In a cautionary tale for all parties remediating contaminated sites who may want to pursue recovery of cleanup costs from another party, the New Jersey Appellate Division recently held that discarding piping and other physical material during the course of remediation constitutes spoliation of evidence warranting sanctions in the ensuing contribution litigation. 18-01 Pollitt Drive, LLC v. Engel et al., Docket No. A-4833-13T3 (App. Div., Oct. 31, 2016). Spoliation is the legal phrase used when evidence that is pertinent to a lawsuit is destroyed, interfering with the proper administration and disposition of the action. During the course of litigation, all parties have a duty to preserve relevant evidence. Significantly, the duty to preserve evidence arises before litigation is actually filed when the future litigant has knowledge of the likelihood of litigation. The destruction of evidence in contravention of that duty does not have to be intentional for the Court to issue sanctions against the “spoliator,” which may range from adverse inferences related to the lost evidence to a complete dismissal of the case.
In Pollitt, the current owner of property discovered to be contaminated after purchase brought an action to recover investigation and remediation costs from former owners. The former owner Defendants argued that evidence relied on by Plaintiff to establish the timing and source of the discharges at the property had been destroyed during remediation, thus prejudicing the Defendants’ ability to defend the claims. The trial court agreed and dismissed Plaintiff’s complaint with prejudice, which is the most extreme sanction the court can impose.
In reviewing the case, the Appellate Division considered the destroyed evidence to assess the trial court’s spoliation finding. The first item was a piece of corroded pipe destroyed during the course of remediation two years before the complaint was filed. Plaintiff’s expert relied upon photos of the destroyed section of pipe and a replacement sample from a different pipe, which Plaintiff then lost, to opine on the timing of when the original pipe had breached and caused the contamination. The other unavailable physical evidence consisted of a sump pit and concrete floor that Plaintiff had excavated and destroyed after the litigation commenced. Again, Plaintiff’s experts relied upon pictures and data collected prior to disposal to make conclusions about the source and timing of discharges. Defendants’ experts argued it was not possible to verify or refute the opinions of Plaintiff’s experts because the underlying physical evidence had been destroyed.
On appeal, Plaintiff argued that it had no duty to preserve the pipe because litigation was not contemplated at the time it was destroyed. The Appellate Division disagreed, finding that by the time the pipe was destroyed, Plaintiff knew that the property had significant contamination and was located next door to a Superfund site. In addition, Plaintiff was working with an environmental consultant and should have anticipated that it could become involved in litigation regarding the contamination. Thus, the Appellate Division found that Plaintiff had a legal duty to preserve the pipe at the time it was destroyed. With regard to the sump pit and the concrete floor, the Plaintiff argued there was no spoliation because it and the Defendants were equally hampered by the loss of that evidence. Unpersuaded by Plaintiff’s argument, the Appellate Division held that Plaintiff’s unilateral destruction of the physical evidence supporting its claims was a breach of its duty to preserve, and constituted spoliation of, relevant evidence. It is worth noting that the Appellate Division drew this conclusion even though Plaintiff’s experts similarly did not have access to the destroyed evidence.
Notwithstanding Plaintiff’s status as a “spoliator,” the Appellate Division remanded the matter to the trial court to assess the appropriate sanction holding that dismissal of the case, at least at this juncture, was not appropriate. Because it is the harshest possible sanction, the New Jersey Supreme Court has required that dismissal should only be imposed if there is no lesser sanction that will negate the prejudice to other litigants caused by the lost evidence. Here, the trial court did not consider whether less severe sanctions, such as an adverse inference, would offset the prejudice to the Defendants caused by Plaintiff’s destruction of the pipe, sump pit and concrete floor. While Plaintiff dodged the bullet of dismissal for now, it remains to be seen whether it can prove its case without the destroyed evidence.
Remediating parties need to be cognizant of the potentially harsh consequences of being a “spoliator” if they later seek to recover their costs or otherwise become involved in litigation regarding the contamination. Accordingly, parties remediating contaminated sites and their environmental professionals, in consultation with an environmental attorney, should implement procedures to prevent the destruction of evidence discovered during remediation that may be relevant to a claim seeking to hold another party responsible for the contamination. Failure to do so may breach the duty to preserve relevant evidence and cut short any effort to recover remedial costs.