Civil Litigation Essentials – Preserving Evidence (“Spoilation”) in Copyright Cases.
When a dispute is pending (ex. your company just received an Autodesk audit letter) it is prudent, and often required for parties to the dispute to preserve the evidence that is essential to the case. For example, in software audit cases the audit demand letter will often demand that you (1) preserve all evidence, (2) do not buy new software to replace infringing software and (3) do not delete for destroy software (ex. don't go deleting Microsoft office from all your computers and laptops). This blog discusses some of the potential consequences of failing to preserve evidence when litigation is a possibility or is pending, Click here to learn more about our Software Compliance Law practice.
What is “spoliation of evidence?”
Silvestri v. Gen. Motors Corp., 271 F.3d 583, 590-91 (4th Cir. 2001) is a great case that discusses the need to preserve and maintain evidence in a case. Here is some discussion from the court case: 1. “Spoliation refers to the destruction or material alteration of evidence or to the failure to preserve property for another's use as evidence in pending or reasonably foreseeable litigation.” See West v. Goodyear Tire & Rubber Co., 167 F.3d 776, 779 (2d Cir.1999) (citing Black's Law Dictionary 1401 (6th ed.1990)). 2. “The right to impose sanctions for spoliation arises from a court's inherent power to control the judicial process and litigation, but the power is limited to that necessary to redress conduct “which abuses the judicial process.” See Chambers v. NASCO, Inc., 501 U.S. 32, 45–46, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991) (recognizing the inherent power of the courts to fashion appropriate sanctions for conduct that disrupts the judicial process); see also United States v. Shaffer Equip. Co., 11 F.3d 450, 462 (4th Cir.1993) (recognizing “that when a party deceives a court or abuses the process at a level that is utterly inconsistent with the orderly administration of justice or undermines the integrity of the process, the court has the inherent power to dismiss the action”); cf. Fed.R.Civ.P. 37(b)(2) (authorizing sanctions for violations of discovery orders). 3. “The policy underlying this inherent power of the courts is the need to preserve the integrity of the judicial process in order to retain confidence that the process works to uncover the truth. “[B]ecause no one has an exclusive insight into truth, the process depends on the adversarial presentation of evidence, precedent and custom, and argument to reasoned conclusions—all directed with unwavering effort to what, in good faith, is believed to be true on matters material to the disposition.” Shaffer Equipment, 11 F.3d at 457. The courts must protect the integrity of the judicial process because, “[a]s soon as the process falters … the people are then justified in abandoning support for the system.” 4. “Thus, while the spoliation of evidence may give rise to court imposed sanctions deriving from this inherent power, the acts of spoliation do not themselves give rise in civil cases to substantive claims or defenses.” 5. While a district court has broad discretion in choosing an appropriate sanction for spoliation, “the applicable sanction should be molded to serve the prophylactic, punitive, and remedial rationales underlying the spoliation doctrine.” West, 167 F.3d at 779. 6. “A court must find some degree of fault to impose sanctions. We have recognized that when imposing spoliation sanctions, “the trial court has discretion to pursue a wide range of responses both for the purpose of leveling the evidentiary playing field and for the purpose of sanctioning the improper conduct.” Vodusek v. Bayliner Marine Corp., 71 F.3d 148, 156 (4th Cir.1995). But dismissal should be avoided if a lesser sanction will perform the necessary function. West, 167 F.3d at 779. 7. “The duty to preserve material evidence arises not only during litigation but also extends to that period before the litigation when a party reasonably should know that the evidence may be relevant to anticipated litigation. Kronisch v. United States, 150 F.3d 112, 126 (2d Cir.1998). If a party cannot fulfill this duty to preserve because he does not own or control the evidence, he still has an obligation to give the opposing party notice of access to the evidence or of the possible destruction of the evidence if the party anticipates litigation involving that evidence. See Andersen v. Schwartz, 179 Misc.2d 1001, 687 N.Y.S.2d 232, 234–35 (N.Y.Sup.Ct.1999) (holding that in a products liability action arising from a vehicle collision where the vehicle was not owned by the plaintiffs, the plaintiffs nonetheless had an obligation to notify General Motors of the date and time of the initial and only inspection of the vehicle because the plaintiffs were aware that General Motors would be brought in as a defendant).
What sanctions might a Court impose where a party violates the duty to preserve evidence?
In re Napster, Inc. Copyright Litig., 462 F. Supp. 2d 1060, 1066 (N.D. Cal. 2006), a copyright infringement case, the Court discussed the measures a federal court can take when evidence is destroyed. The Court held that Courts may sanction parties responsible for spoliation of evidence in THREE ways:
1. First, a court can instruct the jury that it may draw an inference adverse to the party or witness responsible for destroying the evidence. See Glover v. BIC Corp., 6 F.3d 1318, 1329 (9th Cir.1993); Akiona v. United States, 938 F.2d 158, 161 (9th Cir.1991), cert. denied, 503 U.S. 962, 112 S.Ct. 1567, 118 L.Ed.2d 212 (1992).
2. Second, a court can exclude witness testimony proffered by the party responsible for destroying the evidence and based on the destroyed evidence. See Glover, 6 F.3d at 1329; Unigard, 982 F.2d at 368-69.
3. Finally, a court may dismiss the claim of the party responsible for destroying the evidence. See Allstate Ins. Co. v. Sunbeam Corp., 53 F.3d 804, 806-07 (7th Cir.1995); see also Chambers, 501 U.S. at 45, 111 S.Ct. 2123 (“outright dismissal … is a particularly severe sanction, yet is within the court's discretion”); Alexander v. National Farmers Org., 687 F.2d 1173 (8th Cir.1982), cert. denied, 461 U.S. 937, 103 S.Ct. 2108, 77 L.Ed.2d 313 (1983) (dictum) (dismissal of claims is a severe sanction and may be warranted for “outrageous” destruction of evidence).”
Does the destruction of evidence need to be in “bad faith” to trigger sanctions?
According to the Napster case:
A party's destruction of evidence need not be in “bad faith” to warrant a court's imposition of sanctions. Glover, 6 F.3d at 1329; Unigard, 982 F.2d at 368 n. 2. District courts may impose sanctions against a party that merely had notice that the destroyed evidence was potentially relevant to litigation. See Glover, 6 F.3d at 1329; Akiona, 938 F.2d at 161; cf. Unigard, 982 F.2d at 368 n. 2 ( sanctions may be imposed for “ willfulness or fault by the offending party”). However, a party's motive or degree of fault in destroying evidence is relevant to what sanction, if any, is imposed. Baliotis v. McNeil, 870 F.Supp. 1285, 1291 (M.D.Pa.1994); see also Schmid v. Milwaukee Electric Tool Corp., 13 F.3d 76, 79 (3rd Cir.1994) (courts should choose “ the least onerous sanction corresponding to the willfulness of the destructive act and the prejudice suffered by the victim”).
What to do if you feel evidence is being destroyed in your case.
You should immediately put the other party on notice of the need to preserve evidence. If they are a lawyer or a law firm, they should be aware of their obligations. Contact a litigation attorney immediately to discuss your case. Call us at (877) 276-5084 to discuss your software compliance legal issues. We can help with subpoenas, audit letters, copyright infringement arbitration or litigation, and illegal download cases involving use of torrents.