Appellate court affirms discovery sanctions against Target

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After Cheryl Cody complained to Target customer service that she and three family members had been exposed to Ortho Ant & Roach Killer concealed in an air mattress box, she dropped the box off at the west Madison Target store.

In the next week, Target destroyed the box, leaving Cody and her family with no evidence to prove causation in a lawsuit.

In a recent appellate decision issued in the 4th District, the three-judge panel ruled Target was on notice to better protect the box, and spoliation of the air mattress box and its contents deserved strong discovery sanctions.

“Every party in potential litigation is duty-bound to preserve evidence that is essential to a claim,” according to the appellate court.

In December 2006, Cody bought what she believed was an Eddie Bauer air mattress from the Target store in west Madison, according to court documents. Cody left the boxed mattress in her minivan for about nine days. She took the mattress into her house Dec. 29.

In the box, she found “what looks like kind of noxious stuff that had a tee-shirt wrapped around some deodorant thing with a plastic hose or tubing wrapped around it and then a jar of Ortho Ant & Roach Killer with a tube coming out of it,” according to comments attributed to Cody in court documents.

She took the box and its contents back to Target the next day. Soon, Cody and her family started feeling ill, according to documents.

She repeatedly tried to call Target during the next several days but allegedly failed to reach anyone.

An off-site Target customer service representative, Rosie Warren, documented a call from Cody on Jan. 2, 2007. Cody described how she took the box into her house, that she felt sick, that her 80-year-old mother “experienced a reaction” and that Cody and her son had puffy eyes.

The mattress box and contents Cody returned Dec. 30 were in the office of Loss Mitigation Manager Jonnie Milton for nearly a week, according to documents. Target employees indicated Cody brought the box back but that she just got her money back and received a 20 percent discount on a new mattress.

Target employees, according to documents, said Cody did not report any injury Dec. 30 but waited to file an injury report Jan. 4, 2007.

Target’s counsel said employees had previous experience with customers who removed new items from boxes and then returned opened boxes for exchange or money. Consequently, Cody’s returned box was treated as a possible fraudulent return.

According to trial court evidence presented, Milton was not in his office the day the box was turned in and allegedly it to the chargeback department for processing, where the box was disposed of.

Cody returned the box in the middle of the busy holiday season to a store that did more than $60 million in annual sales and a chargeback department that processed 2,000 to 3,000 items per day, according to comments attributed to counsel for Target in court documents. Items that are returned intact are put back on the shelves. Other returned items, such as Cody’s, are destroyed.

Still, the circuit court found Target’s actions “egregious.” The company, according to documents, knew the caller to its off-site customer service center was sick. Failing to keep the box was a “flagrant disregard of the process,” according trial court Judge C. William Faust in court documents.

As sanctions for Target’s discovery violation, the trial court dismissed the other defendants from the case, declaring Target would be responsible for any damages attributable to the other defendants in the jury verdict. Additionally, Target would be denied the ability to defend the case based on the issue of causation.

Target’s appeal was based on several premises, the most salient suggesting that “not all destruction, alteration, or loss qualifies as spoliation of evidence,” and that the company’s actions were not “egregious.”

Counsel for Target highlighted case law from other jurisdictions that focused primarily on what constitutes notice of injury. Mere notice of an incident, according to counsel’s argument, is not the same as when notice is given of an injury, when litigation is a distinct possibility.

The circuit court should have factored in whether Target knew, or should have known, about pending or possible litigation when the evidence was destroyed, according Target counsel’s argument. When the evidence was destroyed, the argument continued, Target lacked sufficient knowledge about Cody’s situation or that it could have led to litigation.

But the appellate court found that Target was given plenty of notice during the documented call to Target’s call center, that Cody identified the contents of the box, that the contents included a substance identified as poison, that the Ortho Ant & Roach Killer was half empty and that three members of her family exhibited symptoms of illness.

“Target should have known the box was relevant evidence,” according to the court.

But, according to Target counsel’s argument, there was ample evidence and testimony that showed the box was destroyed as part of regular Target operations and not with intent to create an advantage.

In affirming the trial court’s opinion, the appellate court decided Target’s actions could be reasonably interpreted as “egregious,” particularly in light of information given during the call to customer service.

In part because Target’s actions were ruled “egregious,” the trial court had every right to impose severe discovery sanctions, according to the appellate court, which affirmed and returned the case to trial court for continued proceedings.