I. BASIC GEORGIA LAW REGARDING SPOLIATION OF EVIDENCE AND POTENTIAL SANCTIONS

Spoliation of evidence, and the sanctions that can result from it, remain a significant potential concern in civil cases of all types. A spoliation sanction can turn a small case into a big one or a no-liability case into a clear-liability case. In addition, it is important to understand that even seemingly innocent conduct can result in spoliation sanctions, particularly under recent Georgia appellate case law; a party’s good faith, while a factor in whether and which sanctions should be imposed, is not dispositive. The only way that any company can truly protect itself against potential spoliation sanctions (against itself or its insured) is to put procedures in place to ensure that after any incident that could conceivably result in litigation, all relevant documents and things are preserved until any claim is resolved or the applicable statute(s) of limitations have expired.

Under Georgia law, “spoliation” refers to “the destruction or failure to preserve evidence that is necessary to contemplated or pending litigation.”  Phillips v. Harmon, 297 Ga. 386, 393 (2015) (emphasis supplied). Thus, absent the existence of contemplated or pending litigation, a request for sanctions pursuant to a spoliation theory must fail. Id. In determining whether to impose sanctions for evidence spoliation, trial courts routinely and necessarily make factual findings about the following relevant factors: “whether spoliation occurred, whether the spoliator acted in bad faith, the importance of the compromised evidence, and so on.” Bouve & Mohr, LLC v. Banks, 274 Ga. App. 758, 762 (1) (2005).

Georgia trial courts are required to weigh the following five factors prior to issuing any sanction for alleged spoliation of evidence:

(1) whether the party seeking sanctions was prejudiced as a result of the destruction of the evidence; (2) whether the prejudice could be cured; (3) the practical importance of the evidence; (4) whether the party who destroyed the evidence acted in good or bad faith; and (5) the potential for abuse if expert testimony about the evidence was not excluded.

Phillips, 297 Ga. at 399, n.12; Bagnell v. Ford Motor Co., 297 Ga. App. 835, 840 (2009); AMLI Residential Props., Inc. v. Georgia Power Co., 293 Ga. App. 358, 361 (2008).

If a trial court finds that a party has engaged in spoliation, it may instruct the jury regarding O.C.G.A. § 24-14-22, which provides:

If a party has evidence in such party’s power and within such party’s reach by which he or she may repel a claim or charge against him or her but omits to produce it or if such party has more certain and satisfactory evidence in his or her power but relies on that which is of a weaker and inferior nature, a presumption arises that the charge or claim against such party is well founded; but this presumption may be rebutted.

A trial court may properly deny a motion for sanctions where it determines that the alleged evidence in question was destroyed innocently, or even negligently, rather than in bad faith. See Bagnell, 297 Ga. App. at 840. Compare Banks, 274 Ga. App. 758 (2005) (affirming sanctions for spoliation of evidence in premises liability case arising from alleged rape, where trial court determined that agent of defendant deliberately and in bad faith destroyed rape kit, plaintiff’s counsel had served defendant with preservation of evidence letter prior to filing suit, and undisputed evidence showed that rape kit was destroyed more than 20 months after suit had been filed against defendant). “Additionally, even if evidence was wrongfully destroyed, the injured party still must show prejudice” as a result of the alleged spoliation. Craig v. Bailey Bros. Realty, Inc., 304 Ga. App. 794, 797 (1) (2010). As a result, if the plaintiff “cannot establish any causal link between the failure of his underlying claims and the alleged misconduct by [the] defendant,” no redress is warranted for the alleged spoliation. Id. (brackets in original). See also Kronisch v. United States, 150 F.3d 112, 126 (2nd Cir. 1998) (holding that only the destruction of evidence “relevant to proof of an issue at trial” constitutes spoliation); Taylor v. Mkt. Transp., Ltd., 2010 U.S. Dist. LEXIS 24939, *13-14 (W.D. Wash. Mar. 12, 2010) (holding that “[a] party who wishes to benefit from an adverse inference [for alleged spoliation] has the obligation to prove not only its entitlement to the inference but to also provide some evidence to the court to support the specific inference” requested by such party (emphasis supplied)).

