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Products liability defense cases are particularly vulnerable to "bad" company documents. A company trying to manage the risks presented by bad documents needs more than a well-defined and enforced document retention program. It requires an educated work force that understands the risks that are created whenever anything is written down in the workplace, either in paper or electronic form. This article suggests a program to educate employees and raise their consciousness about the litigation risks attendant to the creation of documents. We call the program "Safe Communication."

What Are "Bad" Documents and Why Are They Created?

Very few "bad" documents in litigation are true "smoking guns" that disclose secret wrongful conduct by the company or admit liability. Many are barely relevant to the main issues at trial. But bad documents have one important characteristic: they are written in a way that suggests -- often unintentionally -- a "bad" motive, dishonesty, wrongful conduct or culpable knowledge on the part of the corporate defendant.

Putting aside the rare instances of disgruntled employee sabotage, most employees who create a "bad" document are simply trying to do a good job for the company. A designer become aware of a safety problem with a product and properly reports it to a superior. An engineer sees a flaw in a manufacturing process and write a memo suggesting a solution. A sales manager tries to pump up the sales force with some inspiring words about a product by stressing its profitability. But in carrying out these normal duties, employees are often careless in their choice of words. They don't understand litigation. They don't appreciate that an improvident turn of phrase can give rise to a cause of action. They don't recognize how a simple, innocent communication can be transformed into a lethal weapon in the hands of a skilled trial lawyer. And because they don't understand the reach of modern discovery, they are shocked when their obscure, "private" corporate communications become public documents in litigation..

The Risks of "Bad" Documents

Nothing is more powerful at trial than using a company's own "bad" documents against it. Once created, bad documents become fodder for discovery and deadly weapons in the hands of your adversary. Defense witnesses will struggle to explain the documents, but fail. The documents can be handed to the jury in hard copy, read repeatedly in cross-examinations, blown up on boards or television monitors, and excerpted and highlighted in colors as demonstrative exhibits. They will be stressed in closing argument with rhetorical flourishes, and they will go into the jury room as tangible evidence during deliberations.

A good document retention program is an important component of any document control program, but it is wishful thinking to believe that it is an antidote for bad documents. Many kinds of documents must be retained to comply with regulatory requirements. [1] Moreover, photocopying and e-mail make it virtually impossible to destroy all copies of outdated or otherwise unnecessary documents that may be properly discarded.

A Program of Safe Communication

The only way to control the proliferation of bad documents is to prevent their creation in the first place. That can be accomplished by Safe Communication, a careful corporate program that educates employees about the realities of litigation, trains them in the creation of documents and establishes protocols for their dissemination. This training cannot be a blurb in the company's employee newsletter or a fifteen-minute lecture by counsel to selected managers of departments. It must be a serious effort to train a broad range of employees to write truthful, informative documents in a manner that will not jeopardize the company unnecessarily in current or future litigation. It should become part of standard corporate practice.

Safe Communication can be distilled down to a few principles that are common sense to most litigators, but are foreign to most laypersons. We propose the following ten principles.

1. Use alternatives to written communications whenever possible.

Employees put pen to paper (or fingers to keyboard [2]) for a variety of reasons. They may want to be conscientious, or they may want to show off their written work, especially if they think it will be rewarded. Others document their ideas out of proprietary concerns that their ideas may be purloined by others. Of course, there is also the "CYA" memo of self-protection.

Regardless of the many compelling reasons to create documents, the first rule of Safe Communication is to avoid writing anything unless it is necessary. Employees should try a phone call or a personal conversation to communicate nonessential or particularly sensitive matters. For example, all companies have a strong interest in knowing about and correcting discrimination or harassment in the workplace. At the stage where such conduct is only suspected, however, it might best be addressed verbally so that unfounded allegations or suspicions do not become part of the company file. Long after the allegations are shown to be untrue or de minimis, preliminary (and unnecessary) memos regarding an incident can be used to show that the company had "notice" of problems with its employees.

