama recognizes a similar, negligence-based tort of spoliation by a third party. In addition to proving a duty, a breach, proximate cause and damage, a litigant must prove the following: 1) that the third-party defendant had actual knowledge of a pending or potential litigation; 2) that a duty was imposed upon the third-party defendant through a voluntary undertaking, an agreement, or a specific request; and 3) that the missing evidence was vital to the third-party plaintiff's pending or potential action. Smith v. Atkinson, 771 So. 2d 429, 432 (Ala. 2000). See also Silhan v. Allstate Ins. Co., 236 F. Supp. 2d 1303, 1309 (N.D. Fla. 2002) (stating similar elements for Florida's tort of negligent spoliation).

Negligence

Another option is to bring a negligence cause of action against the third party, either through a third-party complaint in the pending litigation, or in a separate suit. This strategy may be more useful in situations of spoliation by a non-party employer, insurer, or hospital, or against another non-party where some duty owed to a plaintiff or defendant can be formulated. Bringing a separate suit for negligence could be an appropriate remedy while the lawsuit is pending, as well as after the pending litigation is over.

Illinois, for example, does not recognize a separate tort for negligent spoliation of evidence, but rather provides that litigants may seek recourse for third-party spoliation simply through a negligence claim. As with any other negligence claim, a third-party plaintiff would have to prove the elements of: 1) duty; 2) breach; 3) causation; and 4) damages. SRE Carlsbad, Inc. v. Kerr-McGee Coal Corp., No. 93-3498, 1995 U.S. App. LEXIS 12953, *3-4 (7th Cir. Ill. May 25, 1995). The duty to preserve evidence in product liability litigation arises primarily through agreement or through the voluntary assumption of the duty by affirmative conduct. Id. For example, if the third-party defendant took any steps to preserve the evidence, even initially, but then failed to do so ultimately, a case can certainly be made that he voluntarily assumed the duty to preserve the evidence in question.

Contribution or Indemnification

Yet another option is to bring a claim for contribution or indemnification against the third-party spoliator. Note, however, the majority trend is to reject such claims, just as the majority of states do not recognize separate claims in tort for spoliation. Johnson v. Liberty Mut. Fire Ins. Co., 653 F. Supp. 2d 1133, 1138-1139 (D. Colo. 2009). Typically, if a state recognizes a tort claim for intentional or negligent spoliation of evidence, it tends to permit claims for contribution or indemnification arising out of third-party spoliation. Hirsch v. General Motors Corp., 628 A.2d 1108 (N.J. Super. Ct. 1993). Similarly, if a state does not recognize spoliation as a separate tort, it tends to restrict a party's ability to bring a contribution or indemnification claim against a third party. See Timber Tech Engineered Bldg. Prods. v. Home Ins. Co., 55 P.3d 952 (Nev. 2002) (declining to recognize an independent tort for spoliation and declining to permit claims for contribution and indemnification arising from the alleged spoliation); see also Seaport Park Condominium, Inc. v. Greater New York Mutual Insurance Company, 2007 NY Slip Op 33772U, 14 (N.Y. Sup. Ct. Nov. 19, 2007).

Conclusion

Spoliation by a third party can make establishing a defect or lack of a product defect very difficult. Further, without the key piece of evidence, proving the element of causation or an alternative causation argument can also be extremely difficult. Thus, seeking some type of remedy from the third party may be the best strategy for addressing this serious situation. Litigants, however, must fully weigh all options if there is evidence of third-party spoliation. When considering those options, it is important to be familiar with your jurisdiction's law on third-party spoliation claims. Some courts, for example, may refuse to recognize other potential remedies if a third-party claim is not brought. See, e.g. R.C. Olmstead, Inc. v. CU Interface, LLC, 606 F.3d 262, 274 (6th Cir. Ohio 2010) (holding that district court did not abuse its discretion in declining to impose a sanction on a third party because an intentional spoliation of evidence claim could have been brought against the spoliating party).

The success of bringing a claim of intentional or negligent third-party spoliation, a traditional negligence claim, or a contribution or indemnification claim varies widely in the states that recognize these claims, and is highly fact-dependent. Generally, it appears that courts nationwide, at federal and state levels, may find it difficult to sanction a third party that has no involvement with a litigation, and, thus, find that the third-party has no duty or obligation to preserve the evidence. Courts further appear to find the claimed damages ' damage to the ability to file or defend a lawsuit ' to be speculative and difficult to quantify.

