Liability for Spoliation by Employees: The Doc They Destroy May be Your Own

Most corporate parties and all litigators know to avoid “spoliation,” but what it is required to do so is not always clear.  Some would be surprised to know that, even if they are following best practices by issuing litigation-hold instructions and following through on them, the deliberate acts of a rogue employee acting contrary to those instructions can result in sanctions against the employer in litigation.

“Spoliation” is a legal term that all attorneys (especially litigators) know and fear.  In its most general sense, spoliation refers to the “intentional destruction, mutilation, alteration, or concealment of evidence.”[1]  Under Washington law, spoliation is used as a term of art referring to the legal conclusion that a party’s destruction of evidence was both willful and improper—and thus subject to sanctions.  Where the court finds that a party’s destruction of evidence was both willful and improper, the court can impose a wide range of sanctions.  A common sanction is an inference that the evidence, had it not been destroyed, would have been unfavorable to the party that destroyed it.  But  for the more egregious instances of spoliation, the court may impose harsher penalties, including the exclusion of evidence or entry of a default judgment against the guilty party.[2]

In order to avoid these potentially devastating penalties, common practice is for civil litigators and corporations to issue “litigation hold” notices as soon as litigation is commenced or reasonably anticipated.  A party may be liable for spoliation where an employee fails to follow the instructions.  But what about the rogue employee who, having been given notice of the duty to preserve, nonetheless destroys evidence—even secretly and intentionally?  Even here, the employer/party may be liable for spoliation.

For example, in a case tried by this firm, Straitshot Comms., Inc. v. Telekenex, Inc., our client (Straitshot) obtained an order requiring the defendant to produce a laptop that one of the defendant’s employees had retained after leaving Straitshot.[3]  Despite receiving notice of the court’s order to return the computer, the employee proceeded to use the computer to access proprietary information, lied about his possession of the computer, and thereafter took elaborate measures to try to delete documents from the computer and otherwise conceal his use of it.  In ruling on the motion at trial, the court found that the employee had engaged in intentional destruction of evidence and therefore awarded sanctions in favor of Straitshot for costs incurred, including expert costs and attorney’s fee, in attempting to recover the destroyed documents.  Further, the court found that the employee had at all times been acting within the scope of his employment and, therefore, the employer was jointly liable for spoliation under the doctrine of respondeat superior.[4]

To be sure, cases of rogue employees destroying evidence in the face of a court order are rare.  More often, spoliation is the result of employee negligence.  To reduce the risk of both, the employer must do more than simply instruct its employees not to destroy evidence; rather, the employer should take steps to ensure that its employees both know of and have complied with the court order or discovery request.

–Ryan Solomon