Possible, Not Probable: Massachusetts Business Litigation Session Applies Broad Standard for Evidence Preservation


business litigation

By Thomas K. McCraw, Jr., Esq. and Alexandra F. Held, Esq

Both federal and state law impose an affirmative duty on defendants to preserve relevant evidence to a legal action involving their organizations—but when exactly does this duty begin? On remand from the Massachusetts Appeals Court, the Business Litigation Session of the Superior Court recently applied a broad standard for determining whether a reasonable person in a defendants’ position would have expected to be sued for purposes of spoilation of evidence. 

The plaintiff and defendants were partners in an $800 million condo project in Boston’s Back Bay before the defendants withdrew from the project in August 2019. On August 20, 2019, plaintiff’s counsel sent the defendants a letter providing them with written notice of a “Major Decision Impasse” under the terms of the parties’ operating agreement. The plaintiff eventually filed suit in October 2019.  

From the time the defendants withdrew from the project to the time the plaintiff filed suit, the defendants never imposed a litigation hold—an internal process in which an organization preserves all information, communication and data relating to a legal action. The defendants also affirmatively deleted or failed to preserve emails, texts and voicemails concerning the subject matter of the lawsuit. The plaintiff brought a motion for sanctions against the defendants for destroying relevant evidence.  

The Business Litigation Session initially denied the motion, holding that someone in the defendants’ position would not reasonably have expected to be sued until October 1, 2019, when plaintiff’s counsel sent a settlement demand to the defendants’ attorney with the warning that the plaintiff would seek to recover his losses through other mechanisms if the parties could not reach an agreement.  

Following an interlocutory appeal, a single justice of the Appeals Court remanded the case and ordered the Business Litigation Session to apply a broader standard: whether or not the defendants “knew or reasonably should have known that evidence might have been relevant to a possible action.” Under this standard, a defendant may be subject to spoilation sanctions if it destroyed materials that would be relevant evidence in a lawsuit at a time when litigation was possible, even if a reasonable person would not have considered litigation likely or probable

Using the broader standard, the Business Litigation Session on remand determined that “standing alone, the August 20 notice would have made anyone in the [defendants’] position fear that they were likely to be sued by the Plaintiffs.” Although the Court recognized communications between the parties occurring after the August 20 notice suggested litigation was not yet likely, the notice alone served to inform the defendants that litigation was possible.  Accordingly, their duty to preserve communications and other materials that would be relevant in litigation was triggered. 

In light of this decision applying the broader standard, Massachusetts attorneys should instruct their clients to impose a litigation hold within their organizations immediately upon notice of a possible legal dispute.  Practitioners in other jurisdictions should likewise double-check the standard for triggering litigation holds so they may advise their clients accordingly. 

Please contact Thomas K. McCraw, Jr., Esq., Alexandra F. Held, Esq., or your local FMG attorney with any questions.