Discovery Abuse: How Defendants in Products Liability Lawsuits Hide and Destroy Evidence
David Halperin
Congress Watch
July 1997
Summary
For nearly two decades, the world's biggest corporations have relentlessly lobbied the U.S. Congress and state legislatures to restrict the ability of consumers to obtain relief through the legal system for severe or fatal injuries caused by defective products. These corporations approach lawmakers with wild claims about a "litigation explosion." They frequently complain about the expense of defending themselves from lawsuits and the delays that occur in our legal system. But the record shows that, in fact, expense and delay in product liability litigation is often the result of deliberate attempts by corporate defendants -- the very entities urging "tort reform" -- to avoid disclosure of critical information revealing knowledge of design defects that can kill and maim. Product liability defendants have repeatedly abused the pre-trial discovery process, ignoring the obligations imposed on them by plaintiffs' discovery requests and by orders of presiding trial judges. Among the abuses:
- Product liability defendants have provided misleading responses to discovery requests -- responses that obscure the fact that the defendant is deliberately withholding documents sought by the plaintiff.
- Product liability defendants have sought to shield mountains of documents behind the attorney-client privilege, without demonstrating or even confirming that all such documents are subject to the privilege.
- Even when they have provided documents to plaintiffs, product liability defendants have often sought elaborate protective orders aimed at hiding damaging product information from the public, the media, and government agencies -- as well as from others who claim injury from the same product. And where defendants face likely defeat at trial, they sometimes demand, as the price for settlement, agreements by plaintiffs to seal for all time the records of a case -- including, sometimes, the transcripts of a public trial.
- Product liability defendants often refuse to provide important information until ordered to do so by the presiding judge -- and often fail to comply even after such judicial orders are issued.
- Product liability defendants have blatantly concealed and destroyed documents relevant to their defective products -- often while denying that such records ever existed.
Judges around the country have identified and condemned these tactics. For example:
- In a case involving alleged defects in a Samurai four-wheel-drive vehicle, a federal judge in Georgia found that Suzuki Motor Co. had provided false information and withheld key documents. He concluded that Suzuki deserved "the most severe sanction available." A federal appeals court affirmed the decision, concluding that Suzuki "engaged in an unrelenting campaign to obfuscate the truth."
- A two-year-old girl died after taking asthma medication. When the girl's parents sued, the manufacturer, Fisons Corp., used a misleading discovery response to avoid disclosing company memos that revealed corporate knowledge of the risks posed by the medication. The Washington state Supreme Court found that Fisons' misleading answers were "contrary to the purposes of discovery and ... most damaging to the litigation process."
- DuPont's Benlate 50DF was supposed to kill funguses, but instead it appeared to be killing the plants it was supposed to protect. Faced with mounting legal claims by growers, DuPont deliberately withheld testing data that suggested contamination of the Benlate by powerful weedkilling chemicals. A Georgia federal judge held that DuPont had "engaged in a continuous scheme and pattern of bad faith and discovery abuse." DuPont, he wrote, "cheated consciously, deliberately, and with purpose. DuPont has committed a fraud on this court." In another Benlate case, a Florida state judge found that DuPont had deliberately acted "in utter disregard for orders of the court, and for the rules of evidence and ethics." In a third case, a Hawaii state judge concluded that DuPont had made "fraudulent" statements and engaged in "abusive litigation tactics" and "intentional misconduct."
- In a suit brought by the survivors of a lung cancer victim, a New Jersey federal judge found evidence that major tobacco companies created a research organization that was "a fraud -- to deflect the growing evidence against the industry." Rejecting the cigarette makers' claims of attorney-client privilege, he wrote, "The tobacco industry may be the king of concealment and disinformation."
- General Motors' efforts to delay disclosure of corporate records to plaintiffs claiming automobile defects have been repeatedly criticized by courts. A South Carolina federal judge found "a substantial likelihood" that General Motors had engaged in "perhaps perjury and systematic destruction of documents involving gross misconduct." An Oklahoma federal judge found that GM had repeatedly violated discovery orders, engaging in misconduct that was "both willful and intentional." A federal judge in Missouri concluded that "General Motors' discovery practices as a whole are conducted with complete disregard" for federal court rules. He found "a deliberate, willful policy on the part of General Motors to stonewall discovery as much and as long as the patience of the court would tolerate."
