By Payal Salsburg and Alexis Theriault
The importance of the duty to preserve evidence in the context of litigation cannot be overstated: an error can lead to the imposition of draconian sanctions for spoliation of evidence, including instructing the jury that it may draw the inference that the evidence destroyed was unfavorable to the party responsible for its destruction. The initial – and critical – question for businesses and their counsel is “when does the duty to preserve arise?” A recent unpublished, single-justice order from the Appeals Court attempts to shed light on that query.
The Supreme Judicial Court (“SJC”) has been consistently inconsistent in its description of when the duty arises, which is the major factor in determining when spoliation sanctions may be imposed.
Most recently, the SJC stated that the duty to preserve arises when a party “knows or reasonably should know that it might be relevant to apossibleaction.” Scott v. Garfield, 454 Mass. 790, 798 (2009) (citing Kippenhan v. Chaulk Servs., Inc., 428 Mass. 124, 127 (1998)) (emphasis added). However, in Kippenhan, the SJC also stated that the threat of a lawsuit “must be sufficiently apparent to a reasonable person in the spoliator’s position. . ..” 428 Mass. at 127 (emphasis added). Yet, the SJC in Scott did not overturn its prior decisions on this issue. 454 Mass. at 798.
In other pre-Scott decisions, the SJC has held that the duty to preserve arises only when the person is “actually involved in litigation (or know that they will likely be involved).” Fletcher v. Dorchester Mut. Ins. Co., 437 Mass. 544, 549-550 (2002) (emphasis added); see also Keene v. Brigham and Women’s Hosp., Inc., 439 Mass. 223, 234 (2003) (“[D]efendant should have been aware of a likely claim at least as early as . . . the time it filed a notice [with its insurer] of a potential claim on the plaintiff’s injuries.”) (emphasis added).
Further confusion has resulted from decisions holding that there must be knowledge of a “possible” action citing decisions holding that litigation must be “likely,” and at times equating the two standards. In Scott, the SJC acknowledged that while there may be a discrepancy between the standards stated in Kippenhan and Keene, it did not need resolve any discrepancy because the trial court judges found that the defendant’s conduct satisfied both standards. See 454 Mass. at 798 n. 10.
Trial courts and attorneys have tried to make sense of these decisions to determine whether there is a distinction between when litigation is “possible” vs. “likely.”
JFF Cecilia LLC, et al. v. Weiner Ventures LLC, et al.
In January 2023, after remand from the single justice after an interlocutory appeal, the Massachusetts Superior Court Business Litigation Session (Salinger, J.) issued a decision that for the time being clarifies the standard to use for spoliation sanctions under Massachusetts law. In JFF Cecilia LLC, et al. v. Weiner Ventures LLC, et al., C.A. No. 1984CV03317-BLS2, 2023 WL 1804375 (Mass. Super. Ct. Jan. 30, 2023). Judge Salinger held that, as a result of a defendant’s failure to preserve communications that might have been relevant to a possible lawsuit and prejudice to the plaintiffs, that plaintiffs were permitted to offer evidence of spoliation at trial and were entitled to a jury instruction that “the jury may but are not required to, infer that . . . the deletion of emails and texts that the message contents were unfavorable to the defendants.” Id. at *3. The decision when read in connection with Judge Salinger’s earlier decision denying plaintiffs’ motion for spoliation sanctions, JFF Cecilia LLC, et al. v. Weiner Ventures LLC, at al., C.A. No. 1984CV03317-BLS2, 2023 WL 1804376 (Mass. Super. Ct. Jan. 6, 2023) which was reversed following interlocutory review also sheds some light on the distinction between when litigation is “possible” vs. when it is “likely.”
Background – A Construction Project Comes to a Halt
The JFF Cecilia case arose from a project between a construction company and a real estate development firm to build a luxury condominium high-rise over the Massachusetts Turnpike. After the developers pulled out of the project, counsel for the construction company, pursuant to the parties’ contract, sent a dispute letter to the developers accusing the developers of violating the parties’ agreement and reserving the construction company’s legal rights. The dispute letter did not specifically mention pursuing litigation.
Two months later, the construction company filed suit. It sought discovery of relevant communications, including those sent during the time period between the developers’ receipt of the dispute notice and the filing of the complaint. Noticing gaps in the production caused by the developers’ failure to preserve those communications, the construction company moved for spoliation sanctions. The developers claimed that there were additional communications after the dispute letter to suggest that actual litigation was not yet likely, and thus no duty arose.
The Superior Court’s First Spoliation Decision: The Dispute Letter Did Not Trigger the Duty to Preserve
The Superior Court denied the motion for spoliation sanctions, finding that based on the additional communications received after the dispute letter, a reasonable person in the developers’ position prior to the filing of the lawsuit would not have thought it very likely that they would be sued. See 2023 WL 1804376, at *1 (“The ‘will likely be involved’ standard [… means that for a duty to preserve evidence to arise ‘the potential litigation must be probable . . . and not merely possible.’” (quoting Diamondrock Boston Owner LLC v. Suffolk Constr. Co., Suffolk Sup. Ct. No. 1284CV00307-BLS1 slip op. at 12 (Feb. 10, 2014) (ellipses in original) (internal quotations omitted).
The construction company filed an interlocutory appeal.
