A nonparty has the right to destroy evidence to its advantage and will not face any legal consequences for doing so says the Kansas Supreme Court. With the decision, Kansas joins the majority of states [PDF] refusing to recognize intentional spoliation as an independent tort.
Third Party Destroys Evidence Despite Knowledge of Pending Subpoena
In Superior Boiler Works, Inc. v. Kimball [PDF], the court held that product distributor, Ferris Kimball Company (Ferris), had no duty to preserve records. This was despite Ferris’s actual notice of a potential subpoena and the possibility of an indemnification claim.
In 2002, Superior Boiler Works (Superior), a former purchaser of products allegedly containing asbestos, asked Ferris to identify asbestos-containing products that Ferris had supplied to Superior. Ferris provided Superior with a summary of the products and quantities it sold using documents from Ferris’s upstream supplier.
Five years later, Superior informally asked both the former owner and the present owner of Ferris for records relating to the asbestos-containing products that Ferris sold to Superior between 1967 and 1983. Superior advised Ferris that it intended to issue a subpoena as part of an asbestos-related case in which it was a defendant. Ferris’s former owner (who was still in control of some records) then destroyed company records concerning its sales of asbestos-containing products.
After consulting with counsel, Ferris’s present owner ordered the shredding of similar records in the company’s possession. The present owner then personally destroyed critical index cards that identified what asbestos-containing products Ferris sold to Superior. By the time Superior issued the subpoenas, all relevant records were destroyed.
Superior Files Suit for Spoliation
Superior sued Ferris, as well as its former and present owners, seeking recovery for intentional spoliation. The trial court granted summary judgment for the defendants and Superior appealed.
Superior acknowledged that Kansas does not recognize independent “third-party spoliation claims” (i.e., spoliation alleged against a nonparty to the underlying litigation), and that, absent some independent tort, contract, agreement, voluntary assumption of duty, or special relationship of the parties, the tort of the intentional interference with a prospective civil action by spoliation of evidence had not been recognized in Kansas.
In an attempt to fall within the exception, Superior argued that Ferris and Superior had a special relationship and that Ferris had agreed to preserve the documents at issue. Superior also acknowledged that Kansas appellate courts had not yet determined whether they would recognize independent first-party spoliation claims—spoliation committed by a defendant or potential defendant—but argued that Kansas should.
The Kansas Supreme Court affirmed the trial court ruling, holding that Ferris was under no duty to preserve the evidence that Superior informally requested. The appellate court found that being in the same chain of product distribution or participating in an arms-length transaction does not create a special relationship. The court reasoned that to decide otherwise, would create “an intolerable burden of requiring most businesses to preserve all records.” The court further held that Ferris’s voluntary review of its records and creation of a summary did not constitute an implicit agreement or an active undertaking to preserve the records.
Where Did Superior Go Wrong?
Manufacturer defendants involved in products liability litigation nonetheless have options to secure the evidence needed from their suppliers. Superior “should have acted more urgently and not delayed five years, and considered pursuing an agreement with the defendants to pay for the storage of the documents,” says Nathaniel Cade Jr., Milwaukee, WI, cochair of the ABA Section of Litigation’s Products Liability Committee.
Cade recommends that parties consider “utilizing timely presuit discovery tools to obtain records.” Furthermore, the defendants’ approach poses considerable hazards. “It is risky to tell a client it is okay to destroy documents even if the client is not in the underlying case,” Cade cautions. “[This] may have some unforeseen consequences like having to explain your conduct in a different suit initiated by a plaintiff allegedly injured by your product.”
Refusal to Recognize Independent First-Party Spoliation Claims
The court also held that Kansas does not recognize an independent tort of intentional spoliation for claims by a defendant against codefendants or potential codefendants. While acknowledging the minority position, which considers paramount the validity of punishing “a party who has weakened the integrity of the truth-seeking process of litigation,” the court decided against adopting the tort because of the endless litigation and unwarranted intrusion on property rights that the tort could entail.
The appellate court’s “bright-line approach and the majority view taken is correct, particularly in an era where there exist an enormous amount of data and e-discovery requirements,” opines Paul V. Majkowski, Uniondale, NY, cochair of the Toxic Torts Subcommittee of the Section of Litigation’s Mass Torts Committee. He believes that “[t]here might, however, be circumstances where the duty to preserve documents is outweighed by the countervailing equity that the most vital, irreplaceable evidence on a highly material matter be preserved.”
In this case, “the evidence apparently could have been retained by the propounding party or would be available from an existing codefendant. [Thus], this circumstance would not fall within a potential narrow exception that might be crafted,” continues Majkowski.
Notwithstanding the defendants’ victory, “the court’s decision does not necessarily let the company off the hook for destroying the records because Superior could bring a third-party suit in the underlying case and pursue discovery sanctions,” says Lori Blake Leskin, NY, cochair of the Section’s Products Liability Committee. Leskin recommends that counsel “consider drafting a contract provision with vendors obligating them to preserve documents, but that must be weighed against agency considerations that may impose duties relating to litigation hold requests.”