However, notice of potential liability is “not the same as notice of potential litigation.” Craig v. Bailey Bros. Realty, Inc., 304 Ga. App. 794, 796 (1) (2010) (punctuation omitted), overruled in part, Phillips, 297 Ga. at 398; accord Silman, 286 Ga. at 28. In Craig, in holding that no spoliation of evidence had occurred, the Court of Appeals relied in part on the fact that the alleged spoliation in question had taken place seven months before the plaintiff’s lawsuit was filed, as well as the fact that there was no evidence suggesting that the destruction of the alleged evidence was done in order to deny evidence to the plaintiff. Thus, Craig appears to stand for the proposition that a plaintiff cannot neglect to request the preservation of alleged evidence of unclear import to a particular incident and then seek to use the non-preservation of such “evidence” as a “gotcha” to obtain sanctions against a defendant after suit has been filed.

II. THE SUPREME COURT OF GEORGIA’S HOLDING IN PHILLIPS V. HARMON, 297 GA. 396 (2015)

In the recent case of Phillips v. Harmon, however, the Supreme Court of Georgia held that the duty to preserve evidence arises when litigation is reasonably foreseeable to the party in control of that evidence, even if the party is not on notice of a potential claim. 297 Ga. at 396. In Phillips, the plaintiffs alleged that the defendants acted negligently in monitoring and responding to heart decelerations and periods of bradycardia of an infant while at Henry Medical Center. Sometime after the incident, the defendant hospital destroyed or failed to preserve printed paper strips of the electronic monitoring of the decedent’s fetal heart rate. At the time of the incident, medical records at the facility were maintained electronically, but nurses sometimes took notes on paper fetal monitor strips during labor and delivery and nurses sometimes would refer back to their notes to complete the official record. Evidence in the case was that the facility would maintain the strips for 30 days post-delivery and then routinely destroy them and that the strips at issue were destroyed pursuant to this procedure. The plaintiffs in Phillips sought a jury charge on spoliation, which the trial court denied, and the jury subsequently returned a verdict for the defendants.

The plaintiffs appealed, contending that the trial court had erred in refusing to give the requested charge because the hospital’s actions showed that it was contemplating litigation regarding the delivery in question when the monitoring strips were destroyed. The plaintiffs cited to the facts that hospital launched an internal investigation, as required under the hospital’s policies and procedures, which involved questioning hospital personnel who were involved in the incident, the hospital’s subsequent notification of its insurance carrier regarding the incident, and the hospital’s decision to contact an attorney regarding the incident shortly thereafter. The plaintiffs argued that once the hospital undertook those activities, a duty arose for the hospital to obtain or preserve evidence and to protect the medical record and other potential evidence as needed in anticipation of possible litigation. The plaintiffs also presented evidence that the hospital’s risk management would “sometimes” request that fetal monitor strips be preserved, although no such request was made in this case. The Court of Appeals held that the hospital did not have notice of “pending or contemplated” litigation when the paper fetal monitor strips were destroyed, and consequently, that the trial court did not abuse its discretion in declining to give a jury charge on spoliation as requested by the plaintiffs.

The Supreme Court of Georgia reversed, holding that the Court of Appeals and the trial court had applied an incorrect standard in determining whether litigation was “contemplated or pending” when the monitoring strips were destroyed. The Supreme Court explained that “the duty to preserve relevant evidence must be viewed from the perspective of the party with control of the evidence and is triggered not only when litigation is pending but when it is reasonably foreseeable to that party.” 297 Ga. at 396. The Court held that the injured party’s duty to preserve evidence “arises when that party contemplates litigation, inasmuch as litigation is obviously foreseeable to the plaintiff at that point.”Id. But as to potential defendants, the duty to preserve potential evidence “arises when it knows or reasonably should know that the injured party, the plaintiff, is in fact contemplating litigation, which the cases often refer to in terms of ‘notice’ to the defendant,” which may be either “actual” or “constructive.” Id. Notably, the Court held that a defendant’s own actions may be relevant in determining whether the defendant had “constructive” knowledge of contemplated litigation:

Notice that the plaintiff is contemplating litigation may also be derived from, i.e., litigation may be reasonably foreseeable to the defendant based on, other circumstances, such as the type and extent of the injury; the extent to which fault for the injury is clear; the potential financial exposure if faced with a finding of liability; the relationship and course of conduct between the parties, including past litigation or threatened litigation; and the frequency with which litigation occurs in similar circumstances. Thus, it may be appropriate to consider, in determining whether the defendant actually did or reasonably should have foreseen litigation by the plaintiff, not only what the plaintiff did or did not do after the injury and before the evidence in question was lost or destroyed, but also what the defendant did or did not do in response to the injury, including the initiation and extent of any internal investigation, the reasons for any notification of counsel and insurers, and any expression by the defendant that it was acting in anticipation of litigation. It is undisputed that at the time the strips were destroyed, Henry Medical Center had not received express or actual notice from Plaintiffs that litigation was being planned, pursued, or pending. Again, the duty to preserve relevant evidence arises when litigation is reasonably foreseeable to the party in control of that evidence, and thus while actual notice of litigation from the plaintiffs would clearly make such litigation foreseeable, other circumstances may show that the defendant/alleged tortfeasor actually or reasonably should have anticipated litigation, even without notice of a claim being provided by the injured party/plaintiff. Id. at 396-97.

The Court in Phillips went on to hold that the trial court would have to reconsider its decision whether to charge the jury on spoliation in that case because it had applied an incorrect standard to make that decision. The trial court should have considered such factors as “the type and extent of the injuries (severe injuries to a newborn child after an unexpectedly difficult delivery), the high damages that can flow from such injuries, the frequency of litigation in these circumstances, and the defendant’s internal investigation and notification to its counsel and insurer” in determining whether the defendant contemplated litigation when the alleged evidence was destroyed. Id. at 398. Finally, the Supreme Court specifically disapproved numerous prior Court of Appeals cases which had based the analysis of potential spoliation on whether a party had received notice of a claim or suit and did not consider other relevant factors in making the determination. Id. Essentially, after Phillips, it is clear that as long as a party itself contemplates potential litigation, that party is under a duty to preserve potential evidence regardless of whether it has received notice of a potential claim or suit.

The Supreme Court’s decision in Phillips was not all bad for defendants, however. The Court reiterated that “a rebuttable presumption or adverse inference jury instruction…is to be given as a remedy for spoliation of evidence only in exceptional cases, that the greatest caution must be exercised in its application, and that each case must stand upon its own particular facts.” Id. at 398 (internal brackets and quotations omitted), quoting Cotton States Fertilizer Co. v. Childs, 179 Ga. 23, 31 (1934). The Court also for the first time specifically approved the Court of Appeals’ prior holding that “in considering the giving of such an instruction, the trial court should consider both prejudice to the party seeking the charge and whether the party who destroyed the evidence acted in good or bad faith.” 297 Ga. at 398, citing Johnson v. Riverdale Anesthesia Assocs., 249 Ga. App. 152, 154 (2) (2001).

The good or bad faith of the party is a relevant consideration because one of the rationales for the presumption is that it deters parties from pretrial spoliation of evidence and serves as a penalty, placing the risk of an erroneous judgment on the party that wrongfully created the risk. But, [a] party should only be penalized for destroying the documents if it was wrong to do so.

297 Ga. at 398-99. Importantly, however, although a party’s good or bad faith in destroying evidence is a factor in whether a party may be sanctioned, a party may be sanctioned even absent a showing of bad faith. Id. at 399, citing AMLI Res. Props. v. Ga. Power Co., 293 Ga. App. 358, 363 (1)(a)(iii) (2008) (“Exclusionary sanctions may be appropriate where the spoliator has not acted in bad faith.”).