Some of these cases are still in litigation, and the final decisions as to penalties for the discovery misconduct are not yet determined. Nevertheless, the facts demonstrate the need for genuine reform of the tort system -- reform that addresses discovery abuse by litigants rather than, as industry groups urge, arbitrarily weakening the rights of injured persons. What are needed are reforms to make the resolution of tort claims more fair and more efficient, so that frivolous claims can be quickly identified and dismissed and legitimate claims can be promptly resolved. Reforms aimed at curbing abuse of the pre-trial discovery process would help ensure that cases are decided on their actual merits -- on the truth -- and not on the ability of one side to outspend the other on legal fees and expenses, or the willingness of one side to bend and break ethical and legal standards. Specific measures would include:
- Tougher sanctions imposed by judges for discovery abuse.
- Stronger court rules to provide for direct punishment of attorneys who violate court discovery orders and related ethical rules.
- More criminal investigations of lawyers and parties who lie or destroy documents during litigation.
- Increased recognition of an independent tort action for deliberate destruction of relevant evidence.
- Sharp restrictions on the use of pre-trial secrecy orders and confidential case settlements.
The Increasing Abuse of Litigation Discovery Rules
It was a rare public glimpse at internal deliberations within one of the world's largest corporations: A tape, secretly recorded by a Texaco executive, of an August 1994 meeting in which company officials discussed how to handle an ongoing lawsuit charging Texaco with racial discrimination. When the tape was released to the media, public outrage focused on indications of racial animosity among the Texaco executives overheard. But just as shocking was clear evidence of a deliberate scheme by corporate executives to manipulate and destroy evidence relevant to a pending lawsuit.
On the tape, discussing a request for documents by the plaintiffs, Texaco treasurer Robert Ulrich says, "We're gonna purge the [expletive deleted] out of these books, though. We're not going to have any damn thing that we don't need to be in them." The officials discuss the fact that two sets of meeting minutes exist. As to one set, apparently unadulterated, Ulrich says, "You have that someplace, and it doesn't exist... I just don't want anybody to have a copy of that." But then Ulrich goes even further: "You know, there is no point in even keeping the restricted version anymore. All it could do is get us in trouble. That's the way I feel. I would not keep anything." Another executive, Robert Lundwall, responds: "Let me shred this thing and any other restricted version like it.... because it comes back to haunt us." At another point, a third Texaco official appears to urge his colleagues to be sure to retain information helpful to Texaco's position in the case; he says, "If it was a favorable chart, you'd want to retain it."
According to federal officials, Lundwall, who made the tape recording, has admitted that he did indeed participate in the destruction of documents sought by the plaintiffs in the case. In addition, information obtained by federal investigators reportedly indicates that a Texaco lawyer advised that a draft internal memorandum not be disseminated "to avoid it becoming part of the 'discovery' process in the [discrimination] litigation." Federal authorities have indicted Lundwall and Ulrich for obstruction of justice in connection with the alleged concealment and destruction of documents sought by the plaintiffs. (The executives deny the charges.) (1)
The Texaco lawsuit concerned claims of discrimination, but many, many other examples of blatant corporate abuse of the pre-trial discovery process come from another area of hotly-contested litigation: suits arising from personal injuries alleged to be caused by defective products.
Product liability suits have been the subject of sustained public and media scrutiny in recent years, mainly as the result of heavily-orchestrated public relations and lobbying campaigns by product manufacturers aimed at limiting the rights of injured persons. Among other things, these corporate lobbying efforts have sought to place arbitrary caps on damage awards and to abolish the traditional rules of "joint-and-several" liability, which help ensure recovery for victims harmed by multiple defendants by requiring such defendants jointly to pay the full damages even if one or more fail to pay.
