Spoliation Sanction Ruling Affirmed, Defendant Destroyed Records Although Had Already Contemplated Litigation Re Asbestos

21 Mar 2018

In Warren v. Anchem Products, et al., J-M Manufacturing Company, No. 5493N 40000 (N.Y. App. Div. Jan. 18, 2018), the Supreme Court Appellate Division, New York County considered whether a lower court award of spoliation sanctions in favor of Plaintiff against Defendant J-M Manufacturing Company, Inc. (“JMM”) was an abuse of discretion.

In or around the 1990’s, JMM lost or destroyed numerous banker’s boxes that housed records regarding the manufacture, sale, and marketing of asbestos containig pipe.  The Defendant JMM had purchased this line of business from a predecessor company Johns-Manville in the 1980s. The first claim for personal injuries by an end user with regard to that pipe was not made until 2000, however, Plaintiff presented evidence of earlier notice to JMM that the records might be needed for future litigation.  Plaintiff argued that JMM’s behavior constituted spoliation by asserting that JMM was aware of the long history of personal injury claims arising from other Johns-Manville asbestos-containing products, and also of the Worker’s Compensation claims filed by individuals who worked in the manufacture of the pipes at issue. The Court also considered multiple other evidentiary bases supporting Plaintiff’s argument that JMM contemplated the possibility of litigation at the time it acquired the Johns-Mansville business (and before the loss/destruction of the records):  (1) JMM’s having entered into a litigation cooperation agreement with Johns-Mansville at the time it purchased the pipe business; (2) through internal memos from the 1980’s showing that executives and lawyers at JMM discussed the risk-benefit of continuing the product line; and (3) through internal communications regarding the possibility that its insurance carriers would withdraw liability coverage for the product.  Based upon this evidence, the Appellate Court found that the motion court did not abuse its broad discretion in granting the spoliation motion, and in its direction that the jury be charged with an adverse inference at the time of trial.  The lower court ruling was affirmed by the New York Supreme Court, Appellate Division, First Department.