Evidence Preservation, Spoliation, and the Potential for Adverse Inferences

By: Russell D. Collings

The Nevada Supreme Court has held that a litigant is under a duty to preserve evidence which it knows or reasonably should know is relevant to an action, even where an action has not been commenced and there is only a potential for litigation. Fire Insurance Exchange v. Zenith Radio, Corp., 103 Nev. 648 (1987). In fact, sanctions under Nevada Rule of Civil Procedure 37(b) may be imposed for willful suppression or destruction of evidence which is clearly relevant, whether or not the party has been expressly ordered to produce the evidence. See Bass-Davis v. Davis, 122 Nev. 442 (2006). The entry of liability against a party destroying evidence is also an appropriate sanction under NRCP 37. Fire Insurance Exchange v. Zenith Radio, Corp., 103 Nev. at 648.

Spoliation of evidence occurs in a prospective civil action when evidence pertinent to the action is destroyed. A party who destroys evidence interferes with another party's ability to defend a lawsuit and right to discovery. Where a party spoils such evidence, sanctions should be imposed and the non-spoliating party may even be entitled to attorney fees. Stubli v. Bid D. Int'l Trucks, Inc., 107 Nev. 309 (1991).

The Nevada Supreme Court established the following eight factors to determine if such a sanctions are appropriate for spoliation of evidence: 1) the degree of willfulness of the offending party; 2) the extent to which the non-offending party would be prejudiced by a lesser sanction; 3) the severity of the sanction relative to the severity of abusive conduct; 4) whether evidence has been irreparably lost; 5) the feasibility and fairness of alternative and less severe sanctions such as an order deeming facts relating to improperly lost or destroyed evidence to be admitted by the offending party; 6) the policy favoring adjudication on the merits; 7) whether sanctions unfairly operate to penalize a party for the misconduct of his or her attorney; and 8) the need to deter both the parties and future litigants from similar abuses. Young v. Johnny Ribeiro Building, 106 Nev. 88 (1990).

In addition to the above sanctions, when relevant evidence is destroyed, the trier of fact may draw an adverse inference from the destruction. Reingold v. Wet'n Wild Nev., Inc., 113 Nev. 967 (1997), overruled on other grounds. The Ninth Circuit has noted that "simple notice of 'potential relevance to the litigation'" is sufficient when entering an adverse inference. Glover v. BIC Corp., 6 F.3d 1318 (9th Cir. 1993).

A party seeking the presumption has the burden to demonstrate that the evidence was destroyed with the intent to harm. Bass-Davis, 122 Nev. 442. When such evidence is produced, the presumption that the evidence was adverse applies, and the burden of proof shifts to the party who destroyed the evidence. To rebut the presumption, the destroying party must then prove, by a preponderance of the evidence, that the destroyed evidence was not unfavorable. Id. at 448.

Due to the extreme sanctions and consequences that follow negligently or willfully destroying evidence that could be used during litigation, it is imperative for all companies to consult with an attorney prior to destroying or disposing of any potential evidence.

Russell D. Collings is an Associate with Kring & Chung, LLP's Las Vegas, NV office. He can be reached at (702) 260-9500 or rcollings@kringandchung.com.