Crews v. Avco Corp., No. 70756-6-I, 2015 WL 1541179 (Wash. Ct. App. Apr. 6, 2015)(unpublished opinion)
On April 6, 2015, the Washington Court of Appeals affirmed the severest of sanctions (a so-called “death penalty” order) against Avco Corporation for discovery violations. Various articles and blogs summarizing this decision appear to contend that the order of the trial court and subsequent affirmation by the court of appeals reject reliance on retention policies for defensible destruction. In my opinion, this overextends the actual decision, which only rejects reliance on “vague” retention policies for non-production of discoverable documents.
This case arose from a plane crash in which several people were killed purportedly from an engine failure caused by a faulty carburetor. The plaintiffs (comprised of personal representatives of the deceased estates) sought discovery, pertinent to this discussion, relating to the design and manufacture of the carburetor and knowledge of defects or malfunctions. One of the defendants in the case, Avco Corporation (manufacturer and seller of the plane’s engine in 1978), failed to respond to these discovery requests to the satisfaction of the plaintiffs, resulting in multiple motions to compel, orders to produce by the trial court, and finding of contempt.
In response to the allegations regarding the inadequacy of production, Avco relied upon its document retention policy. More specifically, after being held in contempt, Avco submitted a declaration from counsel to explain efforts made to comply with the trial court’s order to produce:
Counsel stated that, pursuant to company policy, “certain categories of documents (such as engineering documents and regulatory correspondence) are kept into perpetuity whereas other categories of documents are not required to be retained on a permanent basis but are retained only for fixed periods of time, depending upon the category of document” and that many of the documents supplied…regarding carburetors were “beyond the various retention periods in [Avco’s] Records Management Policy.”
The records management policy itself, however, was not attached to the declaration.
In response to a subsequent motion for sanctions that alleged continued failure to produce relevant documents, Avco explained that, under its records management policy, many of the documents were no longer in its possession. In reply, plaintiffs noted that Avco:
…failed to submit any employee affidavit stating that no responsive documents existed or that certain evidence was destroyed under the records management policy. Instead, they observed, Avco “wholly relies on [its attorney’s] declaration….”
On the first day of trial (approximately 16 months after the declaration), the trial court heard the plaintiffs’ motion for default. It was during this hearing that Avco first produced a copy of the records management policy. In review of the policy, the presiding trial judge found that it was not clear from the policy whether it extended to the documents requested by plaintiffs. Because she was “not satisfied…that some of the documents requested by the plaintiff couldn’t have been produced” she orally granted the plaintiffs’ motion for sanctions.
In a written order that followed, the trial judge stated that the justification for non-production was insufficient:
The Court examined the [records management policy], which was provided without affidavit or declaration and here finds the categories within it, combined with counsel’s assignment of documents to the categories within it, to be overly vague.
Based on the foregoing, the trial court found Avco’s continued disregard and violation of discovery and contempt orders to be without reasonable excuse and willful. Accordingly, the trial court concluded that the only sanction that will suffice is that “[a]ll of each plaintiff’s allegations in their respective operative Complaints against [Avco] are deemed admitted, and all of [Avco’s] defenses, if any, are stricken,” which established liability and causation in favor of the plaintiffs leaving for the jury the amount of compensatory damages and punitive damages to be awarded. In the interim, Avco settled with one of the plaintiffs. With respect to the remaining plaintiff, the jury returned a verdict of $17,283,000 – $11,283,000 in compensatory damages and $6,000,000 in punitive damages. Avco appealed.
The appellate court affirmed the “death penalty order” of the trial court and in doing so noted:
- Avco did not produce or prove the policy at the original contempt hearing. Instead it chose to submit an attorney declaration stating the policy governs the retention of “various categories of documents, including intra-company and inter-company correspondence.
- The attorney declaration did not specify the discovery requests or types of documents to which the policy applied.
- The trial judge examined the policy and found that it was “vague in many ways…. I’m not satisfied, looking at the exhibits provided today, that some of the documents requested by the plaintiff couldn’t have been produced.”
- That the records management policy was not part of the record on appeal, rendering it unavailable for independent review; however, on the record before it, it was not an abuse of discretion to reject the policy as an excuse for non-production as: (1) the scope and operation of the policy is unclear and unsupported; (2) no explanation of how the policies applied to the “various categories” of documents requested; and (3) no other evidence submitted (i.e., employee affidavits) on application of policy to requested documents and destruction.
Pertinent to this discussion, the appellate court agreed with the trial court’s assessment that it would require a leap of faith to conclude the policy covered the evidence in question.
To conclude that this decision rejects reliance on document retention policies simply goes too far. Instead, vague retention policies were rejected as a basis to support defensible destruction of records. While neither the trial court nor the appellate court expanded on the vagueness standard employed, it is clear that a reasonable correlation must be demonstrated between the record and the retention policy or schedule prescribing its disposal.
A document destruction practice will not win the day on a “leap of faith.”
Disclaimer: The purpose of this post is to provide general education on Information Governance topics. The statements are informational only and do not constitute legal advice. If you have specific questions regarding the application of the law to your business activities, you should seek the advice of your legal counsel.