2. Assume that every writing will be read by an adversary in litigation.

Under the discovery rules of most state and all federal courts, nearly every potentially relevant letter, memo, note, e-mail or report is subject to disclosure when suit is filed. Employees must be taught to assume that the documents they create will one day fall into the hands of someone suing the company. This rule is not intended to create paranoia in the workplace. It is intended to promote caution and sober reflection before anything is written down. The company may promote such reflection by using computer screensavers carrying such messages as "THINK BEFORE YOU WRITE."

3. Make sure every written communication is accurate.

The need for accuracy in every written communication cannot be overstated. When litigation starts, inadvertent errors of fact may become evidence of incompetence at best and dishonesty at worst. Nothing should be written without first checking the facts and performing adequate research. This is especially important for communications going outside the company. For example, a misstated or overstated communication to a customer about the safety or effectiveness of the company's products might be characterized as a misrepresentation and could give rise to a cause of action in fraud. Communications by marketing and sales personnel are particularly vulnerable to criticisms for inaccuracy.

The flip side of overstating the good things about company products or practices is the equally destructive practice of overstating problems with the company's products or practices. Going off "half-cocked" never serves the company's interests. Employees should never be critical of the company, its products or practices, or of fellow employees without checking the facts. An employee memo describing unfounded speculation or supposition about product "dangers" will often be given more weight by a jury than hard data demonstrating that the memo was wrong and the product is safe.

4. Realize that if a communication can be construed to mean something else, it will be.

Trial may be regarded as an elaborate exercise in creating inferences. If a written communication can be given an interpretation that is against the company's interest, your adversary will do so. Lawyers understand this. Lay persons often do not.

5. When dealing with sensitive or risky subjects, choose your words with great care.

There are many instances when an employee must document some event that by its nature creates risks for the company. A poor choice of words can unnecessarily increase those risks. As a general rule, when a document with a "bad" message is written, the author should establish the company's bona fides and provide a context that will prevent misuse of the document in litigation. For example, if a line engineer discovers a quality control problem that may have led to a manufacturing defect, the memo documenting the problem should point out the extent and effectiveness of the existing quality control practices and the steps that have already been taken to resolve the problem. The memo should avoid words such as "defect," "reckless," "hazardous," or "negligent" which have both inflammatory impact and legal significance. [3] Additionally, the memo should not disparage the company or its quality control practices with the gratuitous charges such as, "This is yet another example of shoddy workmanship and incompetence in this plant."

6. Avoid commenting on potential liability.

There is ordinarily no need for lay employees to comment on potential legal liability of the company. Communications about liability should be limited to privileged communications between lawyers and employees covered by the corporate privilege. [4] Even relatively innocent comments will take on great significance when they address liability. For example, the pharmaceutical company scientist proposing a clinical testing protocol to his superior should not write, "If we do not conduct the tests I propose the company could face serious FDA regulatory problems and product liability suits." Rather, the scientist may say, "I believe this protocol employs sound research methodologies that will yield scientifically valid data and should be favorably reviewed by the FDA." This allows the author to advocate the protocol without a speculative and gratuitous comment on future liability.

7. Deal with bad documents immediately.

When a bad document is created, it must not be ignored. Even if the bad document is dead wrong and misinformed, it can rarely be destroyed with confidence that a renegade copy will not turn up. More importantly, the act of destruction, especially if the author is ordered to do so against his will, can give rise to adverse inferences at trial. [5] It is always wiser to address the document head-on. Safe Communication is not about "cover up." It is about avoiding unnecessary risks through prudent, truthful communication.

Obviously, if a document reveals a legitimate problem with the products or practices of a company, corrective action must be taken to avoid liability. But the corrective action must be carefully documented and specifically address the concerns in the original document. Whenever possible, the author of the original memo should sign off on the corrective action.

A more troublesome problem arises when a company determines that a written criticism does not have merit. If the author refuses to yield, then the company must fully document its investigation, its dialogue with the employee, and its decision not to take the advice of its employee. The goal is to avoid transforming the employee into a martyr or "whistleblower." As with bad documents, powerful evidence at trial comes from an employee who turns on his company.

