You’ve just discovered that the artificial hip at issue in a contentious products liability case against your company was fractured during testing. What implications will this have for the case? Because many courts will impose sanctions when key evidence is lost, destroyed, or altered, recent changes to long-standing case law create opportunities and risks for manufacturers in the healthcare industry.

As a general rule, most jurisdictions allow a spoliation inference when a party willfully destroys, alters, loses, conceals, or mutilates relevant evidence.¹ Courts infer from the intentional destruction of the evidence that it would have been harmful to the destroying party’s case. Although rebuttable, the inference acts as a sanction against those who cause evidence spoliation, unless the spoliation occurs in the normal course of activity. Courts frequently remedy the issue by granting a negative-inference jury instruction.

Although the Federal Rules of Civil Procedure do not specifically address the consequences of evidence spoliation, sanctions against parties who abuse the rules of the court are available under Rule 37. Available sanctions include taking facts as established as the non-destroying party claims and prohibiting the destroying party from supporting certain claims or defenses on the issue.² The most severe penalty, dismissal of an action, is becoming more frequent when inadvertent spoliation of evidence is at issue.

Some state courts have amended their rules to address spoliation claims specifically.³ For example, Tennessee allows sanctions, including dismissal of the action or default judgment, against a party who “discards, destroys, mutilates, alters, or conceals evidence.”⁴ Regardless of the jurisdiction, all courts have the inherent power to protect the judicial process by imposing sanctions on those who willfully (and sometimes inadvertently) spoliate evidence.⁵

Recent Changes

Generally, most courts require some variety of willfulness in the act of spoliation.⁶ Others require only notice on the part of the destroyer that he or she is under a duty to protect relevant evidence before dismissal is allowed as a sanction.⁷ In these jurisdictions, situations when evidence is destroyed through inadvertence or routine activity usually will not warrant a dismissal of the action, but the less severe sanctions are still available. Inadvertent spoliation of evidence occurs when a party allows, but does not necessarily willfully cause, evidence to be destroyed, lost, or otherwise altered. Although the law varies by jurisdiction, some state courts are changing how to handle this situation.

Recently, the Tennessee Court of Appeals made such a change. In Cincinnati Insurance Co. v. Mid-South Drillers Supply, Inc., No. M2007-00024-COA-R3-CV, 2008 WL 220287 (Tenn. Ct. App. Jan. 25, 2008), a drilling company’s insurer sued the supplier of an allegedly defective air hose after a malfunction damaged the driller’s equipment. The trial court dismissed all claims against the supplier because the insurer’s investigator inadvertently destroyed the hose.⁸ The appellate court affirmed, recognizing the dismissal sanction for intentional destruction of crucial evidence, and held dismissal as appropriate when any lighter sanction would not sufficiently remedy a defendant’s prejudice resulting from a plaintiff’s destruction of evidence.⁹ Significantly, this holding applies even when the spoliation of evidence occurs inadvertently through no malfeasance of the destroyer.¹⁰

The Tennessee Court of Appeals found the reasoning in Citizens Insurance Co. of America v. Juno Lighting, Inc., 635 N.W.2d 379 (Mich. Ct. App. 2001), persuasive.¹¹ In that case, a fire insurer sued a lighting fixture manufacturer whose product allegedly caused a fire.¹² Finding that the plaintiff spoliated evidence by failing to preserve all of the lighting fixtures during an investigation, the trial court dismissed the action as a sanction because the case could not be tried fairly.¹³ The plaintiff appealed to the Court of Appeals of Michigan, which affirmed, holding that dismissal was not an abuse of discretion because courts need to have full authority to discourage “unscrupulous” behavior.¹⁴ The Cincinnati Insurance court was not the first to discard notice and willfulness as requirements for dismissal. For example, in DeLong v. A-Top Air Conditioning Co., 710 So. 2d 706 (Fla. Dist. Ct. App. 1998), the trial court dismissed the plaintiffs’ personal injury claims based on spoliation of evidence because one plaintiff inadvertently lost or misplaced a piece of relevant and material evidence.¹⁵ The decision was affirmed on appeal.¹⁶ Likewise, in Sponco Mfg., Inc. v. Alcover, 656 So. 2d 629 (Fla. 1995), the court affirmed a default judgment against a manufacturer who discarded an allegedly defective ladder, even though no evidence showed that the manufacturer willfully destroyed the ladder.

Applications for Health Industry

Although most courts still hold to the traditional rules, some, like the Cincinnati Insurance and DeLong courts, are liberating dismissal sanctions for destruction of evidence. What do these changes mean for you? If a defendant-manufacturer spoliates evidence (even accidentally) and the plaintiff’s case is severely prejudiced by the lost evidence, there is a risk of default judgment being entered against that defendant. Conversely, if a plaintiff destroys or alters crucial evidence (even inadvertently) the defense can seek a dismissal sanction if its case is severely prejudiced by the spoliation.

