May 4, 2021 – On a deer hunting trip in 2017, Tyler Mueller was using his brother’s AR-15 rifle when it accidentally discharged. A bullet struck Tyler’s foot, which prompted his negligence lawsuit against the gun shop that assembled and sold the rifle.

Before the lawsuit was filed, Tyler’s brother (Jordan) took the AR-15 back to the same gun shop that assembled and sold it to him, Bulls Eye Sports Shop LLC (Bulls Eye).

Jordan granted permission for a Bulls Eye employee to modify the firearm with knowledge that litigation concerning the hunting accident (and the firearm) was likely.

In the lawsuit that followed, Tyler alleged that Bulls Eye was negligent in assembling the AR-15 rifle, which caused Tyler’s injuries. Bulls Eye, in a third-party claim against Jordan, alleged that Jordan’s negligence caused or contributed to Tyler’s injuries.

An amended complaint stated a claim against Jordan and his insurer. Then Bulls Eye and Tyler moved for sanctions against Jordan for spoliation of evidence, since he had granted permission to alter the subject firearm after learning litigation was likely.

The circuit court, finding spoliation, ruled that the jury would receive an instruction that it could draw an adverse inference against Jordan regarding the spoliated evidence.

The circuit court did not dismiss Bulls Eye from the lawsuit, despite Bulls Eye’s claim that Tyler – because of Jordan’s intentional spoliation of evidence – must indemnify Bulls Eye for any negligent conduct on its part by operation of a Pierringer release.

Jordan was dismissed from the lawsuit under the Pierringer release he entered into with Tyler. Under a Pierringer release, a settling defendant’s ultimate liability to a third party is imputed or attributed to the settling plaintiff and that defendant is dismissed.

Under the terms of the Pierringer release, Jordan’s insurer paid Tyler the policy limit of $300,000, which then limited Tyler’s additional recovery against Bulls Eye.

Appeals Court Rejects Dismissal

In Mueller v. Bulls Eye Sports Shop LLC, 2020AP978 (April 29, 2021), a three-judge panel for the District IV Court of Appeals affirmed the circuit court’s decision and rejected Bull’s Eye’s argument that it should be dismissed because of the spoliation.

“Jordan does not owe an indemnity obligation to Bull’s Eye based on his intentional spoliation of evidence,” wrote Presiding Judge Michael Fitzpatrick, noting the circuit court did not err in selecting the jury instruction as the appropriate sanction.

Judge Fitzpatrick explained that dismissal as a sanction for spoliation is rare and should only be imposed when the conduct is “egregious.” Under the facts of the case, the appeals court ruled that Jordan’s conduct, though intentional, was not egregious.

Tyler had told Jordan, in text messages that were entered into evidence, that he should not alter or clean the rifle when it was returned from law enforcement.

However, he took the rifle to Bulls Eye and had a new retention plate installed. Bulls Eye did not know of potential litigation when it agreed to install the new plate.

“The circuit court made a specific finding that Jordan acted intentionally, the court made no finding that Jordan’s conduct was egregious, and the court did not identify any facts suggesting that Jordan’s spoliation was egregious,” Judge Fitzpatrick wrote.

“[W]ithout a finding of egregious conduct by Jordan, Bull’s Eye’s request for dismissal of Tyler’s claim as a sanction necessarily fails.”

The appeals court ruled that the circuit court’s sanction “was reasonable given the court’s examination of the facts and application of the proper standards of law.”

No Equitable Indemnification

Asserting “equitable indemnification,” Bulls Eye argued that any liability for negligence on Bulls Eye’s part shifted to Jordan based on the spoliation of gun evidence, and per the Pierringer release, Jordan’s indemnification obligation shifted to Tyler.

“In this case, as we have discussed above, there is no finding of egregious conduct by Jordan (or Tyler),” Judge Fitzpatrick wrote. “Therefore, Bull’s Eye’s request for dismissal of Tyler’s remaining claim against it based on indemnification fails because it cannot be reconciled with established Wisconsin law on spoliation.”

“If we accept Bull’s Eye’s argument, at least in some circumstances the circuit court would have no discretion to exercise when determining whether relief for intentional spoliation should be granted and, if so, the appropriate relief,” Fitzpatrick wrote.

“Instead, in Bull’s Eye’s view, in these circumstances the court would be required to shift all causal negligence from the non-spoliator party to the intentional spoliator and grant the concomitant dismissal.”

The panel examined the case law cited by Bulls Eye to conclude that equitable indemnification was not an appropriate remedy under Wisconsin law.

“Granting Bull’s Eye’s unsupported request for relief would, in effect, void decades of case law and standards,” Judge Fitzpatrick wrote.