8. Limit dissemination of all writings to those who need to know.

Except for "confidential" memos (which will probably not be confidential when litigation starts), there is always a temptation to broadcast every document written in the corporate context. Some supervisors demand broad distribution of memos so everyone is "kept in the loop." Employees often distribute their memos broadly because they do not want to offend others who may have a purported interest in the topic. Other employees simply want to show off their work product as widely as possible.

Communication is the lifeblood of a company. But reasonable protocols must control dissemination of all writings because each recipient of a document becomes a potential witness on its contents. For instance, if a memo recommending a safety improvement in a product becomes an adverse trial exhibit, every recipient of the memo may be charged with failure to act on whatever the memo recommended, whether it was a valid recommendation or not. Remember Rule 4, if a document can be twisted to mean something else, it will be.

9. Never create documents commenting on pending litigation.

Once a lawsuit is started, no one should write about it or anything related to it unless directed by an attorney representing the company. The documents may be discoverable even though created after the action is filed. They may be relevant to damages in a commercial case or to prove feasibility of an alternate design in a products liability case. [6] They may also be relevant to punitive damages in some circumstances.

10. Adhere to a strict document retention program.

Document retention programs may be more difficult to manage in the era of electronic databases, but they are still important, and employees should be strongly encouraged to adhere to them. [7] There are two important corollaries of document retention that relate to Safe Communication. First, drafts should not be retained. Employees frequently keep drafts of documents that contain not only their own edits but also the frank and sometimes provocative marginalia of others. To make matters worse, the people who edit the marked up draft often photocopy it before returning it to the author, thereby creating multiple copies of marked-up, potentially troublesome documents.

Drafts and mark-ups rarely serve any corporate purpose after the final document is issued. But they can unnecessarily implicate additional people as potential deponents when suits are filed. [8] Drafts also disclose alternate ideas that may have been discarded for sound reasons but can be later used to prove the company "should have known" there were better ideas than the one chosen. Discarding drafts is not about covering up product defects or liability issues. It is intended to insure that if litigation develops, the case will properly focus on the position defendant is prepared to defend.

The second important corollary to a document retention program is that personal notes should not be retained after they are no longer needed. Ordinarily, they should not be kept after the project for which they were created is complete. Notes of meetings are especially problematic because they record the purported comments of others. Such notes are often created without reflection, put into a file and forgotten. Then, years later, an attorney will approach the author with a document demand in a lawsuit, and the employee will find the notes buried in his "personal" files. At that point, the employee may not even remember making the notes and may be unable to explain some ambiguous comment that reflects badly on the company. As with drafts, retention of personal notes rarely serves any corporate purpose, and they should be discarded promptly. [9] If the history of a project must be retained for some reason, a summary document should be created from the notes in accordance with the principles of Safe Communication, and then the notes should be discarded.

To most experienced litigators, these guidelines for Safe Communication are a matter of common sense. But the average employee, who has never seen his or her innocent work product distorted into something it was never intended to be, will find them a revelation. Employees need to be convinced that Safe Communication is important, and they must be shown how to communicate safely. That can be done by corporate counsel conducting targeted workshops with upper and mid-level employees and later with lower level employees who are most likely to create documents. Examples of "bad" documents can be highly educational. Certain groups such as sales and marketing personnel should be given priority because promotional documents are often some of the worst that defendants must face in product liability suits. Sales conferences present an excellent opportunity to make a Safe Communication presentation. Managers should understand that part of their responsibility is to monitor the documents created in their departments. And employees must be made acutely aware that their e-mails are not destroyed when the Delete key is struck; they are merely moved to another location and can be retrieved.

The goal of Safe Communication is to allow employees to do their jobs enthusiastically and conscientiously while teaching them some simple cautionary steps that will protect the company from unnecessary risks if litigation develops. That is the message, and it must be scrupulously presented so that it is not confused with a message of "cover up."

