Judge Deirdre Hill, Case 20STCV46099 2022-08-24 Tentative Ruling

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Motion for an Order for Sanctions Against Plaintiff in the Form of Terminating Sanctions or, Alternatively, Appropriate Evidentiary and/or Issue Sanctions to Remedy the Spoliation of Evidence

On December 2, 2020, Federal Insurance Company filed a subrogation complaint against Toto U.S.A., Inc. and Lavelle Industries, Inc. for (1) product liability, (2) negligence, and (3) breach of warranty based on losses sustained at 2229 Via Guadalana, Palos Verdes Estates.

On April 18, 2022, the case was referred to Dept. 1 from the PI Hub for reassignment.

If a party fails to comply with a court order compelling discovery responses or attendance at a deposition, the court may impose monetary, issue, evidence, or terminating sanctions. CCP § 2025.450(h) (depositions); § 2030.290(c) (interrogatories); § 2031.300(c) (demands for production of documents). CCP § 2023.030 provides that, “[t]o the extent authorized by the chapter governing any particular discovery method . . . , the court, after notice to any affected party, person, or attorney, and after opportunity for hearing, may impose . . . [monetary, issue, evidence, or terminating] sanctions against anyone engaging in conduct that is a misuse of the discovery process . . . .” CCP § 2023.010 provides that “[m]isuses of the discovery process include, but are not limited to, the following: . . . (d) Failing to respond or to submit to an authorized method of discovery. . . . (g) Disobeying a court order to provide discovery. . . .”

“The trial court may order a terminating sanction for discovery abuse ‘after considering the totality of the circumstances: [the] conduct of the party to determine if the actions were willful; the detriment to the propounding party; and the number of formal and informal attempts to obtain the discovery.’” Los Defensores, Inc. v. Gomez (2014) 223 Cal. App. 4th 377, 390 (quoting Lang v. Hochman (2000) 77 Cal. App. 4th 1225, 1246). “Generally, ‘[a] decision to order terminating sanctions should not be made lightly. But where a violation is willful, preceded by a history of abuse, and the evidence shows that less severe sanctions would not produce compliance with the discovery rules, the trial court is justified in imposing the ultimate sanction.’” Los Defensores, 223 Cal. App. 4th at 390 (citation omitted).

Spoliation is the destruction or alteration of evidence. R. S. Creative, Inc. v. Creative Cotton, Ltd. (1999) 75 Cal. App. 4th 486, 497. Spoliation undermines the search for truth and fairness by creating a false picture of the evidence before the trier of fact by destroying authentic evidence. Cedars-Sinai Med. Ctr. v. Superior Court (1998) 18 Cal. 4th 1, 9. In Cedars-Sinai, the Supreme Court held that a tort action may not be brought against a party for intentional spoliation of evidence where the spoliation is discovered before trial, in part because non-tort remedies are available, including discovery sanctions (CCP § 2023.030) and jury instructions (Evid. Code § 413). Id. at 11-13, 17 (“Destroying evidence in response to a discovery request after litigation has commenced would surely be a misuse of discovery within the meaning of section 2023, as would such destruction in anticipation of a discovery request.”). Spoliation is not limited only to destroying evidence in response to a discovery request after litigation has commenced, as noted in Cedars. It also includes the “destruction or significant alteration of evidence or the failure to preserve evidence for another's use in pending or future litigation.” Williams v. Russ (2008) 167 Cal. App. 4th 1215, 1223 (citing Willard v. Caterpillar, Inc. (1995) 40 Cal. App. 4th 892, 907, overruled on other grounds in Cedars, 18 Cal. 4th at 18, n. 4).

To prevail on a motion seeking discovery sanctions for spoliation, the moving party must show the failure to preserve the evidence, and the loss of this evidence has a substantial probability of damaging the moving party's litigation position. Williams, 167 Cal. App. 4th at 1227. Once the moving party establishes this basis, the burden shifts to the opposing party to show lack of prejudice from the loss of the evidence. Id.

Under CCP §§2023.030 and 2031.300, defendant Lavelle Industries, Inc. (and joinder by Toto U.S.A.) requests that the court order sanctions in the form of terminating sanctions or, alternatively, appropriate evidentiary and/or issue sanctions “to remedy the spoliation of evidence,” namely the subject fill valve.

The complaint alleges that prior to July 2018, defendants designed, manufactured, distributed, specified, and sold a toilet, fill valve, and associated components to plaintiff’s insured. As a result of premature failure and unintended catastrophic damage and flooding in and about the subject toilet and fill valve, and consequent damage to the premises, the insured suffered damages totaling $4,091,961. Pursuant to its policy of insurance, plaintiff paid its insured.

