Dan Berexa's Tennessee Law Blog

Tennessee Supreme Court holds that Intentional Conduct is not a Prerequisite for Imposing Sanctions for Spoliation of Evidence

Spoliation of evidence is the destruction or alteration of evidence. In Tatham v. Bridgestone Americas Holding, Inc.,(click cite for opinion) the Tennessee Supreme Court addressed the question of whether a party can be sanctioned for the spoliation of evidence, absent intentional conduct, and set out factors that should be considered by a trial court when determining whether sanctions should be imposed.    

In Tatham, the defendants moved to dismiss a product liability suit as a remedy for the plaintiff's failure to preserve the tire that was the subject of her claim. Shortly after her accident the plaintiff transferred the title to her vehicle to a third party which disposed of the car. The plaintiff claimed she did not realize the importance of keeping the tire and was acting on the advice of her insurance company when she disposed of the vehicle. The trial court denied the defendants' motion, finding that the plaintiff did not intentionally participate in the destruction of the evidence. 

Tatham contains a thorough review of prior appellate decisions regarding the imposition of sanctions for the destruction of evidence, whether under the common law "doctrine of spoliation," the court's inherent authority, or Rule 34A.02 Tenn. R. Civ. P., which provides: “Rule 37 sanctions may be imposed upon a party or an agent of a party who discards, destroys, mutilates, alters, or conceals evidence.” Potential sanctions for spoliation include: drawing a negative inference against the party who destroyed evidence; excluding certain proof related to that evidence; the entry of an order designating that certain facts be taken as established; a finding of contempt; the dismissal of part or all of a the party's claims; or, the entry of a default judgment against the party guilty of spoliation. Justice Bivins, writing for the court, noted while many prior decisions focus on whether the conduct was intentional, the analysis varied. Tatham recognized the need for a uniform standard in connection with the analysis for the possible imposition of sanctions for spoliation based on the totality of the circumstances and utilizing the discretion of the trial court. The court went on to hold that intentional conduct is not a prerequisite for imposing sanctions against a party for spoliation of evidence and that a determination of whether any sanction is appropriate should be based on a case-by-case analysis: 

Factors which are relevant to a trial court's consideration of what, if any, sanction should be imposed for the spoliation of evidence include:

(1) the culpability of the spoliating party in causing the destruction of the evidence, including evidence of intentional misconduct or fraudulent intent;

(2) the degree of prejudice suffered by the non-spoliating party as a result of the absence of the evidence;

(3) whether, at the time the evidence was destroyed, the spoliating party knew or should have known that the evidence was relevant to pending or reasonably foreseeable litigation; and

       (4) the least severe sanction available to remedy any prejudice caused to the non-spoliating part.

While the Tathum court affirmed the trial court's refusal to sanction the plaintiff, the decision makes it clear that a party can be sanctioned for spoliation in the absence of intentional conduct and underscores the importance of taking immediate steps to preserve crucial evidence relevant to pending or reasonably foreseeable litigation.

Dan Berexa
Cornelius & Collins, LLP
Nashville, Tennessee

615-244-1440
www.cclawtn.com

Tennessee Motions for Summary Judgment - Supreme Court Overrules Hannan in Rye v. Women's Care Center

In Rye v. Women's Care Center of Memphis the Tennessee Supreme Court overruled its widely criticized decision, Hannan v. Alltel Publishing Co., 270 S.W.3d 1 (Tenn. 2008), which greatly restricted the availability of summary judgment, a procedure by which the court can determine the legal merits of a case prior to trial. Hannan caused a legislative reaction in the form of the 2011 enactment of Tenn. Code Ann.§ 20-16-101, which was intended to bring Tennessee law back in line with the federal standard applicable to motions for summary judgment. Prior to Hannan, Tennessee courts applied the federal standard, although some argue that the departure from the federal standard began with language in the court's 1993 decision in Byrd v. Hall, 847 S.W.2d 208 (Tenn. 1993).

The well written majority opinion in Rye, penned by Justice Clark, contains a lengthy review of the history of summary judgment in Tennessee and an acknowledgment that the Hannan standard was unworkable. 

The AOC press release discussing the Rye decision states:  

In its ruling today, the court has overruled [Hannan] and returned to a summary judgment standard consistent with cases that have interpreted Rule 56 of the Federal Rules of Civil Procedure. The Court acknowledged that the “standard articulated in Hannan was unworkable and inconsistent with the history and text of Tennessee Rule 56.”

The ruling means that when a party that does not have the burden of proof at trial, and moves for summary judgment, that party can satisfy its burden by either negating an essential element of the other party’s claim or by demonstrating that the other party’s evidence at the summary judgment stage is insufficient to establish that party’s claim or defense. In other words, the moving party can prove that the claim is unfounded, or can show that there is not enough evidence for a jury to consider a genuine issue of material fact at trial.

