General Assembly Introduces New Guidelines and Penalties for Spoliation of Evidence Effective July 1, 2019

05.15.2019

On March 21, 2019, Governor Northam signed the General Assembly’s Senate Bill 1619 into law. The bill, codified as Virginia Code § 8.01-379.2:1, adds an entirely new section to Title 8.01 of the Virginia Code, and becomes effective July 1, 2019.   Most importantly, the law, which addresses spoliation of evidence relevant to litigation, effects a significant statutory change with regard to the duties and obligations of parties who are or may become involved in litigation in the courts of the Commonwealth, including more extreme sanctions for failure to preserve relevant evidence.

Businesses and individuals who routinely interact with attorneys are likely familiar with the concept of a litigation hold, the aim of which is to preserve evidence in the event of threatened or ongoing litigation. Prior to SB 1619’s enactment, in state court practice at least, there was no explicit duty requiring anticipatory preservation of evidence. Similarly, while spoliation sanctions may be a concern during litigation, before the passage of SB 1619 there was limited authority granting state courts the ability to impose sanctions for pre-litigation discovery misconduct. In fact, unlike cases in federal court, in which extreme sanctions such as adverse inference instructions or even dismissal may be imposed upon a party for certain unintentional pre-litigation discovery misconduct, the Supreme Court of Virginia in the recent case Emerald Point, LLC v. Hawkins, 294 Va. 544 (2017) previously limited such extreme sanctions to those circumstances in which evidence had been destroyed or otherwise withheld intentionally.

The new statute effects a substantial change in the law by creating an affirmative duty to preserve any potentially relevant evidence in anticipation of litigation and also by expanding the circumstances in which a court may impose more extreme sanctions such as adverse inference instructions or even dismissal of a case. Under Virginia Code § 8.01-379.2:1(A), every potential litigant and/or party to active litigation now has an affirmative duty to preserve evidence that may be relevant to reasonably foreseeable litigation. In considering at what point this duty arises, a court, if called upon, will evaluate the circumstances of the actual or potential dispute, including “the extent to which the party or potential litigant was on notice that specific and identifiable litigation was likely and that the evidence was relevant.”

And, with regard to sanctions for discovery-related misconduct, Virginia Code § 8.01-379.2:1(B) provides that where evidence that should have been preserved is lost because a party failed to take “reasonable steps” to preserve it or it is “otherwise disposed of, altered, concealed, destroyed, or not preserved,” and cannot be replaced, a party may be subject to two alternate forms of sanctions. If the loss merely results in prejudice to the opposing party(s), a court may order some form of lesser “measures no greater than necessary to cure the prejudice.” The statute, which echoes the language of a similar rule in the Federal Rules of Civil Procedure, diverges from federal practice however, by providing that if the court finds that a party either recklessly or intentionally failed to preserve evidence to prevent its use by an opposing party, then the court may either presume the evidence was unfavorable, instruct the jury that it either may or shall make a similar presumption, or the court may either dismiss the action outright or enter a default judgment against the party that failed to preserve the evidence.

 In light of this new addition to the Virginia Code, parties to ongoing or reasonably foreseeable litigation (and their counsel), need to be aware that, as of July 1, 2019, they are now obligated to preserve any evidence which may be relevant to such proceedings, regardless of whether or not litigation and/or formal discovery have commenced. As such, businesses and individuals who may become involved in litigation should confirm whether or not they have a functional retention policy for documents and other evidence in place, and ensure that those policies are implemented in order to avoid either the prospect of less severe sanctions which may be imposed by a court for negligent failure to preserve evidence, or more severe sanctions for any reckless or intentional failure to do so. In addition, counsel who may be familiar with the applicable rules in federal practice now need to also be aware of the manner in which the standard in Virginia has now diverged. Doing so will ensure that clients and their attorneys can rest assured that they have taken reasonable measures to secure and safeguard potentially relevant evidence, thereby avoiding the future imposition of discovery sanctions which might otherwise adversely affect the outcome of their case. If you have any questions regarding preservation of evidence, or are otherwise involved in threatened or pending litigation, please do not hesitate to contact us.

Until the Code is officially updated, the full text of the new statute is available here.