Lavelle (manufacturer of the fill valve) argues that plaintiff misused the discovery process by failing to respond to Lavelle’s Request for Production and Notice of Inspection [of the fill valve] and that monetary sanctions will not suffice. Lavelle explains that on October 7, 2021, it served a request for production and notice of inspection, disassembly, and destructive testing of “subject fill valve including its internal components and surfaces” for a two day inspection on December 1 and 2, 2021. It served the request and notice after receipt of plaintiff’s expert Bruce Agle’s report dated August 2, 2021 and after consultation with defendant’s expert Scott Meek. Lavelle further explains that “[i]t was only in the Expert Report of Bruce Agle . . . that the mechanism of the Plaintiff’s manufacturing and design ‘defect’ allegations became fully apparent.” Agle’s expert report stated that the following factors either caused or contributed to the fill valve failure: (1) design of the valve’s mold, (2) the orientation of the valve material’s reinforcing fibers, (3) the bonding between the fibers and the surrounding matrix, (4) an alleged porosity void in the material, and (f) the tightening of the valve’s mounting nut. Lavelle asserts that of relevance are Agle’s opinions: “2. The glass fiber reinforced polypropylene latching tabs fractured due to a slow crack grown mechanism. 3. The glass fiber reinforcement fibers were oriented in the wrong direction, parallel to the fracture, which weaken the polymer. . . . 6. There was porosity on the fracture surface which is a molding defect and contributed to the failure. 7. The fractured latching tabs had no significant degradation due to chlorine and bromine exposure as evidenced by the color and OIT testing.”

Lavelle asserts that at 4:45 p.m. on the date before the scheduled inspection, defense counsel received an email from plaintiff’s expert Bruce Agle that the inspection could not take place due to the evidence being with another expert. Counsel met and conferred and plaintiff’s counsel informed defense counsel that the subject fill valve and fractured tabs “were missing and being looked for.” Defendant contends that plaintiff’s counsel indicated that there was a continued search for the missing subject fill valve and fractured tabs but that what is left at this time are “artifacts” from plaintiff’s OIT testing done in May 2020, of which defendant had not been aware.

Lavelle explains that it was invited by plaintiff to a prelitigation inspection on January 23, 2019. Lavelle contends that prior to attending the inspection, all that was known were that the latch rails had failed and a chlorine/bromine toilet cleaner tablet had been found in the toilet tank. Lavelle had planned to do a “disassembly, EDS & SEMs of the subject fill valve to determine root cause of the failure” but that to the “surprise” of Lavelle, it was not allowed to completely disassemble the fill valve in order to document the state and condition of the internal components and surfaces of the subject fill valve.

Thus, Lavelle argues, the spoliation of the subject fill valve and its fractured tabs has damaged its ability to establish its defense with respect to product defect, causation, and the affirmative defense of misuse/abuse and identifies the following six issues:

Lavelle contends that the requested testing would demonstrate that the “poor bonding” was not a design defect/as molded condition but was instead an effect of the chemical attack/degradation of the valve material caused by the cleaning tablets.

Lavelle contends that the requested testing would have been probative on the issue of mechanism of failure because it was anticipated to produce visual evidence of “whitening.” Lavelle contends that the cause of the whitening on the fracture surfaces is probative as to whether the whitening was due to strictly mechanical stress or due to chemical degradation.

Lavelle contends that it was anticipated that the requested testing would have produced evidence to support its position that “this was not a molding defect, but instead was a recently exposed surface, where the overlaying degraded crack surface had separated to reveal a relatively non-degraded portion of the valve material.”

Lavelle contends that it “anticipated being able to support its defense” of plaintiff’s expert’s opinion that the glass fiber reinforcement fibers were oriented in the wrong direction, parallel to the fracture, which weaken the polymer. Lavelle sought the inspection to produce evidence that the fibers at the fracture surface were oriented randomly.

Lavelle asserts that it did not receive advance notice of any OIT testing prior to it being conducted by plaintiff and that on August 16, 2021 plaintiff produced a report of K & N Labs dated May 8, 2020. Lavelle notes that plaintiff’s experts rely heavily on the “unilateral OIT testing.” Lavelle contends that the requested testing would have supported its position that exposure to highly chlorinated water in the toilet tank had degraded the valve.

Lavelle contends that the requested testing was necessary to address plaintiff’s argument that the degradation of the subject fill valve occurred not while it was in service, but during plaintiff’s storage of the fill valve after the incident.

