Opinion
Civ. No. 04-2593 (RHK/AJB).
November 24, 2004
Steven B. Fisher, John R. Schleiter, and David M. Roach, Fisher, Kanaris, P.C., Chicago, IL, and Bradley D. Fisher, Foley Mansfield, P.L.L.P., Minneapolis, MN, for Plaintiff.
George W. Flynn and Bradley J. Ayers, Flynn, Gaskins Bennett, L.L.P., Minneapolis, MN, for Defendants.
MEMORANDUM OPINION AND ORDER
Introduction
On December 6, 2000, a fire caused significant damage to the Decathlon Hotel and Athletic Club ("Decathlon"). Plaintiff Regent Insurance Company ("Regent"), as subrogee of Decathlon, has now sued Defendants Candle Corporation of America, Sysco Corporation, and Sysco of Minnesota, Inc. (collectively "Defendants") alleging various product liability claims based on the theory that a Sterno can manufactured, designed and distributed by Defendants caused the fire. In their Answer, Defendants have asserted an affirmative defense seeking sanctions against Regent for spoliation of evidence resulting in Defendants' inability to investigate the fire scene in its original condition. Regent has moved for summary judgment on Defendants' spoliation of evidence defense.
Background
On December 7 and 8, 2000, the fire scene at Decathlon was investigated by three fire experts: Russ Smith, a Fire Inspector for the Bloomington Fire Department (Smith actually began investigating the scene on December 6); G. Crawford Wiestling, a professional fire investigator retained by Decathlon to investigate the cause and origin of the fire; and Robert Whitemore, a professional fire investigator retained by General Casualty Insurance Company ("General Casualty"), an affiliate of Regent and insurer of Decathlon, to investigate the cause and origin of the fire. (Smith 7/22/04 Aff. ¶¶ 2, 7, 8, 17, 18.) Smith established a protocol for the investigation and instituted a "method of tearing down the scene and removing debris, etc." (Id. at ¶ 8.)
The three inspectors concluded that the fire started in the Tabone Room and that a Sterno can was the cause of the fire. "[T]his determination was based upon [their] observations of the fire scene, interviews with witnesses and firefighters, evidence gathered at the scene and [their] knowledge, experience and expertise in fire cause and origin investigations." (Wiestling Aff. ¶ 23.) After reaching a conclusion about the cause and origin of the fire, the inspectors retained physical artifacts related to and surrounding the Sterno can. (Smith 7/22/04 Aff. ¶¶ 23, 24.) "[S]pecifically, the coffee pot, the Sterno holder, baskets for utensils, silverware, plates, creamer, . . . [a] food riser, coffee cups, glassware, [and] . . . [b]oxes of Sterno cans" were preserved and removed from the scene; "it was determined" that there were no other artifacts relevant to the cause and origin of the fire. (Wiestling Aff. ¶¶ 15, 16.) On December 8, the inspectors considered and rejected numerous alternative ignition sources, none of which was located near the Sterno can. These alternative ignition sources included an artificial Christmas tree and its lights, electrical outlets, and overhead lighting fixtures. (Id. at ¶¶ 17-21, see also Dyer Aff. ¶ VII (mentioning a TV and VCR as an additional "known potential ignition source").)
During the investigation, Decathlon employee Jodi Epstein informed the inspectors that shortly before the fire started, in preparation for a morning meeting, she lit a Sterno can to heat coffee in the Tabone Room. (Ayers Aff. Exs. H, I.)
It was not until June 2003, two and one half years after the fire, that General Casualty notified Defendants of the fire and alerted Defendants to the possibility that a defective Sterno can was its cause. (Ayers Aff. ¶ II.) Defendants first inspected the fire scene in October 2003, accompanied by Richard Dyer, a professional fire investigator retained by Candle Corporation. (Id. at ¶ V.) By that time, the fire scene "had been completely gutted, leaving only the bare brick walls on three sides and concrete floor for inspection." (Dyer Aff. ¶ III; Ayers Aff. ¶ VI.) In May 2004, Defendants inspected the fire artifacts retained by Regent. (Dyer Aff. ¶ IV.) Dyer was also provided with Smith's "report, file materials, photographs and videotape of the fire scene," and the photographs "from Plaintiff's fire investigators and insurance representatives." (Id. at ¶¶ VI, VII.)
At oral argument, counsel for Regent was unable to give a reason for the two-and-one-half-year delay in notifying Defendants.
The record does not indicate when or under what circumstances the Decathlon building was "gutted."
According to Dyer, the photographs of the fire scene "are insufficient . . . to conduct a comprehensive analysis of [the] fire because they do not allow [him] to fully evaluate heat, burn and smoke patterns, to see critical areas close-up, and to see physical evidence that was not photographed or retained." (Id. at ¶ VII.) Dyer has stated that his "ability to determine whether" any of the alternative ignition sources "caused and/or contributed to" the fire has been compromised because he has "not been able to examine the fire scene in its original condition, nor inspect potential alternative sources of ignition." (Id. ¶ IX.) Regent disputes that Defendants' investigation has been compromised in any way, and now moves for summary judgment seeking dismissal of Defendants' spoliation defense.
