In the information age, businesses are inundated with evidence that could be relevant in pending or future litigation. Electronic documents—e-mails, instant messages, text messages, electronic calendars, videotapes—as well as traditional paper documents are all sources of evidence in litigation. The storage, organization, and indexing of all of this information is costly for many businesses. As a result, businesses often enact document retention policies to preserve information for an established period of time, at the end of which the documents are destroyed.
But what if a business (or any person) destroys or loses evidence relevant to a case after receiving notice of a potential claim? What consequences will a party to litigation suffer as a result of lost or destroyed evidence? The Nevada Supreme Court considered this precise issue in Bass-Davis v. Davis, 122 Nev. 442, 134 P.3d 103 (2006), and the consequences can be severe.
In Bass-Davis, the plaintiff suffered injuries after slipping and falling on a wet floor in a convenience store. She claimed the convenience store failed to warn her of the wet floor by posting signs in the store. The convenience store claimed it had posted a sign at the front door in accordance with company policy. Within one week after the accident, the plaintiff’s sister requested a copy of the convenience store’s surveillance videotape. While the videotape did not necessarily show the location of the slip and fall, it would have shown whether the convenience store had posted wet floor warning signs at the front door. However, the convenience store’s insurer lost the videotape.
In addition to discussing the imposition of sanctions, which are always available to a court for improper conduct of a litigant, the Court discussed two sources of Nevada law for handling spoliation of evidence issues at trial: statutory and common law. Under the common law, a jury can infer that missing evidence would be adverse to the party who negligently lost or destroyed the evidence. Under Nevada statutory law, there is a rebuttable presumption: “That evidence willfully suppressed would be adverse if produced.” NRS 47.250(3).
The more common situation is the case in which a party loses or destroys evidence as a result of negligence. In this scenario, the court can issue an adverse inference jury instruction. In other words, a jury can infer that the evidence that was lost would have been unfavorable to the party who lost the evidence. The inference is permissible, not mandatory. To receive an adverse inference, the party claiming that evidence was lost must first demonstrate that the opposing party had a duty to preserve the evidence. This duty can arise from ethics rules, statutes, regulations, or the common law. For example, a business in a regulated industry that is required by law to keep documents has a duty to preserve that evidence. However, the more common situation is the prelitigation duty to preserve. All persons have a prelitigation duty to preserve evidence once it is on notice of a potential legal claim. A party is on notice once litigation is “reasonably foreseeable,” which will depend upon the facts of a given case. For example, in Bass-Davis, the Court noted that litigation was reasonably foreseeable on the date of an accident in which a patron suffered a broken hip and left the defendant’s establishment in an ambulance. Even though the plaintiff may not file suit for up to two years, the defendant has an obligation to preserve all evidence relevant to the accident.
If a party willfully destroys evidence with intent to harm the opposing party, then instead of an adverse inference, the court will impose a rebuttable presumption. In this situation, the jury must presume that the evidence is adverse to the party who willfully destroyed the evidence unless the party can demonstrate by a preponderance of the evidence that the evidence “was not unfavorable.”
While the amount of information which businesses must retain can be overwhelming, to avoid costly sanctions, an adverse inference, or a rebuttable presumption, businesses must educate their employees and institute policies so that once the potential of litigation is foreseeable, the business immediately takes action to preserve all potentially relevant evidence.