United States District Court, N.D. Indiana, Hammond Division
ARCELORMITTAL INDIANA HARBOR LLC and ARCELORMITTAL USA LLC, Plaintiffs,
AMEX NOOTER, LLC, Defendant.
OPINION AND ORDER
R. CHERRY, MAGISTRATE JUDGE
matter is before the Court on Amex Nooter LLC's Motion
for Sanctions Based on ArcelorMittal's Intentional
Spoliation of Evidence [DE 175], filed by Defendant Amex
Nooter, Inc. (“Amex Nooter”) on January 3, 2018.
Plaintiffs ArcelorMittal Indiana Harbor LLC and ArcelorMittal
USA LLC (collectively “ArcelorMittal”) filed a
response on January 15, 2018, and Amex Nooter filed a reply
on January 22, 2018.
April 3, 2013, a fire occurred at Blast Furnace No. 3, a part
of ArcelorMittal's Indiana Harbor facility, while Amex
Nooter employees Korrie Griffith and Robert Swimline were
rebuilding the excess gas bleeder pilot burner cabinets
pursuant to a contract between ArcelorMittal and Amex Nooter.
As Griffith and Swimline were working, natural gas was
released from the system and ignited. ArcelorMittal seeks
from Amex Nooter approximately $3.2 million in property
damage and excess fuel costs as a result of the fire based on
theories of negligence and breach of contract under Indiana
state law. In the instant motion, Amex Nooter seeks the
sanction of dismissal of ArcelorMittal's complaint on the
basis that, within hours of the fire, ArcelorMittal discarded
and then lost important physical evidence central to Amex
Nooter's defense against ArcelorMittal's claims.
case is brought under the Court's diversity jurisdiction.
Thus, ArcelorMittal's duty to preserve pre-suit evidence
is governed by Indiana state law, not federal law. See
Allstate Ins. Co. v. Sunbeam, 53 F.3d 804, 806 (7th Cir.
1995) (noting the parties' agreement that Illinois law
covered the pre-suit duty to preserve evidence and
recognizing that in diversity cases, “state law governs
issues that potentially alter the outcome of the case”
(citing Guaranty Tr. Co. of New York v. York, 326
U.S. 99, 109 (1945))); see also Schuring v. Cottrell,
Inc., No. 13 C 7152, 2015 WL 8970631, at *1 (N.D.
Ill.Dec. 16, 2015) (holding that “Illinois law governs
the question of whether a party had a duty to preserve
evidence before the start of litigation” (citing
Allstate Ins. Co., 53 F.3d at 806); MacNeil
Auto. Prods., Ltd. v. Cannon Auto. Ltd., 715 F.Supp.2d
786, 799 n.2 (N.D. Ill. May 25, 2010)); Large v. Mobile
Tool Int'l, Inc., No. 1:02-CV-177, 2008 WL 89897, *7
(N.D. Ind. Jan. 7, 2008) (holding that Indiana state law, not
federal law, determined the pre-suit duty to preserve
evidence in a case brought based on diversity jurisdiction
(citing Allstate Ins. Co., 53 F.3d at 806));
Lawrence v. Harley-Davidson Motor Co., No. 99 C
2609, 1999 WL 637172, at *2 (N.D. Ill. Aug. 12, 1999)
(conducting a choice of law analysis to find that, in that
diversity action, state law applied because the pre-suit duty
to preserve material evidence was a substantive issue given
that “the outcome of the [diversity] litigation in
federal court should be substantially the same, so far as
legal rules determine the outcome of a litigation, as it
would be if tried in a [s]tate court” (quoting
Guaranty Tr. Co., 326 U.S. at 109)); Thomas v.
Bombardier-Rotax Motorenfabrik, GmbH, 909 F.Supp. 585,
587 n. 4 (N.D. Ill. 1996) (conducting an Erie
analysis to find that Illinois state law controls the
standard for pre-litigation preservation of evidence in a
Indiana law, spoliation is defined as “‘the
intentional destruction, mutilation, alteration, or
concealment of evidence.'” Glotzbach v.