In arguing that the tort litigation system, particularly as applied to claims of personal injury from defective products, is in need of drastic change, advocates of so-called "tort reform" repeatedly point to the fact that product liability lawsuits today are often lengthy and expensive. Victor Schwartz, a Washington attorney paid by industry groups to lead the charge for restrictions on the legal rights of injured persons, complains that "the cost of responding to litigation is very expensive and takes resources away from job creation and research and development." (2) The Health Industry Manufacturers Association, in a statement to Congress urging product liability restrictions, speaks of "prohibitively costly legal expenses," of companies spending "millions of dollars defending themselves in lawsuits." (3) The Insurance Information Institute notes "the growing number of lawsuits, especially unnecessarily prolonged lawsuits." (4) Congressman Jim Ramstad, Republican of Minnesota, who chaired the task force that drafted the legal reforms section of the "Contract with America," says the legal system is overloaded by "skyrocketing costs and mind-boggling delays." (5)
But the evidence shows that very often the actual cause of delay and expense is not the claims brought by the victims but the deliberate strategy of defendants, particularly defendants in product liability cases, to abuse the pre-trial discovery process in hopes of wearing down the plaintiff or keeping the plaintiff from obtaining information harmful to the defense case. Indeed, the public record is replete with examples of defense conduct so outrageous that trial judges have been pushed to impose severe sanctions. But such conduct persists, apparently because product liability defendants and their attorneys still consider such unethical strategies to be worth the gamble.
Business Week's legal affairs editor recently concluded, "Corporate foul play in high-stakes cases appears to be increasing.... Of course, destroying evidence, striking secret deals, and stonewalling opponents aren't new tactics in the world of hardball corporate litigation. But it is difficult to recall a time when so many respectable companies have been hit with court sanctions." He added, "By refusing to play by the rules, these companies have undercut their moral authority to criticize the U.S. tort system." (6) An anonymous "veteran defense attorney," quoted in the Wall Street Journal, says, "It makes me sick how some companies I've worked with treat discovery requests. They think litigation is a game." (7)
What have corporate defendants done to merit such condemnation? The following pages will make that clear. There you will read many, many more strong words condemning abusive conduct by product liability defendants. And those words won't come from Public Citizen but from federal and state trial judges -- dedicated public servants who witnessed the misconduct first-hand.
How the System Is Supposed to Work
The rules governing civil discovery -- the disclosure of documents, physical evidence, witness testimony, and other information prior to the trial of a civil lawsuit -- have been carefully crafted by judges and legislators at the state and federal level to ensure that parties have extensive access to relevant information possessed by their opponents.
It was not always this way. Until the late 1930s, a "sporting theory of justice" dominated. There was no right to discover facts and evidence in the other side's possession. Thus, trials were often an unpredictable game of chance, rather than a search for the facts.
The modern rules of discovery were based on the assumption, as the Supreme Court put it in 1947, that "mutual knowledge of all relevant facts gathered by both parties is essential to proper litigation." (8) Instead of "a game of blind man's bluff," the Court has said, the modern rules promote "a fair contest with the basic issues and facts disclosed to the fullest practicable extent." (9) The facts must come out, even if they hurt the case of the party who possesses them. Damaging documents, like those in the Texaco vaults, or evidence that a personal injury plaintiff has repeatedly filed phony claims, must be disclosed to the other side.
In general, discovery rules governing both federal and state courts provide for broad disclosure prior to trial. Litigants must act in timely fashion in response to discovery requests by opponents. Parties must respond to requests for production of documents -- written demands to make available specific records or categories of records relevant to the case. Parties must answer, in writing, interrogatories and requests for admissions -- written questions about issues in the case. Parties must make themselves and their officials available for depositions -- oral, transcribed interviews by opposing attorneys. Litigants must even provide their opponents with information that, because of some rule of law, would not be admissible at trial, so long as the information could reasonably lead to the discovery of admissible evidence. Recent reforms in discovery rules have further supported this principle of openness: In many jurisdictions parties must disclose relevant documents at the outset, before an opponent has even requested them.
