New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.

Commercial Litigation and Arbitration

New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.
Commercial Litigation and Arbitration
« Back to Complex Lit Blog

The Lingering Question Whether Spoliation Sanctions Are Governed by State or Federal Law

Download PDF

Capogrosso v. 30 River Court East Urban Renewal Co., 2012 U.S. App. LEXIS 9835 (3d Cir. May 16, 2012):

Eleanor Capogrosso, a licensed attorney, appeals from the District Court's dismissal of various complaints related to property damage allegedly suffered as a result of an incident involving a water pipe in her apartment. Following the incident, Capogrosso ultimately filed complaints against the United States Department of Housing and Urban Development, her insurance company, her landlord, and the management company responsible for her building. After the District Court dismissed her complaints against the Department of Housing and Urban Development and her insurance company, Capogrosso appealed those dismissals to this court. For the reasons that follow, we will affirm the dismissal of those complaints. ***

III.

Capogrosso next claims that the District Court improperly dismissed her complaint against State Farm for spoliation of evidence and failure to comply with a Discovery Order. Such dismissals are reviewed by this court for abuse of discretion. Complaint of Consol. Coal Co., 123 F.3d 126, 131 (3d Cir. 1997); Quality Prefabrications, Inc. v. Daniel J. Keating Co., 675 F.2d 77, 78 (3d Cir. 1982). We may reverse a decision pursuant to this standard "only when the judicial action is arbitrary, fanciful, unreasonable, or when improper standards, criteria, or procedures are used." Evans v. Buchanan, 555 F.2d 373, 378 (3d Cir. 1977). "The question . . . is not whether . . . [we] would as an original matter have dismissed the action; it is whether the district court abused its discretion in doing so." Mindek v. Rigatti, 964 F.2d 1369, 1374 (3d Cir. 1992) (quoting Nat'l Hockey League v. Metro. Hockey Club, Inc., 427 U.S. 639 (1975)).

"[T]here is some authority suggesting that spoliation of evidence, and the sanctions that such spoliation may give rise to, are matters appropriately governed by state law." Schmid v. Milwaukee Electric Tool Corp., 13 F.3d 76, 78 (3d Cir. 1994). "On the other hand, there is also authority suggesting that the possible preclusion of evidence in cases such as this is governed by federal law as part of the inherent power of a district court to sanction parties." Id. We therefore consider both the law of this court and the state law of New Jersey in our discussion of spoliation and its sanctions.

Spoliation includes "the failure to preserve property for another's use as evidence in pending or reasonably foreseeable litigation." Mosaid Technologies Inc. v. Samsung Elec. Co., Ltd., 348 F.Supp.2d 332, 335 (D.N.J. 2004). In the event that a party undertakes spoilage, the sanctions available to a court include dismissal of the relevant claim or a presumption by the factfinder that the spoiled evidence was harmful to the offending party's case. See, e.g., Bull v. United Parcel Service, Inc., 665 F.3d 68, 72-73 (3d Cir. 2012); Schmid, 13 F.3d at 78 (discussing each of these sanctions in the context of spoliation).

In determining whether dismissal is appropriate, a court is to consider "(1) the degree of fault of the party who altered or destroyed the evidence; (2) the degree of prejudice suffered by the opposing party; and (3) whether there is a lesser sanction that will avoid substantial unfairness to the opposing party and . . deter such conduct by others in the future." Id. We conclude that the District Court did not abuse its discretion by dismissing Capogrosso's claims against State Farm.

First, Capogrosso disposed of property that she knew State Farm desired to inspect. Furthermore, as a licensed attorney, there can be no question that she knew the allegedly damaged property would be essential evidence in her lawsuit against State Farm. In short, this court can think of no reason that justifies Capogrosso's deliberate disposal of the property.

Second, we hold that the District Court correctly concluded that Capogrosso's disposal of the property "irreparably prejudiced" State Farm. A party suffers irreparable prejudice where the other party impairs their "ability to present a defense on the merits." Gonzalez v. Safe and Sound Security Corp., 881 A.2d 719, 727 (N.J. 2005).

Finally, we conclude that no lesser sanction than dismissal is appropriate in this case. In the absence of the relevant property, Capogrosso's claim against State Farm could not survive a motion to dismiss on the merits, as she can produce no evidence that the property was in fact damaged.

Editorial Observation: In my view, federal law clearly governs, for reasons stated in my Sanctions book.

