Gaffield v. Wal-Mart Stores East:  A Reminder of the Importance of Preserving Evidence during Pending Litigation

By Christopher Sulfaro  

In Gaffield v. Wal-Mart Stores East, 2009 WL 890654 (N.D.N.Y., March 2009), the Court examined the standards for a spoliation of evidence motion. It then found defendant Wal-Mart Stores East (“Wal-Mart”) liable to a third-party defendant, but not to plaintiff, for accidentally discarding important evidence during the lengthy interim period between the injury and when plaintiff filed their action.

The underlying claim arose when plaintiff’s child was injured by a broken pedal on a bicycle that plaintiff had purchased from Wal-Mart earlier that day.  Plaintiff promptly returned the bicycle to Wal-Mart and reported the incident, causing Wal-Mart to open an incident claim file.  In anticipation of litigation and in accordance with standard procedure, a Wal-Mart employee was instructed to tag the bicycle as evidence in a potential lawsuit and place it in an area where it would be preserved.  As the bicycle would not fit in the claims cage that was reserved for such items, the Wal-Mart employee stored it on a nearby ceiling rack.  Wal-Mart made repeated efforts to contact plaintiff regarding potential litigation, but received no response. 

Almost two years after the incident, plaintiff finally filed a law suit against Wal-Mart alleging claims for negligence, strict products liability, and breach of warranty.  Wal-Mart filed a third-party complaint for indemnification against Shen Zhen Boan Bike Co. (“Boan”), the bicycle manufacturer.  It was discovered that at some time prior to, or during the initial stages of this litigation, a Wal-Mart employee accidentally discarded the bicycle at issue, believing it to be clutter.   The dispute between the parties centered on whether the pedal broke as the result of negligent design and/or manufacture by Boan, or from improper assembly by Wal-Mart.  Therefore, the bicycle was both extremely important as trial evidence and an essential element for any expert’s review in the case.  As both Boan and plaintiff were deprived of the opportunity to examine the bicycle, each filed a motion against Wal-Mart for spoliation of evidence.   

Spoliation of evidence is “the destruction or significant alteration of evidence, or the failure to preserve property for another’s use as evidence in pending or reasonably foreseeable litigation.” Gaffield, at *6 (citing Byrnie v.  Town of Cromwell, 243 F.3d 93, 107 (2d Cir. 2001)).  Federal district courts may exercise their inherent power to control the litigation by imposing sanctions for spoliation.  Gaffield, at *6.  These sanctions serve “a threefold purpose of (1) deterring parties from destroying evidence; (2) placing the risk of an erroneous evaluation of the content of the destroyed evidence on the party responsible for its destruction; and (3) restoring the party harmed by the loss of evidence helpful to its case to where the party would have been in the absence of spoliation.” Gaffield, at *6 (citing Byrnie, 243 F.3d at 107). 

The elements for establishing spoliation of evidence are also threefold.  Boan and plaintiff were required to show that (1) Wal-Mart, as the party having control over the evidence, had an obligation to preserve it at the time it was destroyed; (2) Wal-Mart acted with a culpable state of mind; and (3) the missing evidence was relevant to their claim or defense such that a reasonable trier of fact could find that it would support that claim or defense.  See Gaffield, at *6 (citing Residential Funding Corp. v. DeGeorge Financial Corp., 306 F.3d 99, 107 (2d Cir.  2002)). 

The Court found that the first element was satisfied with relation to Boan, but not plaintiff, and stated that the obligation to preserve evidence arises when “a party should have known that the evidence may be relevant to future litigation.” Gaffield, at *6 (citing Kronisch v.  United States, 150 F.3d 112, 126-27 (2d Cir.  1998)).  It was clear that Wal-Mart could have foreseen that the bicycle would have been relevant to a suit brought by the plaintiff as well as to any action for indemnification brought against its manufacturer. 

Tellingly, Wal-Mart created a claim file for the bicycle because it expected that plaintiff would file a lawsuit.  However, the Court noted that “the duty to preserve evidence does not extend indefinitely.” Gaffield, at *6 (citing Allstate Ins. Co.  v. Hamilton Beach/Proctor Silex, Inc., 473 F.3d 450, 458 (2d Cir.  2007)).  In evaluating how long this duty extended, the Court applied a standard which required the party in control of the evidence to provide all other parties with an adequate and meaningful opportunity to inspect that evidence.  Under this standard, the Court held that Wal-Mart did not owe a duty to plaintiff at the time the bicycle had been discarded.  The Court emphasized the fact that Wal-Mart had tried unsuccessfully to contact plaintiff over a period of two years and that plaintiff had not filed suit during that time.  The Court stated that, “plaintiff had ample opportunity in the two years between the accident and the filing of the complaint to inspect the bicycle.  Plaintiff did not do so.”  Gaffield, at *7.  The Court then dismissed plaintiff’s motion for failure to establish the first element of spoliation. 

However, the Court held that Wal-Mart still had an on-going duty to preserve the evidence with respect to Boan. Wal-Mart did not file its third-party claim against Boan until well after the bicycle had been discarded.  Therefore, Wal-Mart’s actions deprived Boan of an opportunity to inspect the bicycle.  The Court found that the second and third elements of spoliation were satisfied, holding that Wal-Mart’s negligence when discarding the bicycle was sufficient for a culpable state of mind and that the bicycle was certainly relevant to the dispute. 

Despite Boan’s successful establishment of spoliation of evidence, the Court refused to dismiss Wal-Mart’s third-party complaint.  The Court reached this conclusion by evaluating the harshness of a dismissal sanction in light of the fact that Wal-Mart’s actions were not egregious.  Instead, the Court found that Wal-Mart’s actions amounted to simple negligence and required Wal-Mart to pay for all of Boan’s expert fees.

The Gaffield case serves as an important reminder to all tort defendants of the importance of having and enforcing policies for handling potential evidence.  In what can often be long delays between the tortious injury and initiation of a lawsuit, defendant companies as large as Wal-Mart can be prone to misplacing important documents or items.  Defendants must be vigilant in their efforts to preserve anything that might be important for evidentiary purposes.  It is not enough to avoid acting in bad faith, as even the accidental loss of evidence was enough to hold Wal-Mart culpable.  Not only did the loss of evidence result in Wal-Mart having to pay Boan’s expert fees, it also impacted its own attempts to recover indemnification from Boan.  By implementing and enforcing better policies for monitoring potential evidentiary items, defendants can save money in the long run and avoid unnecessary litigation expenses.