Froman, 854 N.E.2d 337, 338 (Ind. 2006) (quoting
Cahoon v. Cummings, 734 N.E.2d 535, 545 (Ind. 2000)
(quoting Black's Law Dictionary 1409 (7th ed. 1999)));
see also J.S. Sweet Co., Inc. v. Sika Chem. Corp.,
400 F.3d 1028, 1032 (7th Cir. 2005) (citing Cahoon,
734 N.E.2d at 545); WESCO Distrib., Inc. v. ArcelorMittal
Ind. Harbor LLC, 23 N.E.3d 682, 702 (Ind.Ct.App. 2014)
(citing Glotzbach, 854 N.E.2d at 338). “Under
Indiana law, a party may not lose, destroy or suppress
material facts or evidence ‘prior to the commencement
of the lawsuit that the party knew or should have known was
imminent.'” Large, 2008 WL 89897, at *7
(quoting Porter v. Irvin's Interstate Brick &
Block Co., 691 N.E.2d 1363, 1365 (Ind.Ct.App.1998)
(finding that the trucking company was on notice of imminent
litigation and preservation duties when its vehicle lost a
drive shaft on the interstate)).
2000, the Indiana Supreme Court held that “‘the
exclusive possession of facts or evidence by a party, coupled
with the suppression of the facts or evidence by that party,
may result in an inference that the production of the
evidence would be against the interest of the party which
suppresses it.'” Cahoon, 734 N.E.2d at 545
(quoting Porter, 691 N.E.2d at 1364). This holding
was reaffirmed in Glotzbach in 2006: “If
spoliation by a party to a lawsuit is proved, rules of
evidence permit the jury to infer that the missing evidence
was unfavorable to that party.” Glotzbach, 854
N.E.2d at 338 (citing Cahoon, 734 N.E.2d at 545);
see also Gribben v. Wal-Mart Stores, Inc., 824
N.E.2d 349, 351 (Ind. 2005) (declining to adopt a new tort of
first-party spoliation but noting that “Indiana law
[contains] important sanctions that not only provide remedy
to persons aggrieved, but also deterrence to spoliation of
evidence by litigants and their attorneys”); Dawson
v. Thornton's Inc., 19 N.E.3d 337, 340-41
(Ind.Ct.App. 2014) (discussing this standard and finding that
the trial court did not err or abuse its discretion in not
giving a proposed instruction on spoliation of evidence);
Miller v. Fed. Exp. Corp., 6 N.E.3d 1006, 1011
(Ind.Ct.App. 2014) (recognizing that intentional first-party
spoliation of evidence may be used to establish an inference
that the spoliated evidence was unfavorable to the party
responsible) (citing Gribben).
response brief, ArcelorMittal asserts that Indiana law
“requires a showing of an improper purpose to prove
spoliation.” (ECF 213, pp. 15, 17) (quoting
WESCO, 23 N.E.3d at 702). However, the full
quotation from WESCO provides:
In Gribben v. Wal-Mart Stores, Inc., our supreme
court noted that “[c]ourts uniformly condemn
spoliation. ‘[I]ntentional destruction of potential
evidence in order to disrupt or defeat another
person's right of recovery is highly improper and
cannot be justified.'” 824 N.E.2d 349, 354 (Ind.
2005) (quoting Coleman v. Eddy Potash, Inc., 905
P.2d 185, 189 (N. Mex. 1995)) (emphasis added).
WESCO, 23 N.E.3d at 702. The quotation taken from
Gribben, a case in which the Indiana Supreme Court
ultimately decided not to recognize an independent tort of
first-party spoliation, is not a statement by the court of
the standard under Indiana law but rather a quotation from
New Mexico case law as part of a survey of how other courts
around the country treat spoliation. See Gribben,
824 N.E.2d at 354. Notably, the next sentence in
Gribben quotes from an opinion from the Montana
Supreme Court: “‘The intentional or
negligent destruction or spoliation of evidence cannot
be condoned and threatens the very integrity of our judicial
system.” Gribben, 824 N.E.2d at 354 (emphasis
added) (quoting Oliver v. Stimson Lumber Co., 993
P.2d 11, 17 (1999)).
although ArcelorMittal correctly notes that “bad
faith” is required before imposing sanctions for
spoliation under the law of the Seventh Circuit Court of
Appeals, including for the sanction of an adverse inference,
see (ECF 213, p. 17), that is a requirement for the
federal standard for pre-suit spoliation in cases brought
under federal question jurisdiction or for spoliation as a
violation of Federal Rule of Civil Procedure 37 during the
course of federal litigation, as set forth in several cases
cited by both parties. See Norman-Nunnery v. Madison Area
Tech. Coll., 625 F.3d 422, 428 (7th Cir. 2010) (Title
VII); Faas v. Sears, Roebuck & Co., 532 F.3d
633, 644 (7th Cir. 2008) (ADEA claim); Maynard v.
