In Ace Am. Ins. Co. v. First Call Envtl., LLC, No. 5:21-cv-02331-JMG (E.D.N.Y. Jan. 9, 2023), Pennsylvania District Judge John M. Gallagher granted the plaintiff’s motion for adverse inference sanctions due to the defendant’s spoliation of Basecamp documents that detailed safety information.

Case Discussion

In this case involving a fire that the plaintiffs alleged broke out because the defendant improperly remediated environmentally hazardous substances at the plaintiff’s property, one of the plaintiffs’ production requests requested “any notes, summaries, or any other documentation … for all Tailgate Safety meetings conducted by the Defendant in connection with any of [Defendant’s] work” at plaintiff’s facility in June of 2019. “Daily Tailgate Safety Meeting” documents (“Tailgate Documents”) were the defendant’s form for its employees to fill out, review, and upload to Defendant’s web-based application, Basecamp, before each job to identify a particular job’s site hazards, as well as “reference meeting notes, employee concerns, and [ ] descriptions of activities that were to take place on site.”

In response to Plaintiffs’ request for the Tailgate Documents concerning the job at issue, the defendant responded it had “[n]o responsive documents.” But, in later depositions, Defendant’s employee Justin Tresch testified Tailgate Documents “would … have been used during the work at Bulk Chemical” and he testified he “personally filled out [two] Daily Tailgate Safety Meeting form[s] for the Bulk Chemical job” as well as personally seeing “Daily Tailgate Safety Meeting documents … uploaded to Basecamp for the Bulk Chemical Job.”

The defendant claimed its employees were not located near the fire, but Plaintiff Bulk later produced surveillance footage of its facility showing one of Defendant’s employees located near where the fire started. Defendant corrected its narrative of events “once confronted with surveillance video footage contradicting its initial stance.” Ultimately, Plaintiffs moved for adverse inference sanctions against Defendant for spoliation of Basecamp documents, contending that Defendant “either intentionally destroyed or lost” the Tailgate Documents because Defendant has never produced the documents nor provided any justification.

Judge’s Ruling

In finding that spoliation occurred, Judge Gallagher stated: “Defendant maintained control of the Tailgate Documents because Defendant produces the documents and requires employees to complete and upload them to Defendant’s online application for storage. Defendant’s policy requires employees to complete Tailgate documents and upload them to Defendant’s web-based application, Basecamp, before performing clean-up services… a form identifying hazards—particularly, fire hazards—known to Defendant’s employees on-site before performing work on Plaintiff Bulk’s facility is clearly relevant to Defendant’s awareness of potential job risks… Defendant’s non-production of the documents is sufficient to show there has been ‘actual suppression or withholding of evidence.’… And lastly, Defendant could reasonably foresee a duty to preserve the Tailgate Documents.”

In considering whether an adverse inference against Defendant is proper in light of Defendant’s spoliation, Judge Gallagher stated: “Here, Defendant maintains a high degree of responsibility due to its control over the Tailgate Documents. Defendant’s company policy requires Tailgate Documents to be uploaded—and presumably, preserved—on their online application, Basecamp… Defendant has offered no explanation as to why these documents were removed from Basecamp and cannot be located. Therefore, Defendant’s access and control over the Tailgate Documents support its high responsibility in their non-production.”

Judge Gallagher also stated: “Defendant also fails to provide any reasoning or justification behind the non-production of documents it routinely completes and maintains. Defendant makes no attempt to explain whether the documents are lost or destroyed. In fact, Defendant fails to provide any information concerning the circumstances of the documents’ non-production. So the Court is not inclined to find the Tailgate Documents have been merely lost or accidentally destroyed.” He also stated: “Plaintiffs contend they suffer “significant” prejudice due to Defendant’s non-production of the Tailgate Documents. The Court agrees. The documents are unique because they seek to show Defendant’s acknowledgment of job hazards before performing work at Plaintiff Bulk’s facility. Defendant’s risk awareness is directly relevant to Plaintiffs’ claim Defendant negligently performed work resulting in a fire. As a result, the Court agrees with Plaintiffs the Tailgate Documents are ‘key documents to this litigation.’”

As a result, Judge Gallagher stated: “On balance, the Court finds Defendant’s non-production of Tailgate Documents warrants an adverse inference against Defendant by way of a jury instruction” and granted the plaintiff’s motion for sanctions due to the defendant’s spoliation of Basecamp documents.

So, what do you think? Do you agree that there should have been adverse inference sanctions when there was no direct evidence the documents were spoliated? Please share any comments you might have or if you’d like to know more about a particular topic.

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