There have been attempts in the Georgia legislature to modify the rules on spoliation by way of legislation. In addition, during 2016, the Supreme Court proposed a new Uniform Superior Court Rule 6.8 which would have created greater structure and fairness in the area of electronic discovery and related spoliation claims. In October 2016, however, after soliciting comments on the proposed rule, the Supreme Court decided not to enact the proposed Rule 6.8.

III. ADMITTED LIABILITY CASES AND ATTEMPTS TO USE SPOLIATION ARGUMENTS TO SUPPORT A CLAIM FOR PUNITIVE DAMAGES

In some cases, plaintiffs have attempted to show spoliation as a purported basis for punitive damages.  Thus far, Georgia appellate courts have rejected those attempts, holding that spoliation of evidence cannot itself be the basis for an award of punitive damages. In Brito v. Gomez Law Group, LLC, 289 Ga. App. 625 (2008), the plaintiffs sued their former attorney in connection with a lawsuit filed by the plaintiffs against U-Haul Corporation after one of the plaintiffs was injured while using a piece of equipment obtained from a U-Haul dealer. The plaintiffs alleged that they would have had a claim for spoliation of evidence against U-Haul in the underlying lawsuit because U-Haul was unable to produce the piece of equipment involved in the incident. As part of the malpractice claim against their attorneys, the plaintiffs contended that they should or would have been authorized to recover punitive damages from U-Haul in the underlying lawsuit in connection with U-Haul’s loss of the subject piece of equipment.

The trial court and the Court of Appeals in Brito disagreed that punitive damages could have been awarded for U-Haul’s loss of the subject piece of equipment. The Court of Appeals explained that although a “court may instruct the jury to presume that the missing evidence would have been adverse to the party who failed to produce it or to remove from the jury’s consideration issues related to the spoliated evidence…[the plaintiffs] have not cited to any authority to support a court imposing punitive damages as a sanction for spoliation of evidence.”  Brito, 289 Ga. App. at 631 (3)(b) (emphasis supplied). The Court of Appeals held that unlike cases in which a defendant was found to have intentionally fabricated evidence, “mere spoliation” of potential evidence, such as by losing the evidence, could not support a claim for punitive damages. Id. at 631-32.

The Court of Appeals in Brito specifically distinguished its earlier decision in J.B. Hunt Transport, Inc. v. Bentley, 207 Ga. App. 250 (1993). In Bentley, the appellate court “allowed the presumption that a safety regulation logbook destroyed by the defendant trucking company contained evidence that the company was out of compliance with the regulations,” which presumption in turn was held to support an award of punitive damages. In that case, of course, the defendant trucking company was not subjected to punitive damages simply because it had destroyed the defendant driver’s log book; among other things, the evidence in that case showed that the defendant trucking company “was a ‘habitual violator’ of the hours-in-service requirements of the Georgia Public Service Commission for its vehicles” as shown by logbook violations of other drivers. A presumption that the log book would have shown that the driver was over his permissible hours of service was, thus, permissible in that case because that would have shown a pattern or practice by the motor carrier of allowing its drivers to drive while fatigued. Id.

To be clear, in Bentley, the plaintiff was not entitled to a jury instruction about the lost log book simply due to the spoliation; there was other evidence in the case that supported the conclusion that the defendant truck driver in that case was fatigued. Multiple witnesses testified that for some 10 to 20 miles, they “were afraid to pass because the truck was driving very erratically, swinging from left to right, going well off into the emergency lane across the solid white line and then veering back to the left across the center white broken line.” Id. at 251.

Thus, a presumption or other sanction for alleged spoliation of evidence, in the context of a claim for punitive damages, is appropriate only where there is some evidentiary basis for believing that something within the allegedly spoliated item could have supported a claim for punitive damages. As a result, an admission of liability by the defendant should be sufficient in most cases to avoid a spoliation sanction.