In light of the potentially detrimental effect of third-party spoliation and the uncertainty of success with third-party claims, a product liability attorney should consider taking proactive steps to prevent this type of spoliation. First, try to identify the location of the product at issue at the first sign of a potential litigation. If possible, prior to the lawsuit or early into the lawsuit, consider sending a subpoena or request for production of the product. Also try to establish a chain of custody for the product from the third party, as well as information regarding the condition of the product at that point. In addition, consider requesting the third party's policies, if any, related to retention and preservation of products, like the one at issue. Although a request for retention or preservation of products may not necessarily create a duty for a separate negligence claim against a third party, it still may be an effective means to ensure that the third party preserves the evidence for the life of the lawsuit. Finally, a litigant may attempt to obtain a court order directing preservation, along with remedies for a violation of that order, or come to an agreement with the third party, in order to preserve it securely (and also potentially provide for a way to recover from third party in tort if it later spoliates evidence). Owens v. Am. Refuse Sys., 536 S.E. 2d 782, 784 (Ga. Ct. App. 2000).

While there is no universal solution for dealing with third-party spoliation, product liability attorneys should be prepared to face this issue either proactively or with the proper remedies available in their jurisdiction.

Marcella C. Ducca is an associate in Greenberg Traurig, LLP's Atlanta office. Ms. Ducca focuses her practice on product liability litigation with a particular emphasis on pharmaceutical, medical device, and health care litigation. Christiana C. Jacxsens is a shareholder in the Pharmaceutical and Medical Device Litigation Group of the firm's Atlanta office. She concentrates her practice on complex medical and product liability litigation, with a focus on pharmaceutical and medical device litigation. In addition, she advises pharmaceutical and medical device companies on regulatory and compliance matters.

At the outset of a medical device product liability case, the device in question may not be in possession of either party. For example, the device may be with a medical examiner, or it could be maintained by a non-party medical facility or medical provider. If the device is somehow damaged, or, worse, lost altogether, the issue of spoliation of evidence could be raised. Many product liability litigators have experience in dealing with first-party spoliation or assertions of spoliation, either when their own clients are alleged to have spoliated evidence, or when the opposing party purportedly has done so. Traditional remedies for first-party spoliation include expenses (including attorneys' fees), adverse inference charges, and, in the extreme, default judgment. On the other hand, when a non-party spoliates evidence, which is referred to as third-party spoliation, traditional remedies may not necessarily be applicable. And yet, third-party spoliation can have just as large an effect on discovery in the underlying lawsuit.

A Case in Point

Consider the recent Arizona Supreme Court case, Lips v. Scottsdale Healthcare Corp. 229 P.3d 1008 (Ariz. 2010). In Lips, the plaintiff had her hip replaced with a prosthesis. After 17 months, the plaintiff's prosthesis purportedly failed, and parts of it were explanted at the hospital. At the time of her operation, the plaintiff believed her prosthesis was defective, and she requested that her surgeons preserve the prosthesis parts they removed. Her surgeons communicated this request to the hospital. A pathologist at the hospital reviewed the explanted prosthesis and concluded that it appeared to have some alleged defects. Less than a year later, the plaintiff sued the manufacturer of the prosthesis, alleging claims of product liability, negligence, and breach of warranty arising out of the purported failure of the original hip prosthesis. The hospital was not included as a defendant. After the lawsuit was filed, however, the hospital could not find the prosthesis parts. Consequently, the plaintiff filed an amended complaint, alleging negligent and/or intentional spoliation by the third-party hospital. The hospital moved to dismiss for failure to state a claim because Arizona did not recognize a third-party cause of action for spoliation.

The trial court dismissed the complaint against the hospital ' which was upheld by the court of appeals. In its decision, the Arizona Supreme Court affirmed the trial court's decision. The court declined to establish a tort of negligent spoliation against a third party, and did not address the plaintiff's intentional third-party spoliation claim because it found that the hospital's actions were clearly not intentional.

Due to the alleged third-party spoliation, both parties in Lips were left without the device at issue, the potentially key piece of evidence in support of their respective claims and defenses. As the Arizona Supreme Court determined that bringing a third-party cause of action was not a viable remedy, the parties must turn to other potential strategies for handling the spoliation. This article investigates some potential claims a party could bring against a third-party spoliator.

Intentional Spoliation

Including Arizona, the majority of states do not recognize a separate action for third-party spoliation. However, there is a small cadre of states that do recognize causes of action for third-party spoliation, which sound in tort. These third-party spoliation actions can be either intentional or negligent.

