Commercial Litigation and Arbitration

Spoliation — Definition and Bad Faith Requirement in the Third Circuit

Peterson v. Att’y Gen. Penn., 2014 U.S. App. LEXIS 245 (3d Cir. Jan. 7, 2014):

Anita Peterson ("Appellant" or "Plaintiff") brought an action against Pennsylvania state officials ("Appellees" or "Defendants") alleging violation of her constitutional rights. ***

An investigation by the Monroe County District Attorney's Office of potential mortgage fraud resulted in a subpoena being issued to Peterson and her business, Mountain Valley Abstract, Inc. ("Mountain Valley"). During the investigation, Special Agent Kevin Colgan learned that figures listed on the HUD-1 settlement statements did not match the check issued at the closing. Peterson stated during her grand jury testimony that she never received payment from P&K Developers, but further investigation established that a check issued by P&K Developers was paid to the order of Mountain Valley.

Peterson was initially charged in a Pennsylvania state court with nineteen criminal counts including perjury, false swearing, tampering with public information or records, and hindering apprehension or prosecution. Eleven counts were dismissed by the presiding judge at trial. A jury acquitted Peterson on two counts, and was unable to reach a verdict as to the remaining six counts. Defendants again prosecuted Peterson on three of the remaining counts, none of which resulted in a conviction.

Following her acquittal, Peterson commenced the present action against several Commonwealth of Pennsylvania employees and a private citizen. ***

A. Spoliation

Peterson contends that the District Court erred in denying her Motion for Sanctions. Peterson alleges spoliation by documenting the litany of failed attempts to obtain a transcript of Agent Colgan's grand jury testimony. Sanctions for spoliation of evidence are reviewed for an abuse of discretion. See In re Hechinger Inv. Co. of Delaware, Inc., 489 F.3d 568, 574 (3d Cir. 2007).

Spoliation occurs where "the evidence was in the party's control; the evidence is relevant to the claims or defenses in the case; there has been actual suppression or withholding of evidence; and, the duty to preserve the evidence was reasonably foreseeable to the party." Bull v. United Parcel Serv., Inc., 665 F.3d 68, 73 (3d Cir. 2012).< While Peterson has demonstrated to our satisfaction that the relevant evidence was not produced, she does not come close to showing the bad faith necessary to support a claim for spoliation. Brewer v. Quaker State Oil Refining Corp., 72 F.3d 326 (3d Cir. 1995), and Bull v. United Parcel Serv., Inc., 665 F.3d 68 (3d Cir. 2012), are instructive here. In Brewer, we determined that "[n]o unfavorable inference arises when the circumstances indicate that the document or article in question has been lost or accidentally destroyed . . . ." Brewer, 72 F.3d at 334. In Bull, we further observed that "a finding of bad faith is pivotal to a spoliation determination." 665 F.3d at 79. "This only makes sense, since spoliation of documents that are merely withheld, but not destroyed,  requires evidence that the documents are actually withheld, rather than--for instance--misplaced." Id.

Therefore, we find no abuse of discretion in the District Court's conclusion that Defendants could not be sanctioned for spoliation.


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