On July 3, the Supreme Court of Texas issued a significant opinion in Brookshire Brothers, Ltd. v. Jerry Aldridge, No. 10-0846 (Tex. 2014), that clarifies the standards governing the spoliation of evidence in Texas as well as the parameters of a trial court’s discretion to impose a remedy upon a finding of spoliation. The 6-3 decision includes a number of notable holdings, including that the “harsh remedy” of a spoliation instruction is not warranted in cases involving unintentional spoliation except in the “rare circumstance” where “the act of spoliation, although merely negligent, so prejudices the nonspoliating party that it is irreparably deprived of having any meaningful ability to present a claim or defense.”
The highly anticipated decision comes in a premises liability case stemming from a slip-and-fall incident in a grocery store. On September 2, 2004, the plaintiff slipped on grease on the floor. He did not initially report the event to the store, but reported his injuries a few days later on September 7. The store subsequently decided to retain and copy approximately eight minutes of video from shortly before the plaintiff entered on September 2 until shortly after his fall. At the time, the surveillance cameras recorded video in a continuous loop that recorded over prior events after approximately 30 days. After learning of the existence of the video, the plaintiff asked the store’s claims department for a copy on September 13. The store refused to provide the requested tape. In August 2005, the plaintiff’s attorney sent the store a letter requesting approximately two-and-a-half hours of footage from the store’s cameras. The store was unable to comply because the requested footage had been recorded over almost a year earlier.
The plaintiff sued the store and eventually moved for a spoliation jury instruction, arguing that the store’s failure to preserve additional video footage amounted to spoliation of evidence relevant to the key issue of whether the spill was on the floor long enough to give the store a reasonable opportunity to discover it. The trial court submitted a permissive spoliation instruction to the jury (which allowed, but did not require, the jury to assume the lost evidence was negative to the defendant). The jury ultimately determined that the store’s negligence proximately caused the plaintiff’s fall and awarded more than $1 million in damages. The court of appeals affirmed the trial court’s judgment on the verdict and held that the court did not abuse its discretion in admitting evidence of spoliation or giving the spoliation instruction. The Supreme Court of Texas granted a review of the store’s petition “in order to bring much-needed clarity to our state’s spoliation jurisprudence.”
Spoliation Findings Require the Trial Judge to Perform a Two-Step Judicial Process, Outside the Presence of the Jury
The July 3 opinion “enunciate[s] with greater clarity the standards governing whether an act of spoliation has occurred and the parameters of a trial court’s discretion to impose a remedy upon a finding of spoliation, including submission of a spoliation instruction to the jury.” First, the Court held that “a spoliation analysis involves a two-step judicial process: (1) the trial court must determine, as a question of law, whether a party spoliated evidence, and (2) if spoliation occurred, the court must assess an appropriate remedy.” The first question itself has two elements: “To conclude that a party spoliated evidence, the court must find that (1) the spoliating party had a duty to reasonably preserve evidence, and (2) the party intentionally or negligently breached that duty by failing to do so.”
Notably, the Court explained that “[s]poliation findings—and their related sanctions—are to be determined by the trial judge, outside the presence of the jury, in order to avoid unfairly prejudicing the jury by presentation of evidence that is unrelated to the facts underlying the lawsuit. Accordingly, evidence bearing directly upon whether a party has spoliated evidence is not to be presented to the jury except insofar as it relates to the substance of the lawsuit.”
The Party Seeking a Remedy for Spoliation Must Demonstrate That the Other Party Breached Its Duty to Preserve Material and Relevant Evidence
In addressing the issue of duty to preserve, the Court noted that it had previously held that a party alleging spoliation has the burden of establishing that the nonproducing party had a duty to preserve. Wal-mart Stores, Inc. v. Johnson, 106 S.W.3d 718, 722 (Tex. 2003). In Texas, such a duty arises when a party knows or reasonably should know that there is a substantial chance of litigation and that evidence in its possession or control will be material and relevant. Id. Further, the Court explained that it had previously defined a “substantial chance of litigation” as more than a mere “abstract possibility or unwarranted fear.” National Tank Co. v. Brotherton, 851 S.W.2d 193, 204 (Tex. 1993).
In its July 3 opinion, the Court went on to explicitly recognize what it had previously implicitly recognized – that “the party seeking a remedy for spoliation must demonstrate that the other party breached its duty to preserve material and relevant evidence.”
Trial Courts Have Broad Discretion to Remedy Spoliation, but Spoliation Instructions Are Only Appropriate for Negligent Spoliation in Rare Circumstances
The Court also held that where a trial court finds spoliation under the two-step process described above, it may impose an appropriate remedy, including those enumerated in Rule 215.2 of the Texas Rules of Civil Procedure. However, “the remedy crafted by the trial court must be proportionate when weighing the culpability of the spoliating party and the prejudice to the nonspoliating party” due to “the remedial purpose undergirding the imposition of a spoliation remedy under Texas law, which is to restore the parties to a rough approximation of their positions if all evidence were available.”
Significantly, the Court held that “with a narrow exception...a party must intentionally spoliate evidence in order for a spoliation instruction to constitute an appropriate remedy.” The Court went on to explain that the narrow exception where a spoliation instruction would be appropriate for negligent spoliation is in the case a nonspoliating party is “irreparably deprived of having any meaningful ability to present a claim or defense.” Accordingly, the “harsh remedy” of a spoliation instruction is unlikely to be warranted in the majority of cases involving negligent spoliation.
The Opinion Does Not Address Appropriate Retention Periods
In a footnote, the Court explained that the opinion “in no way suggest[s] that parties may immunize themselves from the consequences of evidence spoliation by hiding behind unreasonable limited-duration retention policies,” noting that the reasonableness of the store’s retention policy was not challenged. The Court also explained that “[b]ecause of the prevalence of discoverable electronic data and the uncertainties associated with preserving that data, sanctions concerning the spoliation of electronic information have reached an all-time high.” Accordingly, the issue of what constitutes a reasonable retention period remains open and continues to be a challenge for corporations struggling to balance preservation requirements with business needs in light of the enormous volume of data generated and stored in the normal course of modern business.
Interestingly, the dissent took up this very issue for analysis and asserted that “[t]hese limited-duration retention polices are designed not only to minimize the cost of discovery but also to assure the destruction of potentially unfavorable evidence.” The dissent further stated that “[t]he proliferation of electronically stored information and the resulting increasing reliance on retention policies make the concept of ‘willful blindness’ all the more acute.” It therefore appears that data retention policies may play a greater role in spoliation arguments going forward.
In its long anticipated opinion, the Court has clarified the analysis to determine (1) whether spoliation has occurred and (2) what remedies are available to a trial court that finds spoliation has occurred, as summarized below:
1. The trial court must determine, as a question of law and outside the presence of the jury, whether a party spoliated evidence, by analyzing:
a. Whether the party had a duty to reasonably preserve evidence; and
b. Whether the party intentionally or negligently breached that duty by failing to do so.
2. If spoliation has occurred, the court must assess an appropriate remedy related proportionally to the culpability of the spoliator and the prejudice to the nonspoliator:
a. In cases of intentional spoliation, where a less severe remedy would be insufficient to reduce the prejudice caused by the spoliation, the remedy of a spoliation instruction is warranted; and
b. In cases of negligent failure to preserve evidence, a spoliation instruction is warranted only in the rare situation in which a nonspoliating party has been irreparably deprived of any meaningful ability to present a claim or defense.