Rye is a "must read" as it is now the definitive standard for any motion for summary judgment or response. The Rye decision makes it clear that Hannan no longer applies to any case, regardless of whether it was filed prior to July 1, 2011, the effective date of Tenn. Code Ann.§ 20-16-101. 

Dan Berexa
Cornelius & Collins, LLP
Nashville, Tennessee

615-244-1440
www.cclawtn.com

Part 4 - Review of Two Years of Tort Reform - Limitations on Venue

The Tennessee Civil Justice Act incorporated significant limitations on the venue in which a defendant can be sued in transitory actions, which includes tort cases. The changes are incorporated in Tenn. Code Ann. §20-4-101 & 104 (see text below). Now, unless venue is otherwise provided for, an individual can only be sued in the county where “all or a substantial part of the events giving rise to the cause of action accrued” or the county where the individual defendant resides.  

If an defendant entity is organized under the laws of Tennessee, it can be sued in the county where the cause of action accrued, or where the business maintains its principal office. If the entity is not organized under the laws of Tennessee, it can only be sued in the county where the cause of action arose or where its registered agent for service of process is located. If the entity does not have a registered agent, it can be sued in the county in which the cause of action accrued or the county of any statutorily designated agent for process. 

20-4-101.  Transitory actions. 

 (a) In all civil actions of a transitory nature, unless venue is otherwise expressly
provided for, the action may be brought in the county where the cause of action
arose or in the county where the individual defendant resides.

(b) If, however, the plaintiff and defendant both reside in the
same county in this state, then the action shall be brought either in the county
where the cause of action arose or in the county of their residence.

(c) Where the action is brought either in the county where the cause of action arose or in the county where the defendant resides, process may be sent to another county as in local action, and it shall not be necessary nor required that the defendant be in the county of action either when the action is commenced or during the time between the commencement of the action and service of process.

20-4-104.  Business office of party. 

For all civil actions, if the defendant is not a natural person, the action shall be
brought in:

   (1) The county where all or a substantial part of the events or omissions giving rise to the cause of action accrued;

   (2) The county where any defendant organized under the laws of this state maintains its principal office; or

   (3)  (A) If the defendant is not organized under the laws of this state, the county where the defendant's registered agent for service of process is located; or

      (B) If the defendant does not maintain a registered agent within this state, the county where the person designated by statute as the defendant's agent for service of process is located.

Overhaul of Tennessee Post Judgment Interest Statute

Prior to the enactment of Public Chapter No. 1043, the "default" interest rate on judgments was 10% per annum, pursuant to Tenn. Code Ann. § 47-14-121. Effective July 1, 2012, the interest rate applicable to judgments will be based on the prime rate, minus 2%, unless there is a statute, note or contract that fixes the rate of interest at a specific rate. Of course, the rate set by a note or contract cannot exceed the maximum rates permitted by Tenn. Code Ann. § 47-14-103 and the maximum "default" rate is 10%.

As long as low interest rates prevail, accruing post judgment interest will not be a significant concern for judgment debtors who are considering appeal. The Tennessee Administrative Office of the Courts will post rates on its website and the applicable rate will be based on the date of the judgment.

Given current prime rates, the post judgment rate announced in July should be approximately 1.5%.   

Dan Berexa
Nashville, Tennessee

 

Tennessee Local Counsel and Practicing Pro Hac Vice in Tennessee

In Tennessee, out of state lawyers who do not have a Tennessee law license are required to associate local counsel in order to qualify for admission Pro Hac Vice in our state courts. The terms and conditions for Pro Hac Vice attorneys are defined in Rule 19 of the Rules of the Supreme Court of Tennessee. Lawyers seeking admission must make filings with the Board of Professional Responsibility (BPR) in addition to seeking formal admission, on a case by case basis, from the court in which they wish to practice. Currently the BPR also requires a registration fee of $170 per calendar year.

The lawyers in my firm are often called upon to serve as local counsel. We are retained by national and regional counsel to assist in Tennessee litigation. Frequently we are associated in personal injury, product liability, health care, commercial matters and employment cases. I am often asked to assist in plaintiff's personal injury cases. The role of local counsel can be as expansive as handling alll the day to day aspects of the case or limited to offering assistance to insure compliance with local rules and practices.

Effective use of local counsel can enhance the quality of the representation, make lead counsel's job easier and acheive cost savings for the client. Some of the benefits of good local counsel are:

-Efficient handling of Pro Hac Vice admission process
-Ready knowledge of Tennessee law, procedure and local rules/practices
-Prior experience with and insight regarding judges
-Access to local experts
-Ability to conduct local investigations and call upon local resources
-Cost effective handling of motion practice, depositions and document production
-Awareness of local perceptions of parties and issues
-Knowledge of jury verdict data
-Assistance with jury panel research and jury selection
-Knowledge of local vendors (good court reporters, videographers, restaurants and lodging)

When you have the occasion to use local counsel take full advantage of all they can do for you and your client.

