Snips from Bill:

> From: "Roach, Bill" <[log in to unmask] <mailto:[log in to unmask]>>
> Subject: Re: Records in basements and linkage of records to career advancement editorial
> Date: May 7, 2015 at 7:58:18 PM EDT
> 
> 
> Sorry, the question asked was whether anyone had been sanctioned by the court for the loss of records due to fire, flood, or other catastrophic loss.  The examples you provided below deal with an entirely different topic, spoliation.
> 
> To the best of my knowledge, I have never see a case where a company has been sanctioned, chastised, or otherwise rebuked by a court for a catastrophic loss of records that occurred without any willful misconduct on the part of the party.  
> 
> While a company may not have the documentation it needs to defend itself or pursue and action, I find it very difficult to believe that an organization would be sanctioned for a loss if they had taken reasonable precautions to protect the materials.  
> 
> Bill Roach, CRM
> [log in to unmask] <mailto:[log in to unmask]>
My skill set is not in searching but I recall Peter providing us RAIN’s on the case of Prudential being involved in litigation over mishandling of client accounts and Prudential claimed that the fire at Iron Mountain in East Brunswick, NJ and the fire at Diversified in Pittston, PA destroyed their records so they could not produce the records for the Plaintiff.  The Judge issued a ruling that gave them so many days to actually produce the records in question or he would issue a Summary Judgement for the Plaintiff.  I also think the Brown & Williamson Judge issued that same directive. 

(But I could be mis-remembering. )

In Wikipedia:

"The spoliation of evidence is the intentional, reckless, or negligent withholding, hiding, altering, or destroying of evidence relevant to a legal proceeding.[1] Spoliation has two possible consequences: in jurisdictions where the (intentional) act is criminal by statute, it may result in fines and incarceration (if convicted in a separate criminal proceeding) for the parties who engaged in the spoliation; in jurisdictions where relevant case law precedent has been established, proceedings possibly altered by spoliation may be interpreted under a spoliation inference, or by other corrective measures, depending on the jurisdiction.

The spoliation inference is a negative evidentiary inference that a finder of fact can draw from a party’s destruction of a document or thing that is relevant to an ongoing or reasonably foreseeable civil or criminal proceeding: the finder of fact can review all evidence uncovered in as strong a light as possible against the spoliator and in favor of the opposing party.

The theory of the spoliation inference is that when a party destroys evidence, it may be reasonable to infer that the party had "consciousness of guilt" or other motivation to avoid the evidence. Therefore, the factfinder may conclude that the evidence would have been unfavorable to the spoliator. Some jurisdictions have recognized a spoliation tort action, which allows the victim of destruction of evidence to file a separate tort action against a spoliator.[2]”

The judges take the approach that there is a legal requirement to hold and protect those records and that there is no such thing as an accident. In Prudential, the defendant used two different storage companies in two different cities and still the Judge said that is not an excuse.  The requirement to produce the records is an absolute.

For example, in the Enron case, the Judge demanded that the computer tapes with all of the records on them be moved to a third party who was required to protect the records in a vault.  That is not the first time we have been charged to build a vault for a client who was warned of sanctions should anything happen to the records.

It reminds me of three businessmen who over lunch at the golf course talked about how they came to be retired and living the good life in Florida. The first two told how fires destroyed their businesses and the insurance paid off and they took the settlement and retired. The third businessman said it was the same with him, a flood came through and destroyed his business and he took the insurance payoff and settled in Florida. The one businessman asked “How do you start a flood?”

If you allow a business relief from liability because of a flood, fire or other events that could have been planned against by storing in non-flood zone areas, in a fireproof vault, or using dissemination to mitigate against loss, then those businessmen who are most criminal will find a way to make those records disappear.

In the Diversified case, the court found liability of $108 million for the destruction of those records in the fire. So fire and arson can be just another cause of spoliation in my interpretation. And as to “How to start a flood?” the real question is “How do you avoid a Flood?” and the answer is to use foresight and not locate records in basements, in flood plains or in the path of potential flood sources.

Hugh Smith
FIRELOCK Fireproof Modular Vaults
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(610)  756-4440    Fax (610)  756-4134
WWW.FIRELOCK.COM



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