Tony J. Sciarrino, Esq., Director of Claims Litigation
As a broker, you assist your clients in finding the right coverage for their businesses, in mitigating risk exposures to their businesses, resolving claims when they occur and when necessary, reducing unnecessary complexities related to subsequent litigation.
If a vehicle in your client’s fleet is involved in a collision, they have a duty to preserve both the electronic and physical evidence related to that accident. If a customer is injured in a trip and fall incident in their store, they have a duty to save the video of that incident. Whether the evidence is electronic or physical and even if it paints their business in a negative light, they have a duty to preserve it – and you as their broker, have a duty to make them aware of this. The failure to do so can expose your client to an allegation of spoliation of evidence which can have serious legal ramifications including negative jury instructions, sanctions and, in some states, a separate cause of action against them.
The availability and utilization of electronic evidence has grown dramatically over the last 20 years. More and more businesses utilize surveillance cameras, both in their stores, warehouses and more. Most companies utilize electronic record keeping, extended email storage and a variety of other technologies designed to save information. Further, many vehicles utilize black box technology that records speed, brake and steering inputs. The vehicle saves such data in the event of a collision.
How important is it for business owners to preserve evidence?
As the availability and variety of evidence has increased, so has the need to preserve it. The courts have reasoned that it is an important requirement that the parties to litigation preserve relevant evidence to prevent one party from subverting the fair administration of justice by destroying evidence.
A recent case that took place just blocks away from our Philadelphia offices demonstrates the importance of properly preserving evidence (St. Clair v. 1511 Locust Tavern C.P. Phila. No. 140300915). In this case, the patron of a bar/restaurant claimed that the bar over-served another patron who then assaulted and injured him. The bar advised the victim that they had surveillance tapes of the incident. When suit was filed months later, the video did not exist any longer.
The case went to trial and the judge instructed the jury they could assume that the video would support the patron’s rendition of events because the bar would never destroy evidence that was helpful to them. This is called the “adverse inference” jury charge, and legal journals are littered with similar cases in which the court instructs the jury that lost evidence can be assumed to be harmful to the party who lost it. In essence, the bar not only lost helpful evidence but they also gave the jury the impression that they were destroying damaging evidence. Ultimately, the jury returned a large verdict in favor of the patron.
When does a business need to preserve evidence?
Generally, the duty to preserve evidence arises the moment that litigation is reasonably anticipated. Practically, that means a policyholder should preserve evidence on any occasion one of their vehicles is involved in an incident that involves property damage or bodily injury. Similarly, if an individual is injured at their retail operation or other facility, they should assume that they have a duty to preserve any evidence related to that event. In some circumstances a party may send a written request that records be preserved. That request will act as notice of the business’ duty to preserve that evidence.
What is encompassed within the duty to preserve evidence?
The duty to preserve evidence includes the duty to locate and safely maintain the evidence. Electronic data preservation may require additional steps, due to automated deletion features or automated overwriting of data. Businesses must take active steps to halt the automatic deletion process and preserve the evidence.
Share these practical tips with your clients:
- In the event of a loss involving either property damage or bodily injury, save the relevant records. If possible, have duplicate records made and save them offsite, ideally with counsel or a reputable third party. Be sure to also document the chain of custody of the evidence.
- Preserve the relevant evidence beyond the statute of limitations for the potential claim. Therefore, if the state has a two-year statute of limitations for automobile accidents save the data acquisition boxes from the vehicles longer than the two-year statute. In the event the injured party is a minor, the business will be required to maintain the records for a longer period of time; typically, this means preserving them past the minor’s reaching the age of majority.
- Be sure your policyholder knows how their surveillance system works: how it stores video, if the videos can be overwritten and how the video can be viewed and saved.
- Be sure the policyholder understands how his or her electronic records are kept. Are his or her records kept on site, are they backed up to the cloud and for how long are they kept?
- Make sure the policyholder understands how his or her fleet vehicle data acquisition works. They should be sure that in the event of a collision or incident, the data is downloaded and preserved. In the event the vehicle is a total loss, they should not allow the vehicle to be destroyed without preserving the data acquisition boxes.
- Policyholders should have written protocols for record retention and follow those protocols.
- Policyholders should err on the side of caution.
If you or your client have questions, contact the PLM Claims Department at 800-752-1895.