On Interlocutory Review, the Single Justice Directs the Superior Court to Apply a Different Standard
A single justice of the Appeals Court (Henry, J.) could not determine whether the Superior Court applied the correct standard in deciding the motion for sanctions. JFF Cecilia LLC, et al. v. Weiner Ventures LLC, et al., No. 2023-J-0037 (Mass. App. Ct. Jan. 30, 2023) (Single Justice Order). The Appeals Court remanded with the instruction that the Superior Court “determine if the [developers] knew or reasonably should have known that evidence might have been relevant to a possible action,” the standard articulated in Scott. Id. (emphasis added). The single justice stated she could not tell if Judge Salinger applied the correct standard, because the decision stated the correct standard—i.e., the possibility of litigation standard in the decision, but held that the developers did not have an obligation to preserve evidence by applying the other standard—i.e., the likelihood of litigation standard. Id. On remand, the Superior Court was to determine if, at the time the developers destroyed relevant evidence, they “knew or reasonably should have known that [the] evidence might have been relevant to a possible action.” Id.
The Superior Court’s Revised Spoliation Decision: The Dispute Letter Did Trigger the Duty to Preserve
After remand, the Superior Court, in a revised decision reversing its original denial of plaintiffs’ motion, found that a reasonable person in the developers’ position would have known at the time that the construction company’s counsel sent the dispute notice, there was a possibility of litigation.
Judge Salinger construed a “possible action” as materially different from a “likely action.” The judge noted that “a future lawsuit is ‘possible’ if it is within the limits of ability capacity or realization [and that] in contrast, litigation is ‘likely’ only if it has a high probability of occurring.” 2023 WL 1804375, at *2 (quoting Webster’s Ninth New Collegiate Dictionary at 918, 962 (1991)). Thus, Judge Salinger held that a party may be subject to spoliation sanctions if it destroyed relevant evidence at a time when it “knew or reasonably should have known that litigation with the plaintiffs was possible, even if a reasonable person would not have considered it likely or probable.” Id. at *2. Defined in this way, the trial court found that while litigation may not have been likely upon receipt of the notice, a lawsuit nonetheless was “possible” and by failing to preserve the communications at issue, the developers breached their duty to preserve evidence. A reasonable person who received the dispute notice would have made anyone in the developers’ position “fear that they were likely to be sued” by the construction company. Id. at *3.
Considering the developers’ intentional or negligent spoliation, the court permitted the construction company to offer evidence at trial of the “alleged spoliation of emails and text messages” and ordered that it was entitled to a jury instruction that the jury that it could (but did not have to) infer that the contents of those communications were unfavorable to the developers. Id.
JFF Cecilia has, for the time being, clarified for practitioners that in Massachusetts even the mere possibility of a lawsuit will kickstart a would-be party’s duty to preserve relevant evidence. While some may question the precedential value of an unpublished single justice decision from the Massachusetts Appeals Court, JFF Cecilia suggests that practitioners should look to Scott for the standard to apply to determine when the duty to preserve evidence begins.
Though counsel involved in litigation that has commenced may find themselves confronted with a situation when the horse already is out of the barn because the deletion already has occurred – whether by negligence or otherwise – they still should undertake efforts to learn what their clients did (and when). And, if it has not already issued, implement a litigation hold for any existing electronic or other documents or information that are relevant to the litigation. Counsel may also wish to consider available methods to attempt to retrieve electronically deleted material if possible.
What about scenarios in which litigation has not commenced? Practitioners should advise clients, and particularly clients who regularly engage in litigation, not to attempt to distinguish between what is possible vs. what is probable in terms of the commencement of a lawsuit and preserve all relevant communications whenever there is the slightest possibility of a legal dispute (and certainly whenever they receive correspondence from an attorney about a business dispute). The ubiquitous nature of electronic communications transmitted in the normal course of business can result in the preservation endeavor becoming unwieldy and, at times, astronomically expensive. JFF Cecilia provides useful guidance for in-house counsel, e-discovery, and IT departments in reviewing record retention and litigation hold policies to ensure they will not run afoul of the duty to preserve most recently articulated in JFF Cecilia. Where preservation and management of electronically stored information is prohibitively expensive, businesses should consult with counsel on undertaking cost-effective measures to preserve electronic communications. If the materials are emails, then a low-cost measure could include archiving emails of relevant individuals and disabling automatic deletion policies. For documents other than emails, businesses may wish to put a hold on the destruction of potentially relevant documents that may otherwise be destroyed pursuant to their record retention policies.
While JFF Cecilia can be viewed as a cautionary tale, it also should be viewed as a useful tool for practitioners.
Payal Salsburg is a Partner at Laredo & Smith, LLP. She focuses her practice on business litigation and white-collar criminal defense. She is a member of the BBA’s Advisory Committee for the Women of Color Attorneys Leadership Forum and a member of the BBA Council. She is a former Co-Chair of the Business and Commercial Litigation Section.
Alexis Theriault is a Litigation Attorney at Conn Kavanaugh Rosenthal Peisch & Ford, LLP. She focuses her practice on commercial litigation, including business disputes and complex insurance coverage litigation. She is a member of the BBA’s Business and Commercial Litigation Section’s Steering Committee and of the BBA’s 14th Public Interest Leadership Program Class.