Albertson's LLC v. HFC Inc, 5:16-cv-00276

Background

On Dec. 23, 2014 Albertson’s alleges HFC truck (driven by Marinhagen) struck an outside fire hydrant while parking at its Ponca City distribution facility, triggering water pumps and causing hydraulic shock that ruptured an 8" interior pipe and flooded the facility.
Albertson’s claims about $333,042.06 in property damage plus $5,266.66 in labor costs.
Albertson’s maintenance manager and operations manager reviewed security video, inspected the hydrant and system, and concluded a truck hit the hydrant; Marinhagen told Albertson’s he “didn’t believe” he hit it.
Albertson’s repaired the 8" pipe (Dec. 31, 2014) and the hydrant/fittings (repaired Jan. 2015) and did not preserve those physical parts or earlier portions of the security video.
Defendants moved for summary judgment or spoliation sanctions, arguing Albertson’s had a duty to preserve the hydrant, fittings, pipe, and video and that loss of evidence prejudiced their defense.
The court considered whether Albertson’s knew or should have known litigation was imminent and whether defendants were prejudiced by the lost evidence.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Duty to preserve evidence (was litigation imminent?)	Albertson’s argues litigation was not imminent; its immediate investigation pointed clearly to a truck striking the hydrant, so preservation was unnecessary.	Defendants argue Albertson’s should have preserved hydrant, pipe, fittings, and video because those items were relevant and their loss prevents effective defense.	No duty shown — court finds Albertson’s did not know or should not have known litigation was imminent when it repaired/discarded items.
Prejudice from destroyed evidence	Albertson’s: other available evidence (maintenance records, photos, gate logs, witnesses) mitigates prejudice and experts could form opinions.	Defendants: loss of physical components and video prevents them from challenging causation and forces speculative defenses.	Insufficient prejudice for severe spoliation sanctions; defendants could develop alternative theories and experts produced multiple scenarios.
Sufficiency of culpability to justify adverse inference or dismissal	Albertson’s: at most negligent loss of evidence; no bad faith.	Defendants: plaintiff’s failure to preserve key evidence warrants exclusion of causation/damages evidence or summary judgment.	Mere negligence is inadequate for harsh sanctions; no bad faith shown, so sanction denied.
Appropriateness of sanctions (summary judgment / exclusion of evidence)	Albertson’s opposes sanctions; argues litigation not expected and sanctions would be disproportionate.	Defendants seek summary judgment or preclusion of causation/damages evidence as alternative sanctions.	Court denies summary judgment and spoliation sanctions; alternative sanctions with same effect as summary judgment are likewise denied.

Key Cases Cited

Jones v. Norton, 809 F.3d 564 (10th Cir. 2015) (sets two-prong test for spoliation: duty to preserve and prejudice; bad faith required for severe sanctions)
Turner v. Pub. Serv. Co. of Colorado, 563 F.3d 1136 (10th Cir. 2009) (spoliation principles and preservation obligations)
103 Investors I, L.P. v. Square D Co., 470 F.3d 985 (10th Cir. 2006) (sanctions appropriate where no substitute evidence exists and visual inspection of destroyed item was essential)