Safe Communication will not prevent lawsuits against companies, but it can substantially reduce their risk of getting sued and significantly improve their chances of winning their meritorious cases when they are sued.

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ENDNOTES

1. See, e.g., Guide to Record Retention Requirements in the Code of Federal Regulations, published by CCH, Inc.
2. The term "document" includes paper documents as well as electronic documents such as e-mail and word processing documents that may never be printed as hard paper copies. Electronic documents are discoverable, and courts have begun to focus on allocating among the parties the considerable expense of electronic discovery. See, e.g., Zubulake v. UBS Warburg LLC, 216 F.R.D. 280 (S.D.N.Y. 2003).
3. See Christopher Scott D'Angelo, "Creating and Managing Documents," 65 Def. Couns. J. 494, 498 (1998).
4. Courts have developed several tests to define which employees of the corporation may communicate with the corporation's counsel under the corporation's privilege. See generally, Eric Reider, "Evidence from the Opposition," 22 No.1 Litigation 17, 18-20 (1995).
5. The potential consequence of "bad" document destruction was dramatically illustrated by the federal jury's guilty verdict against Arthur Andersen for obstruction of justice stemming from its shredding of Enron-related documents upon receiving notice of federal investigation. See also Robert C. Friese, "Document Creation, Retention and Destruction, and the 'Negative Inference,'" 7 No. 1 Insights 22 (Jan. 1993).
6. See Trzeciak v. Apple Computers, Inc., 1995 WL 20329, ~1, n.l (S.D.N.Y.) (documents generated after the date of plaintiffs injury were discoverable because they were relevant to determining damages and "potentially probative of the feasibility of corrective measure[s] prior to plaintiffs injury").
7. For a discussion of electronic document management and discovery, see Paul French, "Electronic Document Retention Policies," ABA Law Practice Today (Jan. 2004); Carey Sirota Mayer & Kari L. Wraspir, "E-Discovery: Preparing Clients for (and Protecting them Against) Discovery in the Electronic Information Age," 26 Win. Mitchell L. Rev. 939 (2000); Jonathan J. Soll, "Managing Electronic Data Risks through an E-Mail Retention Policy," 18 No. 4 ACCA Docket 18 (Apr. 2000); Christopher V. Cotton, "Document Retention Programs for Electronic Records: Applying a Reasonableness Standard to the Electronic Era," 24 J. Corp. L. 417 (1999).
8. Exceptions to retaining drafts may include such things as formal drafts of agreements revealing the history of a negotiation that may be relevant to contract interpretation in later litigation. But handwritten or marked-up drafts of agreements and drafts of internal memos or letters ordinarily serve no useful purpose and should be discarded promptly.
9. As with drafts, some notes should be retained if their destruction may give rise to a negative inference at trial. One example is the retention of notes by someone charged with a corporate responsibility for keeping notes such as a corporate secretary.

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Joseph F. Falgiani is a special counsel to Sedgwick, Detert, Moran & Arnold LLP, resident in the firm's Newark, New Jersey, office. Mr. Falgiani focuses his practice on pharmaceutical and medical device litigation, mass tort litigation, and toxic tort litigation. He has served as a national trial attorney for a major client in breast implant litigation, and is currently involved in various pharmaceutical cases in the United States. Mr. Falgiani can be contacted at 973.242.0002 or via e-mail at joseph.falgiani@sdma.com.

The international litigation and trial law firm of Sedgwick, Detert, Moran & Arnold LLP provides its clients vigorous defense strategies and long-term litigation avoidance strategies. With over 340 attorneys in offices in New York, London, San Francisco, Zurich, Los Angeles, Paris, Newark, Orange County (California), Chicago, and Dallas, Sedgwick's collective experience spans the globe and virtually every industry. For more information about Sedgwick, its attorneys, and its services, visit the firm's Web site at www.sdma.com.

© 2004 Sedgwick, Detert, Moran & Arnold LLP. This communication is published as an information service for clients and friends of the firm, and does not constitute the rendering of legal advice or other professional service.

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