Nygren, 332 F.3d 462, 467 (7th Cir. 2003) (ADA);
Haraburda v. ArcelorMittal USA, Inc., No.
2:11-CV-93, 2011 WL 2600756 (N.D. Ind. June 28, 2011)
(addressing a motion for preservation of evidence filed after
the lawsuit was filed (citing Northington v. H & M
Int'l, No. 08-CV-6297, 2011 WL 663055, *6 (N.D. Ill.
Jan.12, 2011) (Title VII); Jones v. Bremen High Sch.
Dist. 228, No. 08 C 3548, 2010 WL 2106640, *6 (N.D. Ill.
May 25, 2010) (§ 1983 race discrimination); Larson
v. Bank One Corp., No. 00 C 2100, 2005 WL 4652509,
*10-11 (N.D. Ill. Aug. 18, 2005) (illegal credit practices
under federal law, applying Rule 37); Danis v. USN
Comms., Inc., No. 98 C 7482, 2000 WL 1694325, *32 (N.D.
Ill. Oct.20, 2000) (conduct during litigation under Rule 37
and Rule 11); In re Kmart, 371 B.R. 823, 842 (N.D.
Ill. 2007) (applying the federal standard); Wells v.
Berger, Newmark & Fenchel, P.C., 07 C 3061, 2008 WL
4365972, *7 (N.D. Ill. Mar.18, 2008) (Title VII))); see
also Keller v. United States, 58 F.3d 1194, 1197 n. 6
(7th Cir. 1995) (noting, in a case brought under the Federal
Tort Claims Act, the “bad faith” standard and
citing federal question cases in support, noting that some
courts hold that state spoliation law applies in a diversity
case, and noting that the law of New Mexico, which provided
the rule of decision in that case, did not recognize
negligent or intentional spoliation of evidence as a tort
(citing Allstate Ins. Co., 53 F.3d at 805 (diversity
case applying state law); citing for the “bad
faith” standard BASF Corp. v. Old World Trading
Co., Inc., 41 F.3d 1081, 1098 (7th Cir. 1994) (Lanham
Act, discussing inferences drawn from missing records);
United States v. Esposito, 771 F.2d 283, 286 (7th
Cir. 1985) (Hobbs Act and Travel Act); S.C. Johnson &
Son, Inc. v. Louisville & Nashville R. Co., 695 F.2d
253, 258-59 (7th Cir. 1982) (Carmack Amendment); United
States v. $94, 000.00 in U.S. Currency, 2 F.3d 778, 787
(7th Cir. 1993) (civil forfeiture); Coates v. Johnson
& Johnson, 756 F.2d 524, 551 (7th Cir. 1985) (Title
the negligence and breach of contract claims in this case are
state law claims brought under the Court's diversity
jurisdiction, and the motion for sanctions is based on
pre-suit spoliation. Thus, as set forth above, the Indiana
state law standard, and not the federal standard, applies.
See Chambers v. NASCO, Inc., 501 U.S. 32, 53-54
(1991) (discussing, in the context of a court's
imposition of sanctions under its inherent power, that a
court sitting in diversity must consider the concerns of
Erie when there is a conflict between the state and
federal substantive law); see also Ward v. Texas Steak
Ltd., 7:03-CV-596, 2004 WL 1280776, at *2 (W.D. Va. May
27, 2004) (applying the Erie standard to find that
state law applies to sanctions for prelitigation spoliation
in a diversity case in which the rule of decision is supplied
by state law).
March 12, 2013, ArcelorMittal issued Purchase Order No.
N489392 to Amex Nooter to provide supervision, labor, and
materials to rebuild the excess gas bleeder pilot burner
cabinets at Blast Furnace No. 3 located at ArcelorMittal
Indiana Harbor LLC's Indiana Harbor West Facility
(“H3 Cabinets”). Under the Purchase Order, on
April 3, 2013, Amex Nooter was to rebuild the H3 Cabinets
according to drawings submitted by ArcelorMittal Indiana
Harbor to Amex Nooter by demolishing existing pipes and
valves in the cabinets and installing new pipes and valves.
According to Frank Peters, ArcelorMittal's Senior
Maintenance Planner responsible for Blast Furnace No. 3,
ArcelorMittal had not repaired or replaced the H3
Cabinets' fittings, pipes, valves, gauges, and regulators
during the eight-year period of 2005 to 2013. ArcelorMittal
made the decision in February ...