MacElree Harvey Resources - Destruction of Documents

Employment Group

A Maryland case serves as a warning to employers who regularly destroy documents

Prudent employers have a standard practice with regard to the retention and destruction of electronic documents. In a ruling that is sure to cause difficulties for some employers, a U.S. District Court in Maryland recently decided that a party has a duty to preserve evidence once on notice that the evidence is relevant to litigation or when the party should have known that the evidence may be relevant to future litigation.

In Broccoli v. Echostar Communications Corp., the plaintiff, Broccoli, alleged that he had been subjected to inappropriate and sexually charged behavior by Echostar's human resources administrator, Andersen. According to Broccoli, he was terminated in retaliation for having rebuffed Andersen's advances, under the guise of an organizational realignment and reduction in force.

During the discovery phase of the case, Broccoli filed a motion for sanctions against Echostar, alleging that the company had failed to preserve records relevant to the case and was guilty of spoliation of evidence. Spoliation refers to the destruction or material alteration of evidence or the failure to preserve property for another's use as evidence in pending or reasonably foreseeable litigation.

Under Echostar's email/document retention policy, the email system automatically sent all items more than seven days old in a user's "sent items" folder to the user's "deleted items" folder. All items in a user's "deleted items" folder more than 14 days old were automatically purged from the system without retaining copies. Similarly, electronic files of former employees were completely deleted 30 days after the employees left Echostar.

The Court found that Echostar had actual notice of potential litigation when Broccoli informed two of his supervisors of Andersen's sexually harassing behavior in January of 2001. On the day of his termination, November 28, 2001, Broccoli hand-delivered a written complaint to Andersen expressing his belief that the termination was due, at least in part, to the prior complaints he had made regarding Andersen's harassment. In addition, Broccoli's girlfriend sent an email to Echostar executives one month after Broccoli was fired alleging that Broccoli had been terminated in a discriminatory manner. Broccoli filed an employment discrimination complaint with the Equal Employment Opportunity Commission (EEOC) in February of 2002.

Echostar's Misstep
Despite the claims of unlawful conduct, Echostar never issued a company-wide instruction that would have prevented the destruction of relevant documents. As a result, Echostar failed to preserve documents related to Broccoli and his termination, corporate records related to the reduction in force that Echostar contended necessitated Broccoli's termination, correspondence by corporate decision makers related to Broccoli's termination, and emails and other electronic communications exchanged during Broccoli's employment and termination.

The Court held that once a party is placed on notice that evidence is relevant to litigation, it has a duty to preserve the evidence. Moreover, once a party reasonably expects litigation, it must suspend its routine document retention/destruction policies and implement a "litigation hold" to ensure that relevant documents are preserved. The Court found that Echostar had acted in bad faith in its failure to suspend its email and data destruction policy or preserve essential personnel documents. The Court concluded that Echostar's failure to guard against spoliation prejudiced Broccoli in his attempts to litigate his claims.

Echostar's misconduct had a devastating effect in the lawsuit. At trial, the Court imposed limits on Echostar's ability to present evidence that the plaintiff's termination was a result of a legitimate non-discriminatory/non-retaliatory reason and granted Broccoli's request for an "adverse inference" instruction based on spoliation of evidence. The Court also awarded Broccoli attorneys fees and costs incurred in making the motion for sanctions.

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At a glance
Routine Destruction of Documents May Have a Devastating Impact

A recent U.S. District Court in Maryland decided that a party has a duty to preserve evidence once on notice that the evidence is relevant to litigation or when the party should have known that the evidence may be relevant to future litigation.

Because the company failed to preserve records relevant to the case, it was found guilty of spoliation of evidence. Spoliation is the destruction or material alteration of evidence or the failure to preserve property for another's use as evidence in pending or reasonably foreseeable litigation.

Once a party is placed on notice of or reasonably expects litigation, it must suspend its routine document retention/destruction policies and implement a "litigation hold" in order to preserve any evidence relevant to the matter in question.