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. ***
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.
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