In a spoliation ruling issued Friday, Magistrate Judge Maas determined that “GenOn,” a power company, had a duty to ensure that its outside consultant, FTI, preserved evidence for an anticipated litigation because GenOn had “practical control” over the materials:

Although there is no direct evidence that GenOn could have obtained FTI’s audit-related materials merely by asking for them, or that FTI necessarily would have honored a request by GenOn that they be preserved, common sense suggests that this is likely. FTI had not simply performed a single discrete assignment for GenOn. Quite to the contrary, FTI had been engaged to review [the defendant’s] payroll and conduct a two-pronged audit, and it subsequently also agreed to provide expert testimony on GenOn’s behalf at trial. The relationship between FTI and GenOn/Alston & Bird therefore was and remains ongoing. Moreover, FTI holds itself out as an entity that is knowledgeable about litigation. In light of FTI’s continuing relationship with GenOn, and its role as a litigation consultant, there seems to be little doubt that FTI would have complied with a timely request by GenOn to preserve its information. I therefore conclude, at least for present purposes, that Shaw has met its burden of establishing that FTI’s materials related to the audit were within GenOn’s practical control. It follows that GenOn had a duty to ensure that those materials were adequately preserved. 

Judge Maas denied the spoliation motion because he found there was no prejudice, but it seems likely that the above passage will cause corporate counsel to consider carefully whether litigation holds should be distributed to third parties with relevant information.