• Think Twice Before Destroying Documents
  • July 1, 2003 | Author: Josephine H. Hicks
  • Law Firm: Parker Poe Adams & Bernstein LLP - Charlotte Office
  • In a time when many believed we would be in a "paperless" age, businesses continue to struggle with overflowing file cabinets and storage rooms full of documents. Questions constantly arise: Can't we get rid of these documents? If not now, when? In response to those questions, many companies have document retention policies. Those policies are guided by business decisions about what documents need to be maintained and for how long. They are also guided by legal considerations and regulations that require companies to maintain certain types of documents for certain time periods. The May 1998 issue of Liability Alert outlines some pointers on creating and adhering to a document retention policy.

    Every document retention policy should also have this provision: "Do not destroy any document or piece of evidence that relates to an issue in a pending lawsuit or relates to an issue that may reasonably develop into a lawsuit."

    Recent cases in North Carolina and in the Fourth Circuit make clear that the obligation to maintain documents is not limited to documents that relate to a pending lawsuit or are responsive to a pending discovery request in a lawsuit. Rather, if documents may relate to issues likely to arise in reasonably foreseeable litigation, you have an obligation to maintain those documents.

    For example, in a North Carolina case decided in April 2000, an employee claimed she had been sexually harassed by two managers. She documented her claims in a company logbook and asked the district manager to take action. The district manager took no action, and the plaintiff was fired after another incident in which she claimed to have been physically and sexually assaulted by a co-worker. The plaintiff later sued the owner of the company. In the lawsuit, the plaintiff asked the company to produce the manager's log book. The company responded that the district manager had destroyed most of the pages in the log book because he did not think they were "pertinent." The pages had been destroyed more than five months before the lawsuit was filed. The North Carolina Court of Appeals made clear that "the obligation to preserve evidence...arises prior to the filing of a complaint where a party is on notice that litigation is likely to be commenced." 1

    The penalties for destroying evidence can be severe. In the most recent case on this issue from the Fourth Circuit, the court affirmed the trial court's decision to dismiss the plaintiff's lawsuit, because the plaintiff failed to preserve critical evidence.2 The case was a products liability case against General Motors. The plaintiff suffered permanent disfigurement to his face, because the air bag in the car he was driving did not deploy. Experts examined the vehicle on behalf of the plaintiff, but the plaintiff took no steps to preserve the vehicle after that. The vehicle was sold, and by the time General Motors tracked it down, the plaintiff questioned whether it had been altered before General Motors inspected it. The court concluded that the plaintiff's failure to preserve the vehicle in its condition after the accident prejudiced General Motors' ability to defend the case. Noting that the duty to preserve evidence "extends to that period before the litigation when a party reasonably should know that the evidence may be relevant to anticipated litigation," the Fourth Circuit agreed that the destruction of the evidence was so prejudicial to the defense, dismissal of the plaintiff's claim was warranted.

    The more common sanction is an instruction to the jury that the jury may infer from the destruction of the evidence that the evidence would have been unfavorable to the party who destroyed it. That instruction to the jury could be very damaging. The jury may infer that the documents were much more unfavorable than they actually were.

    What does this mean? Does this mean that companies can never destroy documents? No. It means that you must think carefully before destroying any documents. Does the document relate to any incident or claim that could reasonably result in a lawsuit? If so, don't destroy it.

    1 McLain v. Taco Bell Corp., 137 N.C.App. 179, 188, 527 S.E.2d 712, 718 (2000).

    2 2 Silvestri v. General Motors Corp., ___ F. 3d ___ (Nov. 14, 2001)