In opposition, plaintiff argues that case law does not support imposition of sanctions against plaintiff under these facts because all parties involved have had equal access to the evidence, the evidence has undergone extensive joint testing, particulate evidence remains available for further testing, and the misplacement of the evidence was not willful or egregious. Plaintiff explains that on January 23, 2019, an inspection of the Toto toilet and subject fill valve took place at 4xForensic and lasted for seven hours, and pursuant to proposed protocol, consisted of destructive testing and examination of the Toto toilet and subject fill valve, and additional tests. Twelve people were present for the inspection, including retained experts for all parties, as well as representatives and attorneys for both defendants. Plaintiff contends that neither Lavelle nor Toto requested that the subject fill valve be disassembled during the inspection. Plaintiff asserts that on May 2, 2019, the raw data generated by 4xForensic was forwarded to defendants. On May 2, 2020, at the request of plaintiff’s counsel, 4xForensic shipped the subject fill valve and an exemplar fill valve to Plastic Expert Group for testing and evaluation of the design using computer modeling. Plastic Expert Group took samples from the subject fill valve and submitted them to K&N Labs for OIT testing. On August 5, 2020, following the conclusion of the Plastic Expert Group testing, plaintiff transmitted the findings to defendants and on August 5, 2021, plaintiff served its initial expert disclosures.

As to defendant’s request for production and inspection, plaintiff contends that it informed Lavelle that the additional testing was duplicative, unnecessary, costly, and potentially lacking in forensic value given the changes in the condition of the subject fill valve from its original state due to prolonged storage and exposure to chlorine gases. Plaintiff contends that it was during the meet and confer that plaintiff learned for the first time that Lavelle was purportedly denied a request to disassemble the subject fill valve during the joint inspection in January 2019. Plaintiff further explains that on November 30, 2021, plaintiff’s expert Agle requested that Plastic Expert Group return the subject valve, but that Plastic Expert Group was unable to locate it after an extensive search. On December 8, 2021, Plastic Expert Group confirmed that K & N Labs was in possession of samples of the subject fill valve, which, plaintiff contends, constitute enough material to conduct further OIT testing as only 5 to 10 mg is needed for “this type of test.”

Plaintiff further argues that defendant has failed to meet their burden of demonstrating harm. Plaintiff contends that it has gained no tactical advantage over defendants and that it did not disassemble the fill valve outside of defendants’ presence, the raw data from the joint inspection was shared with defendants, the results and raw data of the OIT testing “conducted during the height of a global pandemic by an independent third party laboratory were shared with” defendants and remaining samples of the fill valve remain available for further OIT testing. Also, plaintiff asserts, defendants’ retained expert has already opined by and through federal expert disclosures that “[t]here was no evidence of any design defect, manufacturing defect, or material defect having caused the fill valve failure” and he did not qualify his opinions and conclusions based on a need to conduct further testing and was unequivocal in his findings.

Moreover, in refuting that further testing would “produce evidence” anticipated by defendants as to the six issues above, plaintiff argues and explains in detail that such testing is unnecessary, unwarranted, and duplicative. Also, plaintiff contends, the product sat in residual water and exposed to chlorine gases for six months until the joint inspection date and that the condition of the fill valve in its current state has no probative value in proving misuse and abuse.

In reply, Lavelle reiterates that plaintiff “lost the crucial evidence in this action prior to Lavelle being able to conduct testing on said evidence” and that Lavelle cannot obtain the anticipated evidence it sought in order to rebut, counter, and contradict plaintiff’s expert opinions on the issues of product defect, causation, and misuse/abuse. Lavelle contends that the opposition does not “disprove prejudice, but instead makes assertions as to the weight of the evidence that the testing would have produced had it been accomplished if the evidence was not lost.” Lavelle disputes that there has been “equal access” to the evidence or that there has been “extensive and exhaustive joint testing.” Lavelle also contends that the existing evidence—prior images (SEM/EDS/photographs)—are not sufficient substitutes for the requested testing. Lavelle argues that an appropriate remedy is thus terminating sanctions.

In reply, Toto argues that plaintiff concedes that the subject fill valve has been lost or misplaced and that it cannot be produced for further testing requested by defendants. Toto contends that the missing piece of evidence does not allow defendants to dissemble, inspect, and test the internal components and surfaces of the missing fill valve and that the planned testing is “imperative in the central disputed issues in this litigation, namely product defect, causation, and product misuse and/or abuse.” Without this further testing, defendants argue, they are greatly prejudiced in their defense.

Defendant Lavelle has met its burden to show that plaintiff failed to preserve the evidence (subject fill valve) as it was sent to a third party laboratory that cannot locate the fill valve, which plaintiff acknowledges. Defendant, however, has not shown sufficiently that the loss of the subject fill valve has a substantial probability of damaging its litigation position. The motion is premature to the extent it appears that residual samples are available for further OIT testing. Terminating sanctions at this juncture in the litigation is not warranted.

The motion is DENIED WITHOUT PREJUDICE as to evidentiary and/or issue sanctions.

*Superior Court of California* *County* *of Los Angeles* *Southwest District* *Torrance Dept. M*
FEDERAL INSURANCE COMPANY,	Plaintiff,	Case No.:	20STCV46099
vs.		[Tentative] RULING
TOTO U.S.A., INC., et al.,	Defendants.