Most retailers know not to destroy evidence that is relevant to litigation. Yet preserving the right evidence can be a difficult issue to navigate. And a retailer’s failure to recognize what evidence to keep, or how to properly do it, can lead to spoliation exposure and penalties.
Spoliation and its Potential Penalties
Spoliation is the destruction or failure to preserve evidence necessary to contemplated or pending litigation. For retailers, this can include evidence like incident reports, video surveillance, or electronically stored information (i.e. e-mails, computer files, USB drives). Sometimes spoliation is intentional. But, more often, it occurs by accident. Either way, courts can impose weighty penalties against a retailer for failing to meet its obligation to maintain the right evidence and information once there is notice of a potential claim.
Although spoliation penalties vary by jurisdiction, they generally range from monetary sanctions to an instruction at trial that allows a jury to assume that missing evidence would have been unfavorable to a retailer that lost it. In the most egregious cases, courts will impose “death penalty” sanctions, striking a defendant’s answer and nullifying its defenses, regardless of their merit.
When a Retailer’s Duty to Preserve Evidence Begins and What Evidence Needs to be Preserved
A duty to preserve evidence begins when litigation is pending (e.g. the filing of a complaint), or when litigation is “reasonably foreseeable.”
Recognizing when litigation is reasonably foreseeable can be tricky. It occurs when a party should have known that evidence may be relevant to future litigation. Many times, this occurs well before an opposing party files a claim. Retailers should, therefore, be on the lookout for attorney representation letters, evidence preservation requests, or any other practical indication that litigation may be on the horizon. When in doubt, reach out to legal counsel for help.
Once a duty to preserve arises, retailers must maintain all documents and tangible things relevant, or potentially relevant, to a plaintiff’s claims. This too can be tricky. It requires an examination of the facts and parties specific to each situation. Err on the side of caution. Retain liberally. This should not be left to chance. Again, when in doubt, work with legal counsel to determine the scope of any necessary evidence retention.
How to Limit Spoliation Exposure
A proactive approach to evidence retention plays a major role in limiting spoliation exposure. To do this, retailers should: (1) implement a clear, concise preservation policy; (2) make sure that their employees understand and follow this policy; and (3) continue to regularly train all employees about the retention policy.
Most preservation policies need not be very extensive, but all should lay out:
- Who is responsible for retaining evidence;
- When to retain evidence (i.e. what triggers a retention policy);
- What evidence to retain;
- Where to store evidence; and
- How many copies of evidence to keep.
A policy like this walks employees through what to do when evidence needs to be gathered, it helps ensure that the right evidence is kept, and it makes it more likely that retailers (or their legal counsel) can quickly locate and evaluate this evidence when it is needed months or years later.
Remember: a retention policy loses its impact when employees neglect to follow it, either because they ignore it or fail to recognize what it is. Thus, investing in employee training about a retention policy is critical. This usually comes down to explaining to employees what the policy is and highlighting for them why it is so important. Often, it is beneficial to partner with legal counsel to strategically develop this policy and properly train employees about it. If done right, retailers will be on top of their evidence retention and consistently minimize their spoliation risks.
About Fred M. Heiser
Fred M. Heiser is Counsel in Klinedinst PC’s Los Angeles and Orange County offices, and is a Member of the firm’s Business and Commercial Litigation, Commercial General Liability, and Employment Practice Groups. His clients include local entrepreneurs, small family businesses, and Fortune 500 companies. Mr. Heiser is regularly called on by general counsel, business owners, and claims representatives to protect their interests and to provide hands-on, strategic, and efficient direction for complex civil cases. He can be reached at firstname.lastname@example.org
Klinedinst is the go-to firm for clients looking for litigation, trial experience, transactional representation, and legal counsel. The firm’s offices in Los Angeles, Sacramento, San Diego, Santa Ana, and Seattle service the entire West Coast. What sets Klinedinst apart is the relationship our attorneys foster with each and every client. Klinedinst lawyers are indispensable strategic partners to business leaders, helping to achieve business objectives and create proactive solutions to resolve the many legal challenges that businesses are confronted with every day. Whether vigorously advocating for business clients in court, or guiding business transactions and negotiations, Klinedinst is the trusted legal advisor to have by your side.