Ohio, for example, allows for a cause of action against a third party for the intentional “interference with or destruction of evidence.” Smith v. Howard Johnson Co ., 615 N.E.2d 1037, 1038 (Ohio 1993). However, the elements of this tort are not easy to prove. The party pursuing the action must establish: 1) pending or probable litigation involving the third-party plaintiff; 2) knowledge on the part of the third-party defendant that litigation exists or is probable; 3) the willful destruction of evidence by the third-party defendant designed to disrupt the pursuing party's case; 4) the disruption of the pursuing party's case; and 5) damages proximately caused by the third-party defendant's acts. Id. “Willful destruction of evidence” is defined as intentional and wrongful destruction of evidence. Owca v. Fed. Ins. Co. , 95 Fed. Appx. 742. 746 (6th Cir. 2004).

Similarly, New Mexico recognizes a third-party tort for intentional spoliation. See Coleman v. Eddy Potash, Inc. , 905 P.2d 185 (N.M. 1995) (overruled in part on other grounds by Delgado v. Phelps Dodge Chino, Inc. , 34 P.3d 1148 (N.M. 2001)). The elements of New Mexico's third-party intentional spoliation claim are similar to those in Ohio: 1) the existence of a potential lawsuit; 2) the third-party defendant's knowledge of the potential lawsuit; 3) the destruction, mutilation, or significant alteration of potential evidence; 4) intent on part of the third-party defendant to disrupt or defeat the lawsuit; 5) a causal relationship between the act of spoliation and the inability to prove the lawsuit; and 6) damages. Coleman, 905 P.2d at 189.

New Jersey, too, recognizes an intentional third-party spoliation cause of action. In that state, third-party spoliation exists where: 1) the spoliator knows the tort action for spoliation affords damages to the third-party plaintiff; 2) that litigation exists or is probable; 3) the spoliator willfully or negligently destroys evidence with a design to disrupt the third-party plaintiff's case, or where such disruption is foreseeable; 4) the third-party plaintiff's case is in fact disrupted; and 5) the third-party plaintiff suffers damages proximately caused by the spoliator's acts. Hewitt v. Allen Canning Co. , 728 A.2d 319, 322 (N.J. App. Div. 1999).

Negligent Spoliation

Unlike the exclusive remedy of intentional third-party spoliation available in Ohio, New Mexico, and New Jersey, third-party spoliation claims in Montana can be intentional or negligent. In order to prove negligent spoliation by a third party in Montana, a litigant must prove: 1) the existence of a potential civil action; 2) a legal or contractual duty to preserve evidence relevant to that action; 3) destruction of that evidence; 4) significant impairment of the ability to prove the potential civil action; 5) a causal connection between the destruction of the evidence and the inability to prove the lawsuit; 6) a significant possibility of success of the potential civil action if the evidence were available; and 7) damages. Oliver v. Stimson Lumber Co. , 993 P.2d 11, 19 (Mont. 1999). In Montana, a third party may have a duty to preserve evidence where: 1) the spoliator voluntarily undertakes to preserve the evidence and a person reasonably relies on it to his or her detriment; 2) the spoliator entered into an agreement to preserve the evidence; 3) there has been a specific request to the spoliator to preserve the evidence; or 4) there is a duty to do so based upon a contract, statute, regulation, or some other special circumstance or relationship. Id. Of note, while a request to preserve evidence can be sufficient in Montana to create a duty, in Lips, the Arizona Supreme Court specifically held that a mere request for assistance or help does not create a duty. Lips, 229 P.3d at 1011.

Alabama recognizes a similar, negligence-based tort of spoliation by a third party. In addition to proving a duty, a breach, proximate cause and damage, a litigant must prove the following: 1) that the third-party defendant had actual knowledge of a pending or potential litigation; 2) that a duty was imposed upon the third-party defendant through a voluntary undertaking, an agreement, or a specific request; and 3) that the missing evidence was vital to the third-party plaintiff's pending or potential action. Smith v. Atkinson , 771 So. 2d 429, 432 (Ala. 2000). See also Silhan v. Allstate Ins. Co. , 236 F. Supp. 2d 1303, 1309 (N.D. Fla. 2002) (stating similar elements for Florida's tort of negligent spoliation).

Negligence

Another option is to bring a negligence cause of action against the third party, either through a third-party complaint in the pending litigation, or in a separate suit. This strategy may be more useful in situations of spoliation by a non-party employer, insurer, or hospital, or against another non-party where some duty owed to a plaintiff or defendant can be formulated. Bringing a separate suit for negligence could be an appropriate remedy while the lawsuit is pending, as well as after the pending litigation is over.

Illinois, for example, does not recognize a separate tort for negligent spoliation of evidence, but rather provides that litigants may seek recourse for third-party spoliation simply through a negligence claim. As with any other negligence claim, a third-party plaintiff would have to prove the elements of: 1) duty; 2) breach; 3) causation; and 4) damages. SRE Carlsbad, Inc. v. Kerr-McGee Coal Corp., No. 93-3498, 1995 U.S. App. LEXIS 12953, *3-4 (7th Cir. Ill. May 25, 1995). The duty to preserve evidence in product liability litigation arises primarily through agreement or through the voluntary assumption of the duty by affirmative conduct. Id. For example, if the third-party defendant took any steps to preserve the evidence, even initially, but then failed to do so ultimately, a case can certainly be made that he voluntarily assumed the duty to preserve the evidence in question.

