Although there is abundant case law in Pennsylvania discussing remedies available to an innocent party when the other party destroys evidence, there is no Pennsylvania decisional law that addresses the discoverability of “litigation hold” notices from an attorney to his or her client, or of any other communication between attorney and client that addresses the obligation to preserve evidence. This article addresses the growing case law emanating from district courts within the Third Circuit that permit limited discovery of such communications. These cases have relied upon the reasoning of the U.S. Court of Appeals for the Third Circuit in Schmid v. Milwaukee Elec. Tool, 13 F.3d 76, 78 (3d Cir.1994), for imposing sanctions when there has been spoliation of evidence by a party. Because Schmid has been broadly adopted by the Pennsylvania Supreme Court as the law of Pennsylvania, it is reasonable to anticipate that Pennsylvania trial courts will follow the federal trial courts and allow discovery of litigation hold notices under appropriate circumstances.

Evidentiary Consequences of Spoliation of Evidence

Spoliation of evidence refers to the destruction or loss of evidence, whether or not intentional, and regardless of the intent to destroy relevant information. The general rule is that a “party which reasonably anticipates litigation has an affirmative duty to preserve relevant evidence,” per Romero v. Allstate Insurance, 271 F.R.D. 96, 110 (E.D. Pa. 2010). “The general rule in Pennsylvania is that ‘if a party fails to call a witness or other evidence within his or her control, the fact finder may be permitted to draw an adverse inference,’” as in Oxford Presbyterian Church v. Weil-McLain, 815 A.2d 1094, 1102 (Pa. Super. Ct. 2003). This rule attempts to compensate those whose legal rights are impaired by the destruction or withholding of evidence by creating an adverse inference against the party responsible for the destruction or withholding. (See Manson v. Se. Pennsylvania Transp. Auth., 767 A.2d 1, 5 (Pa. Commw. Ct. 2001).) “Where evidence which would properly be part of a case is within the control of the party in whose interest it would naturally be to produce it, and, without satisfactory explanation he fails to do so, the jury may draw an inference that it would be unfavorable to him,” the court held in Haas v. Kasnot, 371 Pa. 580, 92 A.2d 171, 173 (Pa. 1952).

The spoliation doctrine recognizes the common-sense observation that a party who has destroyed relevant evidence is likely to have been threatened by said evidence. (See Mount Olivet Tabernacle v. Edwin L. Wiegand Division, Emerson Electric, 2001 PA Super 232, 781 A.2d 1263, 1269 (Pa. Super. 2001).) When spoliation of evidence occurs, the following factors must be considered in determining an appropriate sanction: (1) the degree of fault of the party who altered and/or destroyed the evidence; (2) the degree of prejudice suffered by the opposing party; and (3) the availability of a lesser sanction that will protect the opposing party’s rights and deter future similar conduct. (See Schroeder v. PennDOT, 551 Pa. 243, 710 A.2d 23, 27 (Pa. 1999); Creazzo v. Medtronic, 2006 PA Super 152, 903 A.2d 24, 29 (Pa. Super. 2006).

The fault of the party who altered or destroyed the evidence requires consideration of: (1) the extent of the offending party’s duty or responsibility to preserve the relevant evidence; and (2) the presence or absence of bad faith, per Creazzo. A party’s duty is established where: (a) the offending party knows that litigation is pending or likely; and (b) it is foreseeable that discarding the evidence would be prejudicial to the opposing side.

A spoliation inference is an “evidentiary rationale [that] is nothing more than the common-sense observation that a party who has notice that [evidence] is relevant to litigation and who proceeds to destroy [evidence] is more likely to have been threatened by [that evidence] than is a party in the same position who does not destroy the [evidence],” as the court wrote in Healthcare Advocates v. Harding, Earley, Follmer & Frailey, 497 F. Supp. 2d 627, 639 (E.D. Pa. 2007).

Bad faith is not a necessary prerequisite to impose sanctions for spoliation, as the court held in Mount Olivet Tabernacle. A party suffers some measure of prejudice if it is precluded from conducting its own independent investigation of the evidence. Therefore, there does not need to be actual intent to destroy evidence to receive an adverse inference instruction.

