In the spoliation case out of the District of Columbia North et. al. v. Smarsh, Inc., et. al., Case No. 15-494 (D. Columbia, December 4, 2015), Plaintiffs were securities brokers who were subject to disciplinary actions by FINRA. They hired Defendant Smarsh, the email vendor for their former firm, to produce electronic communications concerning them. Plaintiffs filed suit against Defendants, which included FINRA, alleging that the information produced by Smarsh was spoliated and that FINRA should not have relied upon it. Defendants filed Motions to Dismiss.
The court granted the motions to dismiss. Plaintiffs alleged both intentional and negligent spoliation against Defendant Smarsh, and sued Defendant FINRA for relying upon spoliated evidence. The court dismissed the case against FINRA because of lack of jurisdiction over FINRA’s regulatory authority, as well as because of its government immunity. The court dismissed the case against Smarsh based upon lack of jurisdiction. The court never reached the merits of Plaintiffs’ claims.
This spoliation case is worth noting because Plaintiffs should be aware that destruction of electronic evidence can form the basis of its own separate claim and is not simply a discovery device. A plaintiff who sues a defendant for a tort may have a separate cause of action for spoliation if the alteration of records relates to the conduct that makes up the tort – that is, if alteration of electronic records causes its own distinct damages. eDiscovery firms like ILS have the ability to review metadata in electronic files to determine if the files were altered, and when, and by whom.