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Employers Facing Litigation Have a Duty to Preserve Evidence; Failure to Do So May Lose the Case

August 2014

It is true that lawsuits are won or lost based on the evidence presented, and therefore evidence in litigation is extremely important. Sometimes, however, lawsuits are won or lost based on one party's failure to provide evidence that existed early in litigation but can no longer be found. As a result, the more accurate statement is that the preservation of evidence in litigation is extremely important . Two recent cases, Sentis Group, Inc. v. Shell Oil Co., and EEOC v. Chipotle Mexican Grill, Inc., specifically highlight just how important.

In Sentis, the Eighth Circuit Court of Appeals found that the plaintiff failed to preserve certain evidence that it controlled, which disadvantaged the other side. As a result, the court agreed that dismissing the plaintiff's entire case with no chance to refile it was appropriate.

In Chipotle, the EEOC is asking a federal district court to sanction Chipotle for failing to preserve video footage relevant to an employee's termination. The EEOC alleges the employee was terminated in violation of the ADA, while Chipotle maintains the employee was terminated for receiving three complaints of rude behavior toward customers. Chipotle says the video footage showed the rude behavior, but that it was inadvertently scrubbed and recorded over as a result of Chipotle's routine video retention policy.

These cases illustrate at least two main points employers need to know:

First, all parties to litigation (including employers) have a duty to preserve evidence. That duty arises not only when the employer receives notice of an actual lawsuit, but also when a potential lawsuit is reasonably on the horizon. As with the Chipotle case, this includes, but is not limited to, receipt of charges from the EEOC, MDHR or other state and federal administrative agencies. Moreover, that duty means employers may have to modify their actions and keep evidence that might otherwise be destroyed pursuant to a seemingly innocent and routine retention policy.

Second, the two cases emphasize that courts have wide latitude to impose sanctions for employers failing in their duty to preserve evidence. Further, Chipotle demonstrates that it does not matter if an employer's failure to preserve evidence is purposeful or accidental. The court can still impose the sanction, and that sanction can range anywhere from a warning up to the ultimate sanction of losing the case entirely (which occurred in Sentis). Under these circumstances, employers who do not take steps to preserve evidence (including electronically stored evidence found in computers, smartphones, emails etc.), may have already lost the case.

Contact litigation attorneys James B. Sherman in Wessels Sherman's Minneapolis office for more information on implementing policies and procedures regarding the preservation of evidence, including preservation of evidence commonly found in electronically stored information, or for an audit of existing procedures.