Spoliation and Sanctions

Spoliation of evidence has been defined by the courts as “the destruction or significant alteration of evidence, or the failure to preserve property for another’s use as evidence in pending or reasonably foreseeable litigation.” The concept behind this word defies one of the basic tenants in our legal system – the need for open and fair discovery so that both parties can get as close to the truth of the matter as possible. Unfortunately for our legal system, and for products liability claimants, spoliation has been a major issue and disturbing trend for recent pharmaceutical and medical products litigation. However, there is some good news. The courts are starting to hold these companies accountable for sloppy and obvious abuses of discovery. The most notable examples of this disturbing trend of spoliation of evidence and abuses of discovery can be found in the Actos, Pradaxa and transvaginal mesh litigations.

Perhaps we should take a page from our ancestors?

In the Actos litigation, there has been a recently issued case order discussing how Takeda, the manufacturer of Actos, engaged in spoliation of evidence and abuses of discovery. While the court did find some apparent abuses, they stopped short of declaring a default judgment or sanctions and fines. Instead, the court has decided to defer this case to a jury to determine bad faith and wait for trial testimony. The plaintiffs will be able to present Takeda’s actions to a jury which may result in several favorable outcomes. For instance, the jury may receive a special instruction about the spoliation and/or higher penalties may be assessed to the defendants.

Regardless, it is disturbing that spoliation cannot be reversed once it happens. Spoliation, in this way, is only a slightly risky activity – and one that might pay off if it can sway the outcome of tens of thousands of individual cases. It also shows that courts are hesitant to hand out monetary sanctions, even if they think there is possibly enough evidence to do so.

However, deferring to a jury in cases of spoliation is not the only avenue available to the court. Sometimes, the court will act as necessary based on the transgression. This is very apparent in the ongoing litigation over the popular blood thinner Pradaxa, where the court has issued two separate sanctions against Boehringer Ingelheim, the manufacturer of Pradaxa. The first sanction imposed was a fine of $29,500. Even after this first sanction, the abuses of discovery by Boehringer Ingelheim continued. In light of all of the apparent abuses by the defendants of the discovery process, the court decided to increase the penalty and issued a sanction of $931,500 in addition to court costs, an amount that has been affirmed on appeal. The non-monetary penalties, barring, of course, what the defendants were already inclined to do by the rules of discovery, were overturned on appeal. It should also be noted that the court implied that more sanctions may be on the way as the court learns of how much the plaintiffs were actually prejudiced. This is a step in the right direction, but it might not be enough.

Though the Pradaxa ruling is slightly more preferable than the Actos ruling because it sends a clear message to companies that destroying evidence and abusing discovery will not be tolerated, the penalty still might not be enough to stop these kinds of behaviors in the future. In the long run, even a penalty of this size does not hurt their profit margin. This is especially true if companies weigh the risk and rewards of spoliation. Some companies may still decide that a fine is worth it if they can avoid paying a settlement or avoid a loss in court. This point is made more apparent with how the first sanction imposed on the manufacturers of Pradaxa didn’t stop the discovery abuses.These two cases shape the groundwork for the current discovery issues in the transvaginal mesh litigation against Ethicon, a subsidiary of Johnson and Johnson. Ethicon is accused of destroying an untold amount of documents. Ethicon has even admitted to some of the allegations, but argues that it was a misunderstanding that has since been cleared up and, since it was not in bad faith, that sanctions should not be imposed. The company has also argued that the plaintiffs cannot establish if any evidence that was relevant to their claims was lost – they can only speculate. This argument is absurd because it rewards incompetence at best and encourages the destruction of evidence at worst. The documents requested were under the defendant’s control and therefore the defendant should not be rewarded, and the plaintiffs should not be punished by the defendant’s either negligence in maintaining or wilful destruction of evidence. It is impossible for the plaintiff to show the relevance of any evidence if the defense decides to destroy it all. We believe that the court should act and send a loud message to Johnson and Johnson that spoliation will not be tolerated. We should hope that other companies will hear it.

Spoliation of evidence and discovery abuse has been a disturbing trend in major mass tort cases. While courts are starting to hold companies responsible, they are still far too hesitant to enforce sanctions. This was even stated as such by the court in both the Actos and Pradaxa litigation. A conservative line of thinking is understandable because these cases require the gathering and preservation of millions of documents. Mistakes are bound to happen. However, the court’s lack of bite in declaring sanctions on companies only seems to encourage either incompetence or evaluation of risk versus loss in the decision to try “accidentally” destroying evidence. In order to remedy this current state of affairs, the court has the option (and should use it) to increase the damage that sanctions impose on defendants.