Dan Berexa
Nashville, Tennessee

Tennessee Supreme Court Rejects the Twombly/Iqbal Analysis in Motions to Dismiss for Failure to State a Claim

The Tennessee Supreme Court rejected the Twombly/Iqbal analysis applied in federal court to relate motions to dismiss for failure to state a claim. The Tennessee Supreme Court continues to apply the standard articulated in Conley v. Gibson, 355　U.S. 41 (1957) that the court should grant a motion to dismiss only when it appears that the plaintiff can prove "no set of facts" that would entitle the plaintiff to relief. Click here for an excellent article authored by my law partner, J.K. Simms, regarding the Tennessee Supreme Court’s recent ruling in Webb v. National Area Habitat for Humanity, Inc., rejecting the Twombly/Iqbal "plausibility" standard.

Attack on Hannan - Two New Bills Conform Tennessee Summary Judgment Standard to Federal Standard

Two new bills address Tennessee’s standard for granting motions for summary judgment.  One of the acts, which will be codified as Tenn. Code Ann.§ 20-16-101, is intended to bring Tennessee law in line with the federal standard applicable to motions for summary judgment.  This statute act is a direct response to the Tennessee Supreme Court’s 2008 decision in Hannan v. Alltel Publishing Company, which greatly restricted the availability of summary judgment, a procedure by which the court can determine the legal merits of a case prior to trial.  Prior to Hannan, summary judgment was available to dismiss a case, in full, or in part, if a party was unable to offer evidence, prior to trial, to establish the essential elements of its claims.  The act returns Tennessee law to a standard which is consistent with the federal standard and should lead to an increase in the number of cases that are dismissed, in whole or in part, on summary judgment.  The Hannan decision caused a dramatic decrease in the number of summary judgment motions that were being filed and granted.  Tenn. Code Ann. § 20-16-101 will apply to actions filed on or after July 1, 2011. 

On a related topic, Senate Bill No. 940/House Bill No. 1641 clarifies the law as it relates to summary judgment in the context of employment claims for discrimination, retaliatory discharge and wrongful discharge.  This act incorporates the federal burden-shifting standard that was also rejected by the Tennessee Supreme Court.  The new law will apply to claims accruing on or after the effective date of the act.

Dan Berexa
Nashville, Tennessee

Comment Period Coming to End for Proposed Amendments to Tennessee Rules of Civil Procedure

Every year the Advisory Commission on the Rules of Practice and Procedure presents recommendations to the Tennessee Supreme Court for amendments the Rules of Procedure and Tennessee Rules of Evidence.  The Court is soliciting written comments on the proposed amendments through November 30, 2009.  The significant proposed amendments to the Tennessee Rules of Civil Procedure are as follows:

 

Rule 4.01 – the filing of a complaint is ineffective if plaintiff’s counsel intentionally delays issuance of the summons or service for more than thirty (30) days

Rule 5.02 – permits service on attorney via e-mail if document is in Adobe PDF format.  The sender must mail, fax or hand-deliver a seperate notice that advises that the document served has been transmitted electronically.

Rule 5(b) – permits courts to adopt local rule allowing electronic filing.

Rule 26.02 – permits discovery of liability insurance.  

Rule 41.02(2) – requires findings of fact and conclusions of law in the event trial court dismisses an action pursuant to Rule 41.02.

Dan Berexa
Nashville, Tennessee

 

Bad Offer of Judgment Can Perpetuate Litigation

Drafting an offer of judgment can be tricky business. In State ex rel. Landenberger v. Project Return, Inc. the court warns:  

It has been said that, “[i]f there is any occasion in civil litigation which calls for caution and care by counsel, it is the drafting of a Rule 68 offer.” (citation omitted).

The case contains an excellent discussion of Rule 68, its shortcomings and how to avoid getting embroiled in litigation over the terms of an offer of judgment.  In Landenberger, a $5000 offer of judgment, which was intended to conclude the litigation, spawned a battle to set aside the plaintiff's acceptance and resulted in an appeal.

Be careful.

Dan Berexa
Nashville, Tennessee

Civil Procedure Amendments Including E-Discovery Rules Adopted by Tennessee Supreme Court

Here are the amendments to the Tennessee Rules of Civil Procedure and the E-Discovery Amendments. The E-Discovery Amendments, which are part of the rules of Civil Procedure, are the first set of rules directed specifically to E-discovery in Tennessee state courts. Both sets of amendments were adopted by the Tennessee Supreme Court on January 8, 2009 and will become effective July 1, 2009, subject to ratification by the General Assembly.

Dan Berexa
Nashville, Tennessee