What is the Difference between an Adverse Sanction and an Adverse Instruction?

In the world of discovery, including e-discovery, the production of evidence at trial is necessary to prove or defend a case. But what happens when that evidence is unavailable or goes missing? The Second Circuit addressed one of the possibilities to this issue in Mali v. Fed. Ins. Co, No. 11-5413, 2013 WL 2631369 (2d Cir. 2013). The Court in Mali determined that in the event a party is unable to produce evidence, the opposing party may move for a punitive or non-punitive “adverse inference instruction.” The judge will then have the discretion to either grant the motion or reject it.

A punitive “adverse-inference instruction” is a sanction that would allow the judge to instruct the jury to infer facts about the non-producing party’s missing evidence in a way that would be adverse to that party’s case. This type of instruction is usually given in cases where the party’s misconduct is the reason why the party is unable to produce the evidence. In contrast, a non-punitive “adverse-inference instruction” is a jury instruction explaining to the jury the “inferences they are free to draw in considering circumstantial evidence.”  Under this type of instruction, the judge will instruct the jury to draw inferences based upon what the jury believes happened to the non-produced evidence.

In Mali, the plaintiffs were disputing the judge’s “adverse inference instruction” granted to the defendants. There, the plaintiffs filed a claim against their insurance company for money in order to cover items damaged in their home. The plaintiffs stated they did not have any proof of the damaged items aside from their own words and the words of their appraiser. However, the appraiser testified that the plaintiffs gave her a photograph of the items at the time of the appraisal. In response to the appraiser’s testimony, the plaintiffs attempted to explain why the photo could not be produced. The defendants dissatisfied with Plaintiffs’ reasoning, filed a motion for an adverse inference instruction. The judge granted the motion; but not as a sanction, rather, as a guiding instruction to the jurors.

The plaintiffs appealed the “adverse inference instruction.” Relying on Residential Funding Corp. v. DeGeorge Financial Corp., 306 F.3d 99 (2d Cir.2002),  they asserted the trial court’s adverse instruction was a sanction and should not have been granted. The plaintiffs explained there was no evidence of misconduct in their failure to produce the photo.

In response, the Second Circuit distinguished this case from Residential Funding Corp.. The Court explained that in Residential Funding Corp., the defendants moved for an adverse inference instruction sanction. The judge denied the motion because there was no proof that the plaintiff failed to produce e-mails and backup tapes as a result of misconduct. However, here, the trial court’s instruction was not a sanction. It was an explanation of the “reasoning process” that the jury should follow in drawing its inferences. Therefore, misconduct does not need to be proven. The Court further explained, in the event the plaintiffs did not produce the photo as a result of wrongful conduct, then the judge would have provided a different type of instruction. The sanction instruction by the judge would have been either: look at the facts alone or, possibly add that the “jury could, but need not, draw inferences against the plaintiffs based on those facts; or, as requested in Residential Funding, that the jury should draw adverse inferences against the plaintiffs based on those facts; or that the jury should render a verdict for the Defendant.”

This case is important because it demonstrates that a party’s misconduct is not a requirement to an “adverse inference instruction.”   Accordingly, impacted parties going to trial should be prepared to move for an adverse instruction regardless of the non-producing party’s conduct.

If you or your company has any questions or concerns regarding the allocation of e-discovery costs, or any other e-discovery related issue, contact at Bruce Miller via email at bmiller@cullenanddykman.com.

A special thanks to Melissa Cefalu a law clerk at Cullen and Dykman, for help with this post.