Federal Evidence Review

In litigation concerning insulin transported by the defendant which was damaged when exposed to sub-freezing temperatures, plaintiff's post-shipment destruction of the insulin was not spoliation because it did not affect the defendant's ability to make a claim or raise a defense in the case; the defendant failed to show it was prejudiced by plaintiff's destruction of the shipped insulin since federal regulations mandated that any insulin exposed to sub-freezing temperatures was worthless, in Eli Lilly and Co. v. Air Exp. Intern. USA, Inc., __ F.3d __ (11th Cir. Aug. 23, 2010) (No. 09-12725)

The doctrine of spoliation has become a subject of increased attention in the field of discovery as well as in the field of evidence. The doctrine is applied to evidence that a party destroys and which was critical of another party's ability to make its case in court. One limitation on the spoliation doctrine is that evidence that is destroyed be relevant to the litigation. See, e.g., United States ex rel. Aflatooni v. Kitsap Physicians Service, 314 F3d 995, 1001 (9th Cir. 2002) (in absence of awareness that the destroyed evidence was relevant to the litigation, a finding of spoliation is not justified). In a recent case, the Eleventh Circuit examined a similar issue of evidence spoliation and rejected a defendant's spoliation claim because even had the evidence been preserved, it would have done the defendant no good in the litigation.

In the case, defendant DHL (Air Express International) had a long-term agreement with the plaintiff Lilly to provide international shipping services. Disagreement between these parties arose when the plaintiff provided a temperature-sensitive pharmaceutical (insulin) to DHL for transport from Europe to the United States. In the process of shipping the insulin, it was inadvertently exposed to sub-freezing temperatures. As a result, it became unmarketable and its value was destroyed. Lilly sought recovery for the damaged pharmaceutical. The defendant disputed that the insulin was indeed damaged and claimed that the plaintiff had destroyed the allegedly damaged insulin and should be sanctioned for spoliation of evidence. The plaintiff justified destruction of the insulin because the sub-zero exposure rendered it "worthless whether or not actual damage occurred" because "federal regulations mandate destruction of pharmaceutical products subjected to sub-freezing temperatures whether or not they are in fact damaged." Eli Lilly, __ F.3d at __.

The trial court granted the plaintiff's motion for summary judgment, concluding that the insulin had been damaged in transit, breaching the service agreement. The court rejected the defense motion for spoliation sanctions because it concluded that the defendant had failed to show prejudice from the post-transit destruction of the insulin by the plaintiff:

"Plaintiffs produced records showing that the insulin was subjected to sub-freezing temperatures and evidence showing that the devices which measured the temperatures were tested and certified for accuracy before and after use. Further, federal regulations provide that pharmaceuticals subjected to sub-freezing temperatures must be tested for safety and purity prior to being salvaged. 21 C.F.R. § 211.208. And, Plaintiffs presented uncontradicted expert testimony that any testing of insulin subjected to sub-freezing temperatures would result in destruction of the insulin. Because Plaintiffs presented undisputed evidence that the insulin was subjected to sub-freezing temperatures and undisputed evidence that the insulin is unsaleable regardless whether actual damage occurred, Plaintiffs are entitled to summary judgment on the issue of whether the insulin products were damaged in transit."

Eli Lilly, __ F.3d at __.

Because the damage occurred when the temperatures recorded in shipping the insulin reached sub-freezing levels, it made little difference whether the insulin was in fact damaged or harmed. The product had lost its marketability and value and could not be sold. The defendant accordingly suffered no prejudice from the destruction of the insulin because even had it been saved and had the defendant been able to test the insulin, the very process of testing would destroy the chemical so that it could not be marketed. According to the circuit:

"As to DHL's spoliation claim, a party moving for sanctions must establish, among other things, that the destroyed evidence was relevant to a claim or defense such that the destruction of that evidence resulted in prejudice. The destruction of the insulin products did not affect DHL's ability to make a claim or defense; the exposure to sub-freezing temperatures rendered the products worthless regardless of the results of any tests that DHL may have conducted. Because DHL suffered no prejudice, the district court did not abuse its discretion in denying its claim for spoliation of evidence."

Eli Lilly, __ F.3d at __ (citing Flury v. Daimler Chrysler Corp., 427 F.3d 939, 943 (11th Cir. 2005) (explaining that spoliation analysis hinges upon the significance of the evidence and the prejudice suffered as a result of its destruction.))

As the Second Circuit once noted, the spoliation of evidence relevant "to proof of an issue at trial can support an inference that the evidence would have been unfavorable to the party responsible for its destruction." Kronisch v. United States, 150 F.3d 112, 126 (2d Cir. 1998). The Lilly illustrates the applicability of this principle because in that case, the destruction occurred when the record of the shipment reached sub-freezing, so that the good transported could not be used or sold, regardless of whether the temperature-sensitive insulin had actually incurred any damage.