Share this article:

Facebook
Twitter
LinkedIn
Email

Recent Posts

RICO Causation: Parents of Children with Disabilities Deprived In-Person Education and Services during the Pandemic Were Not Causally Injured by Teachers’ False Assurances to Federal Authorities That IDEA-Complaint Policies Were in Place, Which Caused Funds to Issue But Not to the Benefit of the Disabled Children — Damages Too Indirect — Proper Plaintiff Is U.S. Government — Private Injunctive Relief Under RICO Uncertain in Third Circuit

Sanctions: Rule 37(b)(2) Dismissal — Sixth Circuit Factors

Inherent Power Sanctions — Extrajudicial Misconduct: Sanctions Power Extends to Conduct Intended to Sabotage Court’s Ability to Adjudicate the Case Before It, Here, By Commencing State Court Actions Seeking to Enjoin the Federal Plaintiffs from Proceeding with Their Federal Litigation — Sanctions Fee Awards: The Factors Used For Calculating A Fee Award To A Prevailing Party Do Not Govern — Under Goodyear, the Relevant Inquiry Is Whether There Is A Sufficient Causal Link Between The Sanctioned Misconduct And The Fees Awarded

RICO: Members of Association-in-Fact Enterprise Must Act with a Common Purpose—Mere Allegation That Various Defendants Agreed at Different Times to Engage in Various Fraudulent Schemes Does Not Plausibly Support the Essential Inference, That They Acted with s Sufficiently Common Purpose

RICO Causation: (1) State’s Misrepresentation to Federal Government That It Was Providing Plaintiffs with Mandated Special Education Did Not Cause Plaintiffs’ Injury Because The Failure to Provide The Education Was Not Caused by the Fraud on the Federal Government — (2) The Three Factors for Assessing RICO Causation — (3) Limits of the Second Circuit’s Decision in Alix v. McKinsey That Causation Can Be Established Where A Fraud On The Judiciary “Or Other Governmental Entity” Resulted In A Resource Going To Someone Less Deserving

Rule 41(b): Five Factors to Be Weighed in Deciding Whether Dismissal Is Appropriate (Second Circuit) — Is A Finding of Bad Faith or Fault Required if Dismissal Is Without Prejudice? — Undecided If Truly Without Prejudice But It Is Required If the Without Prejudice Dismissal Will Act as a Dismissal on the Merits (Here, Because of the Statute of Limitations) — Failure To Consider A Lesser Sanction Than Dismissal Is Generally An Abuse Of Discretion

Spoliation Sanctions/Mootness: Stipulation Resolving “All Pending Discovery Disputes,” Which Are Enumerated, Does Not Moot Subsequent Sanctions Motion for ESI Spoliation — Postjudgment Sanctions Order Is Appealable When District Court Has Finally Disposed of Both Liability and Amount

Rule 37 Default Judgment Sanction: (1) Default Judgment Appropriate Only As a Last Resort, When Less Drastic Sanctions Would Not Ensure Compliance with the Court’s Orders — (2) Default Judgment Sanction Requires Willful or Bad Faith Failure to Obey Discovery Order — (3) Fugitive Defendant’s Failure to Appear at Court-Ordered, Remote Deposition Despite Court Warning That Sanctions Could Follow Disobedience Warrants Default Judgment — (4) District Court Afforded Wide Discretion in Interpreting Its Own Orders — (5) Filing a Notice of Appeal from a Non-Appealable Order (Here, a Discovery Order) Does Not Deprive the District Court of Jurisdiction over the Case

RICO and Injunctions: (1) State Court Actions Designed to Perpetuate and Monetize a RICO Violation Are Enjoinable under RICO, Even Though They Are Not Themselves Alleged to Be Predicate Acts [Note: Noerr Pennington Applies in RICO Actions] — (2) Although Civil RICO’s Text and Legislative History Fail to Reveal Any Intent to Override the Provisions of the Federal Arbitration Act, Arbitrations Are Enjoinable Under the “Effective Vindication” Doctrine Where They Operate As a Prospective Waiver of a Party’s Right to Pursue Statutory RICO Remedies — (3) Arbitration Findings May Be Given Collateral Estoppel Effect in a Civil RICO Action — (4) Injunction of Non-Corrupt State Court Litigations That Furthers a RICO Violation Are Enjoinable Under the Anti-Injunction Act’s “Expressly Authorized” Exception — (5) “The Irreparable Harm Requirement Is The Single Most Important Prerequisite For The Issuance Of A Preliminary Injunction” (Good Quote) — (6) When Injunction Is Based on “Serious Questions on the Merits” Rather Than “Likelihood of Success,” Court May Rely on Unverified Pleadings and Attached Exhibits to Assess the Merits, Unless the Opponent Has Raised Substantial Questions (Here, the Opponent Failed to Request an Evidentiary Hearing) — (7) Whether Amended Pleading Moots An Appeal Turns on Whether It Materially Changes the Substantive Basis for the Appeal — (8) Meaning of “In That” (“Used To Introduce A Statement That Explains Or Gives More Specific Information” About A Prior Statement)

RICO: Fraudulent Concealment Must Prevent Discovery of the Injury to Toll Statute of Limitations

Archives
New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.
New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.

New York Office

© 2024 Joseph Hage Aaronson LLC  
Disclaimer | Attorney Advertising Notice | Legal Notice