Standard of Review
Summary judgment is appropriate if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c). It is to be granted only where the evidence is such that no reasonable jury could return a verdict for the nonmoving party. See Anderson v. Liberty Lobby, 477 U.S. 242, 250 (1986). The Court views the evidence, as well as all reasonable inferences, in a light most favorable to the nonmoving party.See Enterprise Bank v. Magna Bank, 92 F.3d 743, 747 (8th Cir. 1996); see Adkinson v. G.D. Searle Co., 971 F.2d 132, 134 (8th Cir. 1992). The moving party carries the burden of showing that there is no genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Mems v. City of St. Paul, Dep't of Fire Safety Servs., 224 F.3d 735, 738 (8th Cir. 2000). The nonmoving party may not rest upon the allegations or denials of its pleadings. Rather, the nonmovant must establish the existence of specific facts that create a genuine issue for trial. Neither mere allegations nor denials are sufficient. See Liberty Lobby, 477 U.S. at 256.
Analysis
Regent moves for dismissal of Defendants' spoliation defense on the grounds that: (1) there was no spoliation of evidence because all of the relevant evidence from the fire scene was preserved; (2) the agreement among the three fire experts regarding the cause and origin of the fire indicates that there is "only one viable fire cause and origin theory" (Reply Mem. at 10); and (3) the quality and comprehensiveness of the photographs and videotapes taken of the fire scene negate any prejudice to Defendants. For the reasons that follow, the Court determines that summary judgment is not appropriate.
"Spoliation of evidence refers to the destruction of relevant evidence by a party." Hoffman v. Ford Motor Co., 587 N.W.2d 66, 71 (Minn.Ct.App. 1998) (internal quotation omitted). Where spoliation of evidence occurs prior to the institution of a lawsuit, "[a] district court is vested with discretion to impose sanctions upon a party under its inherent disciplinary power."Bass v. Gen. Motors Corp., 150 F.3d 842, 851 (8th Cir. 1998) (citations omitted). Before a court may impose sanctions for the destruction of evidence, however, "[t]here must be a finding of prejudice to the opposing party." Stevenson v. Union Pac. R.R. Co., 354 F.3d 739, 748 (8th Cir. 2003) (citation omitted). Such a determination is based on the "nature of the evidence destroyed" in a given case, id., and on "the potential for remediation of the prejudice," Patton v. Newmar Corp., 538 N.W.2d 116, 119 (Minn. 1995).
In general, whether the destruction of evidence warrants sanctions is based on factual findings made by the court. Courts often hold evidentiary hearings to determine the facts relevant to the imposition of sanctions. See, e.g., Morris v. Union Pac. R.R., 373 F.3d 896, 901, 903 (8th Cir. 2004) (noting that the district court conducted four days of "sanctions hearings" concerning the defendant's destruction of evidence); Stevenson, 354 F.3d at 743 (noting that the district court granted the plaintiff's motion for sanctions after a three-day evidentiary hearing).
Sanctions for spoliation of evidence may be appropriate where a party destroys evidence that it "knew or should have known was relevant to imminent litigation." Dillon v. Nissan Motor Co., 986 F.2d 263, 267 (8th Cir. 1993). Such a standard has been used to justify the exclusion of testimony that is related to the destroyed evidence where that testimony puts the innocent party at a disadvantage. See, e.g., id. The destruction of evidence may also warrant the imposition of a presumption in favor of the innocent party or an "adverse inference instruction" given to a jury, although "there must be a finding of intentional destruction indicating a desire to suppress the truth before [that sanction] is justified." Morris v. Union Pac. R.R., 373 F.3d 896, 901 (8th Cir. 2004) (internal quotation omitted); see also SDI Operating P'ship v. Neuwirth, 973 F.2d 652, 654-55 (8th Cir. 1992) (affirming the imposition of a sanction excluding certain evidence and the denial of a sanction imposing a "presumption favorable to the innocent party" where there was a "lack of bad faith").
The parties have not addressed whether Minnesota or federal law on spoliation sanctions applies to the instant motion, although both parties rely primarily on Minnesota law. The Court will assume that federal law governs the standards applied to the spoliation issues in this case. See, e.g., Fakhro v. Mayo Clinic Rochester, No. Civ. 02-626, 2004 WL 909740, at *2-3 (D. Minn. March 31, 2004) (applying federal law to a claim for spoliation sanctions because such a determination involves procedural matters). But Minnesota cases that address spoliation of evidence in the specific context of claims stemming from fire damage are also instructive.
