Facts
- Owners and operators of a power plant sued the generator’s designer and supplier over alleged defects and related contract and warranty claims.
- The case proceeded in federal court under diversity jurisdiction.
- A jury trial began in January 2004 but ended in a mistrial after plaintiffs produced a previously undisclosed expert report and related materials during trial, which the court found prejudiced defendant’s expert preparation and cross-examination.
- After the mistrial, defendant moved for an order directing plaintiffs to preserve physical items, documents, software, and electronically stored information (ESI).
- Plaintiffs responded with a counter-motion seeking a corresponding preservation order directed at defendant.
- Defendant moved to strike plaintiffs’ counter-motion.
Issues
- When should a federal district court, exercising inherent authority, issue an order directing preservation of documents, things, and ESI in the absence of a clear showing of ongoing or imminent destruction?
- Whether defendant established a concrete risk of loss or alteration of relevant evidence sufficient to justify a preservation order against plaintiffs.
- Whether plaintiffs established a concrete risk of loss or alteration of relevant evidence sufficient to justify a preservation order against defendant.
- Whether plaintiffs’ counter-motion should be stricken.
Decision
- The court denied defendant’s motion for a preservation order.
- The court denied plaintiffs’ counter-motion for a preservation order.
- The court denied defendant’s motion to strike as moot.
- The court applied a three-part standard and concluded neither party met the required showing on the record presented.
Legal Principles
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A preservation order is an exercise of the court’s inherent authority to manage litigation and prevent spoliation, but it is not automatic and may impose significant burdens.
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A court may consider, at minimum:
- whether the underlying action is properly before the court;
- whether the movant shows a significant, non-speculative concern that relevant evidence will be lost, destroyed, or materially altered absent an order; and
- whether the requested preservation obligations are reasonable and proportional given the amount in controversy, party resources, and the importance of the evidence.
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Past discovery failures, without a concrete basis to believe evidence is currently at risk, do not by themselves justify broad preservation mandates.
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Preservation orders should not substitute for ordinary discovery tools and rule-based remedies (including case-management measures and sanctions) where those mechanisms can address prejudice.
Conclusion
The court refused to impose broad preservation obligations on either side because neither demonstrated a concrete and proportionate need showing that relevant evidence faced a real risk of loss, destruction, or material alteration, and existing discovery remedies were adequate on the record.