From One Beacon Ins. Co. v. Elec. Power Eng’g (Scotland), Ltd., 2009 U.S. Dist. LEXIS 111048 (E.D. La. Nov. 24, 2009):

The spoliation of evidence doctrine concerns the intentional destruction of evidence. See Menges v. Cliffs Drilling Co. , 2000 U.S. Dist. LEXIS 8478, 2000 WL 765082 at *1 (E.D. La.) (Vance, J.) (citing Vodusek v. Bayliner Marine Corp., 71 F.3d 148, 156 (4th Cir. 1995); Schmid v. Milwaukee Elec. Tool Corp. , 13 F.3d 76, 78 (3d Cir. 1994). If a court determines that spoliation has occurred it may, in its discretion, impose sanctions on the spoliating party. Courts have developed two distinct tests for determining the appropriate sanctions in such a situation. See Tracy v. Cottrell ex rel. Cottrell , 206 W. Va. 363, 524 S.E.2d 879, 889-90 (W. Va. 1999) (discussing different tests). Under the Schmid test, developed by the Third Circuit, the trial court must perform the following analysis: (1) determine the degree of fault of the party who altered or destroyed the evidence; (2) determine the degree of prejudice suffered by the opposing party; and (3) determine the availability of a lesser sanction that will protect the opposing party's rights and deter future similar conduct. Schmid, 13 F.3d at 79. Other courts have adopted a five part test in which the courts must determine: (1) prejudice to the defendant, (2) whether the prejudice can be cured, (3) the practical importance of the evidence, (4) whether the plaintiff was acting in good faith or in bad faith, and (5) the potential for abuse in not sanctioning the plaintiff. See Cottrell, 524 S.E.2d at 889-90 (citing several federal district courts and state supreme courts that have adopted this test).

Regardless of the test used, spoliation sanctions are a drastic measure only suitable in extreme circumstances. See Menges, 2000 U.S. Dist. LEXIS 8478, 2000 WL 765082 at *2. Federal courts in diversity suits such as this one apply federal evidentiary rules rather than state spoliation laws in diversity suits. Condrey v. SunTrust Bank of Georgia, 431 F.3d 191, 203 (5th Cir. 2005). In the Fifth Circuit, before an adverse inference or comparable sanction is applied, the Court must find that the party in control of the evidence acted in "bad faith." King v. Illinois Cent. R.R., 337 F.3d 550, 556 (5th Cir. 2003).