According to Regent, summary judgment is proper because only irrelevant evidence (i.e., evidence unrelated to and not located near the Sterno can) was destroyed before Defendants were able to inspect the scene. This argument, however, has been rejected in contexts similar to the instant case. It is well established that "a fire scene itself is the best evidence of the origin and the cause of a fire." Hoffman, 587 N.W.2d at 71. (Dyer Aff. ¶ VIII ("[T]he best evidence to determine the origin and cause of a fire is the fire scene itself.").) In the instant case, Defendants were unable to inspect the fire scene firsthand — and although Regent's experts have "concluded that only [the Sterno can] could have caused the fire, another investigator examining the fire scene could have reached a different conclusion." Dodd v. Leviton Mfg. Co., CX-02-1570, 2003 WL 21147151, at *5 (Minn Ct. App. May 20, 2003); see Auto-Owners Ins. Co. v. Heggie's Full House Pizza, Inc., CX-A03-316, 2003 WL 22293643, at *4 (Minn.Ct.App. Oct. 7, 2003) (affirming dismissal of case where the plaintiffs had "an immense evidentiary advantage because only a small amount of physical evidence . . . was preserved" from the fire scene, and any evidence that could have been a "basis for an alternative defense theory of causation was destroyed"). Further, Defendants' expert states that "his ability to determine whether [any alternative ignition sources] caused and/or contributed to [the] fire" has been compromised by his inability to conduct a firsthand investigation of the fire scene. (Dyer Aff. ¶ IX.)
Regent also contends that the agreement among the three experts, all of whom were able to investigate the fire firsthand, indicates that there is only one possible cause and origin theory. This contention is flawed in two respects. First, the consensus among experts is not dispositive here because those investigators are "not now and never [were] aligned with" Defendants, and Defendants' expert "[was] unable to conduct an independent investigation" of the fire scene. Himes v. Woodings-Verona Tool Works, Inc., 565 N.W.2d 469, 471 (Minn.Ct.App. 1997). This is the pertinent inquiry even where circumstances indicate that an expert's report is credible. See id. Second, the record indicates that the three investigators largely worked together, casting doubt on the independence of their conclusions. (See Smith 10/14/04 Aff. at ¶ III (stating that Whitemore and Wiestling "participated in and assisted with my investigation of the Decathlon fire scene" and that the three "jointly agreed on an investigation protocol and conferred throughout the investigation").)
Finally, Regent asserts that Defendants' spoliation defense should be dismissed because the quality and comprehensiveness of the fire scene photographs are such that Defendants' expert should be able to determine the cause and origin of the fire. But there is clearly a genuine issue of material fact regarding the adequacy of the photos, as Defendants' expert states that they "are insufficient for [him] to conduct a comprehensive analysis of [the] fire" (Dyer Aff. at ¶ VII), and Regent's experts contend that the photos are adequate for an investigation (Wiestling Aff. ¶¶ 25, 27; Whitemore Aff. ¶¶ 24, 25). Further, even where an innocent party's "experts have been able to formulate opinions as to the origin and cause of the fire," prejudice may result from the destruction of evidence; a party presenting testimony without the benefit of having conducted a firsthand investigation will "be confronted with the challenge of meeting probative and convincing firsthand evidence with sketchy, relatively speculative secondhand evidence." Hoffman, 587 N.W.2d at 71.
The Court notes that the existence of photos in and of itself does not preclude spoliation sanctions. See, e.g., Bass, 150 F.3d at 850-51 (affirming imposition of sanctions against plaintiffs in the form of preclusion of testimony and an adverse inference instruction where the destroyed car was "photographed and videotaped and a portion of the driver's seatbelt was removed"); Dillon, 986 F.2d at 267-68 (affirming sanctions where photos were deemed to be inadequate); Hoffman, 587 N.W.2d at 71 (affirming sanctions where defendant's expert was forced to rely in part on unclear and incomplete photographs).
The posture of the instant case — as it is in the preliminary stages of discovery — only bolsters the Court's determination. The parties disagree as to whether Defendants' expert has been furnished with all of the photographs and investigation materials relevant to the fire. (Compare Dyer Aff. ¶ IX, with Roach Aff. ¶¶ 1, 4.) Further, at oral argument, Regent's counsel revealed that the original reports of Wiestling and Whitemore (both of whom inspected the fire scene firsthand) had not been produced to Defendants. Defendants cannot be expected to predict the extent of the prejudice they may have suffered without having the opportunity to conduct a review of such relevant materials. Even if the Court were to ultimately determine that no sanctions are warranted here because, as Regent urges, Defendants have suffered no prejudice, the denial of this motion is clearly proper — the consideration of spoliation sanctions in this case is for another day. Thus, the Court determines that because genuine issues of material fact exist, summary judgment as to Defendants' spoliation defense is not appropriate.
At the Court's request, Regent has since provided the Court and Defendants with these materials.
The current Pretrial Scheduling Order sets the discovery deadline at August 1, 2005. (Doc. No. 9.)
Conclusion
Based on the foregoing, and all of the files, records and proceedings herein, IT IS ORDERED that Regent's Motion for Summary Judgment on Defendants' Affirmative Defense Asserting the Spoliation of Evidence (Doc. No. 21) is DENIED.