Connecticut Federal Court Issues Strong Ruling in Cost Recovery Action for Remediation Costs

December 8, 2009
Client Alert Newsletter December 2009

Historically, spoliation of evidence has been an issue raised primarily in products liability cases, where the plaintiff destroys or fundamentally alters the allegedly defective product and thereby prejudices the defendant’s ability to defend the claims asserted against it. But in the past few years, several federal district courts have issued significant spoliation rulings in environmental cost recovery actions, reminding parties of the need to take appropriate measures to preserve all types of evidence – documentary, electronic and tangible – whenever litigation is reasonably anticipated, and particularly when remediation will eliminate potential future sampling.

The most recent of these cases was Innis Arden Golf Club v. Pitney Bowes, Inc., a cost recovery action brought pursuant to the Comprehensive Environmental, Response, Compensation and Liability Act ("CERCLA") brought by Innis Arden Golf Club, which discovered extensive PCB contamination on its century-old golf course in late 2004. In the action, Innis Arden alleged that Pitney Bowes, which had formerly conducted operations on an adjacent property, was the source of the contamination, and sought to recover the cost of remediation from Pitney Bowes and several other defendants. To establish the causal link to Pitney Bowes, Innis Arden relied upon soil samples its environmental consultant collected from the golf course and from the Pitney Bowes property beginning in early 2005. By comparing the chemical profile of the PCBs found on both properties, the consultant, who also acted as Innis Arden's proffered expert on causation, sought to correlate the contamination on the golf course to releases on the Pitney Bowes property. In accordance with laboratory protocol, the soil samples in question, once analyzed, were disposed of after one month.

Prior to trial, Pitney Bowes filed a motion for sanctions against Innis Arden for spoliation of evidence, charging the golf club with destroying the soil samples upon which its expert was relying and failing to retain all of the analytical data associated with the testing of those samples. According to Pitney Bowes, the destruction of this evidence precluded it from running potentially exculpatory tests that could have established that the PCBs on the golf course property predated Pitney Bowes' operations.

The court agreed with Pitney Bowes, and sanctioned Innis Arden by precluding all evidence based on the soil samples that had been collected from the golf course property and subsequently destroyed. According to the court, Innis Arden’s own documents established that the golf club knew that the soil sampling was a critical part of possible cost recovery litigation, and the duty to preserve such evidence attached at the latest by mid-2005, by which time counsel was actively involved in the investigation and analysis of the samples in preparation for legal action against Pitney Bowes. Further, although Innis Arden did provide Pitney Bowes with notice and an opportunity to conduct its own pre-remediation sampling on the golf course property, to which Pitney Bowes did not respond, the court found that sanctions were still warranted. According to the court, such notice did not satisfy Innis Arden's obligation to preserve relevant evidence, nor did Pitney Bowes' inaction constitute a disclaimer of interest in the evidence.

After issuing its spoliation ruling, the court granted a Daubert motion filed by Pitney Bowes to preclude Innis Arden's causation expert from testifying at trial, concluding that his proffered testimony was inadmissible because, inter alia, the soil samples and full data packages that the expert relied upon were no longer available, which meant that Pitney Bowes could not test or attempt to validate his methods or conclusions. Absent admissible expert testimony on causation, the court then granted Pitney Bowes' motion for summary judgment, and dismissed the case. The outcome of the case is astonishing for a CERCLA cost recovery claim brought by an innocent landowner.