Slattery v. United States

46 Fed. Cl. 402, 2000 U.S. Claims LEXIS 52, 2000 WL 329665
CourtUnited States Court of Federal Claims
DecidedMarch 24, 2000
DocketNo. 93-280C
StatusPublished
Cited by8 cases

This text of 46 Fed. Cl. 402 (Slattery v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Slattery v. United States, 46 Fed. Cl. 402, 2000 U.S. Claims LEXIS 52, 2000 WL 329665 (uscfc 2000).

Opinion

OPINION AND ORDER

SMITH, Chief Judge.

I. Introduction.

Plaintiffs brought a shareholders’ derivative suit on behalf of Meritor Savings Bank to recover compensation for breaches of a regulatory contract with the Federal Deposit Insurance Corporation and the closure of the bank. On November 10 and December 9, 1992, the FDIC Board of Directors held meetings where Meritor was discussed. The instant dispute concerns the government’s partial withholding of the minutes and complete withholding of the transcripts and the tapes of these meetings through most of the litigation in this case to date. The minutes were produced in two redacted versions, until the government made available a substantially unredacted version in the waning days of trial in January, 2000. The transcripts and the tapes were not produced until after trial, in February and March, 2000, respectively.

Plaintiffs contend that the government’s failures to produce constitutes spoliation of evidence. Plaintiffs argue in their briefs that spoliation is proved when the Court finds destruction or alteration of potentially probative evidence that prejudiced the opposing party as a result of either bad faith or negligence. At oral argument, plaintiffs maintained in the alternative that the government’s privilege assertions, which lead to redactions, are themselves evidence of bad faith. Plaintiffs assert that the evidence contained in the documents is material, ask the Court to make adverse factual inferences on fourteen (14) different issues, and seek to bar the government from introducing any contrary evidence into the record.

Defendant argues that the spoliation standard in this Court requires bad faith, that bad faith cannot be established because the failures to produce resulted from inadvertence or plaintiff’s lack of diligence in examining the privilege logs, and that plaintiffs were not prejudiced because they possessed the arguably similar Freedom of Information Act (FOIA) versions of the minutes from the Hindes litigation1. The Court now finds that the government’s position reflects controlling law and that the facts do not warrant a finding of bad faith.

II. Facts.

In the course of discovery in this case, the government produced copies of the minutes that were heavily redacted on the grounds of executive privilege. The production occurred in April of 1997, and, in all likelihood, during the tenure of the prior government counsel of record, Mr. Richard Rice. The November 10,1992 minutes were designated as PX 480, and the December 9, 1992 were designated as PX 502. These same versions of the minutes were previously produced by the FDIC to Mr. Gary Hindes, one of the current plaintiffs, in the course of discovery in litigation he prosecuted in the U.S. District Court for the Eastern District of Pennsylvania. The version of the minutes originally produced in this case was already redacted during the Hindes litigation on grounds of other privileges, such as attorney-client and deliberative process. The government’s current counsel, Mr. Jefferson Hughes, represented to the Court that his litigation file originally [404]*404contained only the version redacted for the Hindes litigation.

Plaintiffs and the government communicated several times during the summer of 1997 regarding privilege assertions for various documents, including executive privilege for the minutes. In its October, 1997 reply, the government specifically reaffirmed its claim of executive privilege to two documents. They were identified in the privilege logs as “transcripts” of the meetings, not minutes. Plaintiffs counsel, Mr. Eric Bloom, subsequently wrote to government counsel that the maintenance of executive privilege as to transcripts might necessitate a motion to compel. The minutes and the tapes were not mentioned in any log and were not addressed by Mr. Bloom. The parties never resolved the privilege issue prior to conclusion of discovery, because the government failed to answer Mr. Bloom or to move for a protective order to support the privilege. For their part, plaintiffs never moved to compel production.

Mr. Hindes also obtained different versions of the minutes in May of 1994 through FOIA requests to the FDIC (hereinafter FOIA minutes). The government held back certain portions of the FOIA minutes as exempt under the Government in the Sunshine Act, 5 U.S.C. § 552b(c)(8) (reports used by financial regulatory agencies) and (10) (information related to agency participation in civil litigation). Plaintiffs used the FOIA minutes in a 1994 filing, and defendant eventually adopted them as its own DX 676 and 677 in the spring of 1999. There are some differences in the text excluded from the FOIA minutes as compared with PX 480B and PX 502B. Parties are hotly contesting whether the differences between the redactions in the above two versions of the minutes reveal any material information.2

During the trial, plaintiffs first brought forward the discrepancies between FOIA and original versions of the minutes on November 3, 1999. They requested that the Court examine the minutes for accuracy of privilege assertions. The request was denied as belated. Plaintiffs ultimately used the FOIA minutes on January 18, 2000 in their cross-examination of Mr. Robert Hartheimer, and there again requested that the government produce the unredacted versions of the minutes so that the Court could ascertain the legitimacy of privilege assertions. Plaintiffs’ counsel, Mr. Thomas Buchanan, again acknowledged that they, “in better diligence,” should have moved to compel production before trial, but argued that they have since obtained more information which undermines the privilege assertions.

Upon review of the documents at the Court’s insistence, the government agreed to waive the privilege and provided the substantially unredacted minutes, designated as PX 480B and PX 502B, on January 19 and 21, 2000. The government produced the transcripts on February 11, 2000, and the tapes on March 15, 2000.

III. Discussion.

Spoliation refers to the destruction or withholding of critically probative evidence resulting in prejudice to the opposing party. See Hardwick Bros. Co., II v. United States, 36 Fed.Cl. 347, 416 (1996). Under the principle of omnia praesumuntur contra spoliatorem, or “all things are presumed against a despoiler or wrongdoer,” the appropriate sanctions traditionally include the drawing of adverse factual inferences. Black’s Law Dictionary 1086, 1401 (6th ed.1991); see also RCFC 37(b)(2)(A) (allowing for negative inferences to sanction discovery violations) and (B) (precluding introduction of contrary evidence). This negative presumption is justified “[w]here relevant evidence is within the control of the party to whose interest it would naturally be to produce it and he fails to do so, without satisfactory explanation, and produces no evidence or weaker evidence.” INA Aviation Corp. v. United States, 468 F.Supp. 695, 700 (E.D.N.Y.1979).

The parties disagree on whether bad faith is necessary to find spoliation, or whether mere negligence or unintentional conduct would suffice. There is an acknowledged jurisdictional split on the necessity of bad [405]*405faith. Compare, e.g. S.C. Johnson & Son, Inc. v. Louisville & Nashville R.R. Co.,

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46 Fed. Cl. 402, 2000 U.S. Claims LEXIS 52, 2000 WL 329665, Counsel Stack Legal Research, https://law.counselstack.com/opinion/slattery-v-united-states-uscfc-2000.