Can the client sue the plaintiff's insurer for discarding the product and injuring its ability to prove that the product was not defective? Until a few weeks ago, the answer was, "It depends." If the insurer intentionally threw away the product, knowing it to be critical evidence, then the client had no cause of action. But if the insurer carelessly lost the product, with no intent to harm, then the client could state a claim.
Sound absurd? Yes, said the 4th and 2nd district courts of appeal in Farmers Ins. Exchange v. Superior Court, 2000 Daily Journal D.A.R. 4121 (April 20, 2000), and Coprich v. Superior Court, 2000 Cal. App. Lexis 394 (May 19, 2000).
Farmers and Coprich removed the stump left by the Supreme Court decisions Cedars-Sinai Medical Center v. Superior Court, 18 Cal. 4th 1 (1998), and Temple Community Hospital v. Superior Court, 20 Cal. 4th 464 (1999), and eradicated the tort of spoliation in California.
Two years ago, in Cedars-Sinai, the Supreme Court held that there was no longer a tort of intentional first-party spoliation (i.e., party A intentionally destroys evidence that party B would have used against part A) where the spoliation victim knew, or should have known, of the spoliation before the underlying action was resolved on the merits.
The Cedars-Sinai court weighed the costs of recognizing tort liability against the availability of other, nontort remedies. On the one hand, the court found that spoliation, like per-injury, involved litigation-related conduct and if recognized as a tort, would invite a spiral of derivation litigation. Further, adjudicating spoliation is inherently speculative because the trier of fact has to determine whether and how unavailable, and thus somewhat unknown, evidence would have affected the outcome of the underlying action. Also the threat of spoliation liability would drive society to undertake costly record-retention and evidence-preservation efforts.
On the other hand, the court believed that existing nontort remedies afford substantial protection against spoliation. For example, Evidence Code section 413 and BAJI No. 2.03 permit an inference against a willful suppressor of evidence. Similarly, Penal Code section 136 criminalizes a willful destruction or suppression of evidence. For attorneys who participate in evidence tampering, the governing rules, like Business and Professions Code section 6106 and Rule of Professional Conduct 5-220, provide for their suspension or disbarment.
Consequently, the court concluded in Cedars-Sinai that the costs on society and our judicial system of permitting tort liability for intentional first-party spoliation outweighed the benefits.
Last year, the court picked up where it left off and held in Temple that there was no longer a tort of intentional third-party spoliation (i.e., party C intentionally destroys evidence that party B would have used against party A). The court reasoned that the same policy considerations and most of the same nontort remedies relied on in Cedars-Sinai applied also to intentional third-party spoliation. In a footnote, however, the court declined to decide whether a claim of negligent spoliation would be viable.
Cedars-Sinai and Temple left the legal community wondering whether a claim of negligent spoliation exists. Notwithstanding Temple's footnote, if intentionally destroying evidence is not actionable, how can negligently losing evidence be actionable?
In April, the 4th District answered this question in Farmers by holding that recognizing a claim of negligent spoliation would be "an absurdity" in view of Cedars-Sinai and Temple. In Farmers, which arose out of a single-vehicle accident allegedly caused by a defective tire, the passenger plaintiff sued the driver's insurer, Farmers, for allegedly taking possession of, then losing, the vehicle and the tire. The trial court denied Farmers' motion for summary adjudication on the negligent-spoliation claim, noting that Temple had expressly declined to decide the viability of negligent spoliation.
On a writ petition to the Court of Appeal, Farmers argued that if a party could not be held liable for intentionally destroying evidence, it should not be held liable for negligently doing so. The court agreed. The court held that the Supreme Court's policy reasons for rejecting intentional first- and third-party spoliation applied with equal force to negligent spoliation. Moreover, the court reasoned that it would be anomalous to permit tort liability for negligently destroying evidence while prohibiting tort liability for intentionally destroying evidence. The court thought that such a result would be "an absurdity."
In May, the 2nd District followed suit in Coprich, which also arose out of an automobile accident allegedly caused by a defective tire. The plaintiff sued the lessor of the vehicle, Board Ford, and its insurer, Liberty Mutual, for negligent spoliation, after Board Ford and Liberty Mutual allegedly lost the vehicle and the tire.
After the trial court denied Liberty Mutual's motion for judgment on the pleadings on the negligent spoliation claim, the Court of Appeal issued an alternative writ directing the trial court to grant the motion to show cause. The trial court entered a new order granting Liberty Mutual judgment on the pleadings on the negligent spoliation claim. The plaintiff challenged the order.
Citing the same policy considerations as those in Cedars-Sinai and Temple, the Coprich court held that the tort of negligent first- or third-party spoliation was no longer viable in California. Like Farmers, Coprich held that the Supreme Court's policy reasons for denying intentional spoliation liability resonated equally with negligent spoliation. And, as in Farmers, the Coprich court felt that penalizing negligent conduct while condoning intentional conduct would be anomalous.
But Coprich took the analysis a step further than did Farmers. Whereas Farmers failed to consider how the availability of nontort remedies applied to negligent spoliation, Coprich addressed the issue head-on and acknowledged that most of the nontort remedies available for intentional spoliation are available for negligent spoliation.
For example, Evidence Code section 413, Penal Code section 6106 and Rule of Professional Conduct 5-220 are all directed at intentional acts of destruction or suppression, not at mere carelessness. Nevertheless, the Coprich court concluded that, even without the nontort remedies, the costs imposed tipped the scales against tort recognition.
In addition, whereas Farmers did not expressly ban negligent loses evidence that party B would have used against party A, Coprich did. The facts and the express holding in Farmers went only to ban negligent third-party spoliation. But, in Coprich, the court was faced with both negligent third-party (against Liberty Mutual) and negligent first-party (against Board Ford) spoliation. The court ruled on both theories and held that neither negligent third-party nor negligent third-party spoliation was viable.
Also, Farmers mentioned, but did not discuss, Johnson v. United Services Automobile Ass'n, 67 Cal. App. 4th 626 (1998), which was decided after Cedars-Sinai but before Temple. The Johnson court held that a claim of "negligent spoliation of evidence by a third party spoliator" would be recognized and that a duty to preserve evidence could be created by a specific request accompanied by an offer to pay the costs or bear the burden of the preservation, or by a voluntary undertaking that induces a reasonable and detrimental reliance.
Johnson, if interpreted to hold not only that one can assume a duty to preserve evidence through agreement or detrimental reliance, but also that negligent third-party spoliation remains a viable tort, conflicts with Farmers and Coprich. Unlike Farmers, Coprich addressed this issue. Noting Johnson's pre-Temple posture, the Coprich court held that Johnson's approval of negligent third-party spoliation is inconsistent with Temple and no longer tenable.
Notwithstanding their denial of tort recovery, both Farmers and Coprich recognized that spoliation can be remedied under a contract theory. Assuming that an agreement to preserve the evidence was made between the spoliator and the victim, spoliation of the evidence can still give rise to a claim for breach of contract.
Whether the Supreme Court will stamp these decisions with express approval remains to be seen, but it is hard to imagine the Court disapproving the ban on the tort of negligent spoliation. Because the notion that the law should not penalize negligence while condoning intentional wrongdoing is irrefutable and inescapable, Farmers and Coprich are necessary extensions of Cedars-Sinai and Temple. If Farmers pulled the spoliation stump out of the ground, Coprich seems to have chained and dragged it out of California for good.