Contribution or Indemnification

Yet another option is to bring a claim for contribution or indemnification against the third-party spoliator. Note, however, the majority trend is to reject such claims, just as the majority of states do not recognize separate claims in tort for spoliation. Johnson v. Liberty Mut. Fire Ins. Co. , 653 F. Supp. 2d 1133, 1138-1139 (D. Colo. 2009). Typically, if a state recognizes a tort claim for intentional or negligent spoliation of evidence, it tends to permit claims for contribution or indemnification arising out of third-party spoliation. Hirsch v. General Motors Corp. , 628 A.2d 1108 (N.J. Super. Ct. 1993). Similarly, if a state does not recognize spoliation as a separate tort, it tends to restrict a party's ability to bring a contribution or indemnification claim against a third party. See Timber Tech Engineered Bldg. Prods. v. Home Ins. Co. , 55 P.3d 952 (Nev. 2002) (declining to recognize an independent tort for spoliation and declining to permit claims for contribution and indemnification arising from the alleged spoliation); see also Seaport Park Condominium, Inc. v. Greater New York Mutual Insurance Company , 2007 NY Slip Op 33772U, 14 (N.Y. Sup. Ct. Nov. 19, 2007).

Conclusion

Spoliation by a third party can make establishing a defect or lack of a product defect very difficult. Further, without the key piece of evidence, proving the element of causation or an alternative causation argument can also be extremely difficult. Thus, seeking some type of remedy from the third party may be the best strategy for addressing this serious situation. Litigants, however, must fully weigh all options if there is evidence of third-party spoliation. When considering those options, it is important to be familiar with your jurisdiction's law on third-party spoliation claims. Some courts, for example, may refuse to recognize other potential remedies if a third-party claim is not brought. See, e.g. R.C. Olmstead, Inc. v. CU Interface, LLC , 606 F.3d 262, 274 (6th Cir. Ohio 2010) (holding that district court did not abuse its discretion in declining to impose a sanction on a third party because an intentional spoliation of evidence claim could have been brought against the spoliating party).

The success of bringing a claim of intentional or negligent third-party spoliation, a traditional negligence claim, or a contribution or indemnification claim varies widely in the states that recognize these claims, and is highly fact-dependent. Generally, it appears that courts nationwide, at federal and state levels, may find it difficult to sanction a third party that has no involvement with a litigation, and, thus, find that the third-party has no duty or obligation to preserve the evidence. Courts further appear to find the claimed damages ' damage to the ability to file or defend a lawsuit ' to be speculative and difficult to quantify.

In light of the potentially detrimental effect of third-party spoliation and the uncertainty of success with third-party claims, a product liability attorney should consider taking proactive steps to prevent this type of spoliation. First, try to identify the location of the product at issue at the first sign of a potential litigation. If possible, prior to the lawsuit or early into the lawsuit, consider sending a subpoena or request for production of the product. Also try to establish a chain of custody for the product from the third party, as well as information regarding the condition of the product at that point. In addition, consider requesting the third party's policies, if any, related to retention and preservation of products, like the one at issue. Although a request for retention or preservation of products may not necessarily create a duty for a separate negligence claim against a third party, it still may be an effective means to ensure that the third party preserves the evidence for the life of the lawsuit. Finally, a litigant may attempt to obtain a court order directing preservation, along with remedies for a violation of that order, or come to an agreement with the third party, in order to preserve it securely (and also potentially provide for a way to recover from third party in tort if it later spoliates evidence). Owens v. Am. Refuse Sys. , 536 S.E. 2d 782, 784 (Ga. Ct. App. 2000).

While there is no universal solution for dealing with third-party spoliation, product liability attorneys should be prepared to face this issue either proactively or with the proper remedies available in their jurisdiction.

Marcella C. Ducca is an associate in Greenberg Traurig, LLP's Atlanta office. Ms. Ducca focuses her practice on product liability litigation with a particular emphasis on pharmaceutical, medical device, and health care litigation. Christiana C. Jacxsens is a shareholder in the Pharmaceutical and Medical Device Litigation Group of the firm's Atlanta office. She concentrates her practice on complex medical and product liability litigation, with a focus on pharmaceutical and medical device litigation. In addition, she advises pharmaceutical and medical device companies on regulatory and compliance matters.