Can a defendant in the healthcare industry always claim “severe prejudice” because of lost evidence? No. Case law generally reflects a common approach to the “severe prejudice” analysis: In most cases, a litigant’s case is prejudiced to the point of warranting a dismissal when that litigant cannot adequately defend the claims against it. Examples include lost opportunities to test the evidence, explore alternative causes, or disprove a claim of proper usage. In cases when the destruction of evidence makes it all but impossible for the defendant to negate the plaintiff’s allegations, courts may order dismissal of the plaintiff’s claim regardless of whether the evidence was lost through willfulness or inadvertence.

This doctrine has direct implications on the health industry. A prominent example is an explanted medical device. Such a situation has many possibilities for spoliation of evidence, beginning from the moment the device is removed. During explantation, the device could be damaged in a way that disallows testing for any alleged manufacturing defect. The device could be discarded and incinerated. Components of the device could be altered during sterilization. If preserved beyond the hospital, the device could be altered or discarded by the plaintiff himself. Or the plaintiff’s investigator could alter or destroy the device during testing. Regardless of how the spoliation occurs, courts following Cincinnati Insurance may dismiss the entire action if the spoliation — whether or not intentional — places severe prejudice on the defendant-manufacturer in trying its case.

In some jurisdictions not following this rule, dismissal is unavailable unless it is shown that the plaintiff or his agent intentionally destroyed the evidence. In jurisdictions requiring notice, it must be shown that the plaintiff or his agent knew how important the device would be to any litigation the plaintiff would bring. If these requirements are met, dismissal of the plaintiff’s case may be warranted. If the requirements are not met, all is not lost; lesser sanctions are still available to provide the burdened defendant with some remedy.

An example case of dismissal as a sanction for non-inadvertent spoliation is Creazzo v. Medtronic, Inc., 903 A.2d 24 (Pa. Super. Ct. 2006). In Creazzo, the plaintiffs sued the manufacturer of an implantable neurological electrical pulse generator on a theory of manufacturing defect.¹⁷ The trial court held that dismissal was appropriate due to the substantial prejudice placed on the defendant-manufacturer after the device was lost by the hospital staff following explantation surgery.¹⁸ The appellate court affirmed, finding no abuse of discretion in awarding dismissal as a sanction for spoliation of evidence.¹⁹

Creazzo shows dismissal as an appropriate sanction for spoliation of evidence in a jurisdiction requiring the spoliating party to have notice of the inevitable need to test the evidence. In Creazzo, the plaintiffs actually commenced the litigation ten months prior to explantation surgery.²⁰ The court reasoned that even though the device was lost by the hospital staff and not by one of the litigants, the plaintiffs bore the responsibility for evidence preservation when they “were fully aware of their pending action and the need to preserve the device[;]” thus, dismissal was appropriate.²¹

What should a healthcare industry defendant do to safeguard itself from suffering the same fate? First, act immediately when presented with an opportunity to inspect the product. In some instances, however, inspection of every allegedly defective product is cost-prohibitive. In such cases, manufacturers should respond to an opportunity for inspection by demanding important evidence be preserved for future testing. After the suit is commenced, attorneys may choose to file for protective orders for the evidence. Every precaution should be taken to ensure that essential evidence is preserved. Setting up these demands and protections may help insulate the manufacturer from the possibility that a court will view the defendant as the spoliating party.

Conclusion

When a plaintiff destroys important evidence and the defendant has lost the opportunity to adequately defend the claims made against it, some courts will dismiss the lawsuit as an inadequate sanction. Because of recent changes in the law of some jurisdictions, even inadvertent spoliation may warrant dismissal. By taking the proper precautions, health industry defendants can avoid being burdened by the same situation and may even be able to take advantage of evidence spoliation in the form of a dismissed complaint.

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[1] E.g., Dowdle Butane Gas Co. v. Moore, 831 So. 2d 1124 (Miss. 2002); Bronson v. Umphries, 138 S.W.3d 844 (Tenn. Ct. App. 2003).

[2] Id.

[3] See Tenn. R. Civ. P. 34A.

[4] Id. at 34A.02.

[5] See, e.g., Wyssbrod v. Wittjen, 798 So. 2d 352 (Miss. 2001); Strickland v. Strickland, 618 S.W.2d 496 (Tenn. Ct. App. 1981).

[6] See, e.g., Iverson v. Xpert Tune, Inc., 553 So. 2d 82 (Ala. 1989); Stahl v. Wal-Mart Stores, Inc., 47 F. Supp. 2d 783 (S.D. Miss. 1998).

[7] E.g., State Farm Fire & Cas. Co. v. Broan Mfg. Co., 523 F. Supp. 2d 992 (D. Ariz. 2007).

[8] Cincinnati Ins., 2008 WL 220287, at *3.

[9] Id. at *6.

[10] Id.

[11] Id.

[12] Juno Lighting, 635 N.W.2d at 380.

[13] Id. at 381.

[14] Id. at 383.

[15] DeLong, 710 So. 2d at 707.

[16] Id.

[17] Creazzo, 903 A.2d at 26.

[18] Id. at 29.

[19] Id. at 32.

[20] Id. at 27.

[21] Id. at 29.

Finis