Federal Court Allows Plaintiff to Amend Complaint to Assert State Law Spoliation Cause of Action Based on Defendant’s Failure to Implement Litigation Hold

Ed Schmidt Pontiac-GMC Truck, Inc. v. DaimlerChrysler Motors Co., LLC, 538 F. Supp. 2d 1032 (N.D. Ohio 2008)

In this case, an automobile dealer brought suit alleging that DaimlerChrysler had breached a settlement agreement when it refused to grant the dealer a Chrysler franchise.  During the two years of discovery that followed, Schmidt alleged that DaimlerChrysler knowingly and intentionally destroyed relevant evidence.  Specifically, Schmidt alleged that DaimlerChrysler failed to implement a litigation hold to prevent the destruction of evidence after the complaint was filed in October 2004, and replaced or altered certain employees’ hard drives days before Schmidt made forensic images of the drives as part of its discovery process.  Further, Schmidt alleged that DaimlerChrysler attempted to hide the extent and significance of its misconduct.  As a result, Schmidt sought to add a spoliation of evidence claim to the litigation.

The court observed that, under Ohio law, the elements for a spoliation of evidence cause of action are:

1) … pending or probable litigation involving the plaintiff; 2) knowledge on the part of the defendant that the litigation exists or is probable; 3) willful destruction of the evidence by the defendant designed to disrupt the plaintiff’s case; 4) disruption of the plaintiff’s case; and 5) damages proximately caused by the defendant’s actions.

The court found that Schmidt had alleged facts supporting all five elements for a claim of spoliation under Ohio law:

Schmidt meets the first and second elements of an Ohio spoliation claim because both parties have filed pleadings in this litigation.  Regarding the third and fourth elements, plaintiff alleges that DaimlerChrylser:  1) failed to implement a litigation hold to prevent the destruction of evidence after the complaint was filed on October 4, 2004, and 2) intentionally destroyed evidence, including replacing employee hard drives.  If true, this destruction might well disrupt Schmidt’s case.  For the fifth element, I believe that a reasonable jury might conclude that altering or replacing the hard drives was a disruption to Schmidt’s case and caused damages to Schmidt.

The court next turned to DiamlerChrysler’s arguments that:  1) the spoliation claim was remote from the original claim; 2) the amendment would bias the jury against DaimlerChrysler; 3) adding a spoliation claim would force DaimlerChrysler’s counsel to withdraw; and 4) Schmidt unjustifiably delayed filing its motion to amend.  The court rejected each of the arguments.

First, the court found that the issue of spoliation of evidence was closely related to Schmidt’s ability to prove breach and placed only the slightest burden on DaimlerChrysler.  “If the jury finds that DaimlerChrysler destroyed relevant information pertaining to the breach, Schmidt may lack resources supportive of its claim that it would otherwise have had available to it.”

Second, the court rejected the argument that adding Schmidt’s claim for spoliation would bias the jury against DaimlerChrysler to a greater extent than “any adverse inference instruction that is often a sanction award for spoliation of evidence.”  The court could not perceive how this prejudice was distinct from any jury bias the defendant might suffer from an adverse inference instruction.  The court continued:

There has been, and probably will continue to be, discovery as to the destruction of evidence for the purposes of the adverse inference instruction.  Any evidence developed in that regard might become known to the jury as a predicate for an adverse inference instruction.  Thus, granting the amendment will not, in all likelihood, significantly increase the amount of discovery as to that issue, nor will it result in introduction of an issue that otherwise would not be before the jury.  Granting Schmidt’s amendment to add a spoliation claim will not result in further jury bias against DaimlerChrysler.

Third, the court was not convinced that the amendment would implicate counsel as a participant in DaimlerChrysler’s alleged destruction of evidence, requiring counsel to withdraw from the case to testify.  It stated that, even if Schmidt decided to call DaimlerChrysler’s counsel as witnesses, that fact alone should not be grounds for denying Schmidt’s motion to amend, as it was mere speculation at this stage of the litigation.

Finally, the court did not consider Schmidt’s waiting nine months to file its motion to constitute unjustifiable delay.  It noted that courts in the Northern District of Ohio have found that delays twice as long were not unjustifiable:

The court in GE v. Advance Stores Co., granted a motion to amend filed after a delay of one and a half years because it was only through discovery that the movant obtained the new information needed to support the claim.  285 F.Supp.2d 1046, 1050 (N.D.Ohio 2003) (granting plaintiff leave to plead count two of its amended complaint).  Similarly, in this case Schmidt discovered the alleged spoliation long after filing the original complaint.