Schmid v. Milwaukee Elec. Tool

The Pennsylvania Supreme Court in Schroeder expressly adopted the spoliation-of-evidence standards set forth by the Third Circuit in Schmid. The court agreed with the Third Circuit that the spoliation doctrine is “broadly applicable” to cases where relevant evidence has been lost or destroyed, regardless of fault. The Superior Court, first in Mount Olivet Tabernacle and then in Creazzo reinforced the applicability of the rationale of Schmid in Pennsylvania.

Schmid in turn cited to the lengthy body of federal evidentiary law stemming from the seminal holding in Zubulake v. UBS Warburg, 229 F.R.D. 422, 422-24 (S.D.N.Y. 2004), that it is “counsel’s obligation to ensure that relevant information is preserved by giving clear instructions to the client to preserve such information and, perhaps more importantly, a client’s obligation to heed to those obligation to ensure that relevant information is preserved by giving clear instructions to the client to preserve such information and, perhaps more importantly, a client’s obligation to heed to those instructions.” The court also explained that counsel must advise their clients to take reasonable steps to preserve records subject to discovery and must take reasonable steps to “make certain that all sources of potentially relevant information are identified and placed on ‘on hold.”’ These instructions have come to be known in the vernacular as “litigation hold” notices, but include any communication between attorney and client regarding the duty of the client to preserve evidence when litigation becomes likely. Are these communications discoverable? Although no Pennsylvania court has addressed the issue, the likely answer is yes, with the caveat that there must be some showing of spoliation that incents the court to inquire into the degree of fault on the guilty party’s part.

Discoverability of Litigation Hold Notices

District courts within the Third Circuit have cited to Schmid when holding that when there is evidence of spoliation there is a de facto waiver of any privilege associated with communications between a client and his or her counsel on the issue of evidence preservation. Within the last six months, the U.S. District Court for the District of Delaware cited to Schmid when it observed in Magnetar Techs. v. Six Flags Theme Park., 2012 U.S. Dist. LEXIS 118930 (D. Del. Aug. 22, 2012), that:

“There has been a growing trend among courts to find the attorney-client privilege is lost when spoliation has occurred. In Major Tours v. Colorel, the court ordered production of defendant’s litigation hold letters after finding the defendant spoliated evidence. Although, in general, litigation hold letters are privileged, courts have adopted the view that when spoliation occurs those letters become discoverable. These cases, although specific to whether litigation hold letters are discoverable, recognize a growing trend of waiver of privilege to require production of documents where spoliation has occurred.

The U.S. District Court for the District of New Jersey has also recently held in Major Tours v. Colorel, 2009 U.S. Dist. LEXIS 68128 (D.N.J. Aug. 4, 2009), that:

“Although, in general, hold letters are privileged, the prevailing view, which the court adopts, is that when spoliation occurs the letters are discoverable. (See Keir v. Unumprovident, No. 02-CV-8781(DLC), 2003 U.S. Dist. LEXIS 14522 (S.D.N.Y. Aug. 22, 2003) (allowing detailed analysis of emails pertaining to defendant’s preservation efforts after finding that electronic records which had been ordered preserved had been erased).) (See also Zubulake v. UBS Warburg (disclosing the details of counsel’s litigation hold communication after discovering that at least one e-mail had never been produced); Cache La Poudre Feeds v. Land O’Lakes, 244 F.R.D. 614, 634 (D. Colo. 2007) (permitting plaintiff to take a Rule 30(b)(6) deposition to explore the procedures defendants’ counsel took “to identify, preserve and produce responsive documents” after finding that defendants expunged the hard drives of several former employees after the present litigation had begun).)”

This reasoning, emanating as it does from a case that the Pennsylvania Supreme Court has adopted as the law of the commonwealth insofar as spoliation of evidence is concerned, strongly suggests that Pennsylvania courts, when faced with the reasonable likelihood of spoliation, regardless of whether or not there is an initial showing of an intent to destroy evidence, will permit discovery of attorney-client communications on the issue of evidence preservation so that they can assess the culpability of the spoliating party and craft the appropriate sanction.

Don Foster is chair of the firm’s business litigation group. He is a seasoned trial lawyer with a proven track record in the courtroom. He is regularly asked to prosecute or defend to verdict cases involving significant financial risk to the client. His trial and dispute resolution experience is varied and includes matters involving title insurance, agent defalcations, intellectual property, health care, franchising, corporate governance and law firm partnership disputes.