Eastern District of Pennsylvania Clarifies Standard for Imposing Spoliation Sanctions

Kean Maynard | The Subrogation Strategist

Courts are faced with the difficult task of drawing a line to determine when the failure to preserve evidence becomes culpable enough to permit a judicial remedy. In State Farm Fire & Cas. Co. v. Cohen, No. 19-1947, 2020 U.S. Dist. LEXIS 163681, the United States District Court for the Eastern District of Pennsylvania (District Court) made clear that a party is not entitled to a spoliation sanction without proof that the alleged spoliation was beyond accident or mere negligence. The District Court emphasized that when evidence goes missing or is destroyed, the party seeking a spoliation sanction must show that the alleged spoliation was intentional and that the alleged spoliator acted in “bad faith” before adverse inferences will be provided.

In Cohen, Joshua Cohen (Cohen) rented a residential property to Lugretta Bryant (Bryant). Bryant’s property suffered damages as a result of a kitchen fire. Bryant’s insurer, proceeding as subrogee, hired a fire investigator to determine the cause and origin of the fire. Based on eyewitness testimony and examination of the burn patterns, the fire investigator concluded that the fire started at the General Electric (GE) microwave located in the kitchen. The investigator advised all parties to preserve the microwave so that a joint examination could take place with the property owner and GE present. In the following weeks, the tenant returned to the property to collect belongings and perform some cleaning in anticipation of repairs beginning. Importantly, the tenant claimed the microwave was preserved during these cleaning efforts and remained at the site as instructed. However, in the fall of 2017, one of Cohen’s workers discovered that the microwave was missing and its whereabouts remain unknown.

Bryant’s insurer brought suit against the property owner, Cohen, claiming that his failure to maintain the microwave was the cause of the fire. Cohen filed a motion for summary judgment. To survive the motion for summary judgment, the insurer asked the court to grant an adverse inference in its favor, directing the jury to infer that the microwave showed signs of poor maintenance. The insurer argued that the defendant had control and custody of the evidence and was therefore responsible for its disappearance.

Following the standard established by the United States Circuit Court of Appeals for the Third Circuit (Third Circuit), the District Court noted that, when presented with alleged spoliation, courts must engage in a two-part analysis. First, a court must determine if spoliation occurred. Second, if it did, then the court must decide on an appropriate sanction, if any. As noted by the District Court, the “spoliation analysis” is distinct from the “sanctions analysis” and courts must conduct the spoliation analysis before determining any sanctions.

Pursuant to the Third Circuit’s test regarding the “spoliation analysis,” spoliation is deemed to have occurred if: “(1) the evidence is within the alleged spoliator’s control; (2) there has been actual suppression or withholding of the evidence; (3) the evidence was relevant; and 4) it was reasonably foreseeable that the evidence would be discoverable.” With respect to the second prong of the test, the District Court emphasized that the Third Circuit “requires a showing of intentionality and bad faith.” A defendant’s mere negligence in failing to preserve evidence is not enough.

As noted by the District Court, in its response to Cohen’s motion, the insurer made no argument that Cohen disposed of the microwave intentionally and/or in bad faith. In the absence of any evidence that Cohen intentionally and/or in bad faith facilitated the disposal of the microwave, the court found that the insurer could not establish that spoliation occurred. Accordingly, the court held that it need not engage in a “sanction analysis” and the insurer was not entitled to an adverse inference.

The District Court’s decision in Cohen made clear that, in Pennsylvania, parties seeking an adverse inference in cases of spoliation cannot rely on negligence alone. Thus, when the opposing party seeks a spoliation sanction, subrogation professionals should take an active role in the investigation of the alleged spoliation to confirm the presence or absence of intentional conduct and/or bad faith.

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