Electronic Discovery Law
City Barely Avoids Spoliation Sanctions and Receives Harsh Reprimand
Doctor John's, Inc. v. City of Sioux City, 486 F. Supp. 2d 953 (N.D. Iowa 2007)
Although the parties settled their respective claims, the court retained jurisdiction over the question of whether or not sanctions should be imposed upon the City for the destruction, during the pendency of litigation, of recordings of City Council closed sessions concerning the ordinances challenged in the case. The court held a conference on the matter and received further information about changes made to the City's policy regarding retention of recordings of closed sessions of the City Council.
The court began its analysis by remarking:
A first year law student should have--and most would have--known that a party must retain documents or records that are likely to be relevant in pending litigation. The City's claim that it was simply following state law in destroying key evidence is laughable and frivolous. No state or federal statute, rule, or common law allows a party to destroy critical evidence during the pendency of litigation, and the City policy that permitted destruction of certain documents after a specified period of time certainly did not require destruction of such documents.
(Italics in original.) The court stated that both state and federal law require the retention of evidence relevant to pending or reasonably anticipated litigation. The court found that the City's failure to preserve the tape recordings of the City Council's closed-session meetings, and the consequential destruction of critical evidence in this case, was “clearly and unquestionably improper conduct.” The court found that a substantial monetary sanction against the City was “easily justified by the City's outrageous conduct in failing to preserve the key evidence of recordings of closed-session meetings.” It explained:
More specifically, as noted above, the contention that the document retention policy mandated by state law excused destruction of the records in question is laughable and frivolous, because that policy plainly did not require the destruction of any documents, and certainly did not authorize the destruction of records pertinent to pending litigation. Moreover, purported adherence to the policy by destroying records that the policy did not mandate for destruction was unreasonable and amounted to bad faith conduct where litigation was pending. Indeed, this case seems to this court to fall well within, not to test the limits of, conduct that constitutes bad faith destruction of documents, where the City had not simply been made aware of the circumstances giving rise to a potential lawsuit, but was in the throes of litigating a lawsuit over the constitutionality of its sex shop ordinances at the time that it destroyed records of closed sessions in which the City Council considered those ordinances. Moreover, while the City destroyed these records, the City went out of its way to provide evidence and even to generate new evidence to try to justify the ordinances long after they were passed, enjoined, and partially struck down. Finally, the recordings of the closed sessions in question here were the only contemporaneous evidence of the motives of the decision makers at the time certain decisions were made, and as such--where the motives of the decision makers were plainly at issue--the evidence was highly relevant to pending litigation.
(Citations omitted; italics in original.) Thus, the court found that a monetary sanction in the amount of $50,000 was warranted for the City's destruction of plainly relevant records. However, the court did not impose sanctions in light of other considerations:
On the other hand, because of the City's ill-conceived, illegal, and unconstitutional actions in targeting and attempting to trample the plaintiff's First Amendment rights, the taxpayers have already paid dearly, to the tune of over $600,000. No matter how you fry it, that's a ton of Sneaky's chicken. Also, notwithstanding various City Council Members' attempts to save face by claiming that the City would have ultimately prevailed in this litigation--just how those City Council Members became such enlightened, sophisticated, and prophetic federal constitutional scholars remains a prodigious mystery--the City and Doctor John's have worked diligently to reach a settlement. In so doing, both sides engaged in substantial compromise from their equally unreasonable legal positions. Moreover, the City Council has voluntarily and wisely changed its record retention policy to prevent the destruction of such evidence in the future during pending litigation. Thus, having recognized the error of its ways, the City moved swiftly to correct its mistake.
The court concluded that, balancing all these factors, “the scales of justice tip ever so slightly in favor of declining to impose sanctions against the City for destruction of relevant records.” (Emphasis in original.) The court further warned: “Any similar litigation misconduct in the future, however, will be dealt with severely, in light of the City's 'get out of jail free' card here.”
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