There are exceptions to the principle of openness, but they are narrow and tightly drawn. If a party seeks information not possibly relevant to the dispute -- if it seeks to go on an extensive "fishing expedition" that improperly burdens the other side -- or if the information sought is protected by a legally-recognized privilege, such as confidential communications between a lawyer and client or husband and wife, the opponent can object. If the parties cannot resolve their differences, they can submit their dispute to the presiding judge.
When the parties play by these rules, the system has a chance to work. Both sides become promptly aware of the available evidence and the strengths and weaknesses of their cases. This promotes settlement of valid claims on reasonable terms. Frivolous claims can be quickly identified and dismissed. Where the parties cannot agree on an appropriate settlement, at least surprises at trial are minimized, and the process is more efficient. And the policy of openness helps level the playing field, providing less wealthy parties with genuine hope that their cases will be resolved on the merits.
How Product Liability Defendants Subvert the System
Unfortunately, as case after case in the product liability area demonstrates, defendants often do not play by the rules. They fail to fulfill discovery requests from opposing parties and even disobey discovery orders issued by judges. Why? Because such tactics can exhaust the opposition and help keep damaging information from coming to light.
How do these litigants bend and violate the rules? The techniques, by now, are well-known. Below we will see these tactics come alive in a number of actual cases. But first, a quick catalogue of the tools of the trade:
1. The open-ended response
Product liability defendants frequently respond to document requests by indicating that their initial document production may be supplemented if additional documents are found. This stance sounds reasonable, but in practice it is sometimes used as license to deliberately withhold relevant records. If the plaintiff obtains a document from another source and confronts the defendant with it, asking why it had not been produced in the litigation, the defendant can say, "We told you we were still looking."
2. The clever response
Another variation of the cat-and-mouse game sometimes played by product liability defendants is to respond to a discovery request by providing only a subset of the documents requested or an answer to only part of the question asked. But instead of expressly objecting to providing the rest of the information sought, the defendant subtly slips the limitation into its response. For example, in a case where the issue is whether Mechanism A, a component of Vehicle X, caused an injury, the plaintiff gives the defendant this request: "Provide all documents concerning defects or potential defects in Mechanism A." The defendant has documents indicating defects with respect to Mechanism A, but they concern Vehicles Y and Z, not Vehicle X. Instead of providing those documents or objecting to the scope of the request, defendant simply responds, "There are no documents regarding Vehicle X concerning the risk of Mechanism A." If the busy plaintiff's lawyer fails to notice that the defendant has unilaterally limited the scope of the discovery request, the documents will remain hidden.
For a real-world example, see the case of Pollock v. Fisons Corp., discussed below.
3. Claims of attorney-client privilege
Product makers often hide damaging documents behind the broad banner of attorney-client privilege and its cousin, the attorney work-product doctrine (which shields from disclosure the strategies and conclusions of lawyers). Defense lawyers know that plaintiffs' attorneys are reluctant to spend time and energy trying to force the trial judge to entertain detailed motions to compel discovery, and that trial judges don't have the time to pore over thousands of pages to determine the validity of assertions of privilege. The system instead depends on the integrity of lawyers, who are supposed to assert the privilege only as to records covering genuine attorney-client communications. Unscrupulous companies and their lawyers have taken advantage of this doctrine. They simply assert the privilege, sometimes as to numerous documents and often without elaboration or adequate inspection, and hope that will be the end of the matter.
4. Protective orders
Product liability defendants, claiming that public disclosure of product information will reveal essential business secrets to competitors, frequently insist on elaborate secrecy agreements -- called protective orders -- prior to providing discovery to the plaintiff. These complicated orders assist defendants by delaying the release of crucial documents, requiring plaintiffs' attorneys to spend time negotiating the orders and complying with their sometimes complex provisions, and -- often most importantly -- keeping harmful information out of the hands of attorneys representing other persons claiming injuries from the same product -- and keeping it away from govenment regulatory officials. Often there are no genuine trade secrets in need of protection, but plaintiffs' lawyers, anxious to move forward on behalf of their clients, accept the restrictions anyway. Judges, normally too busy to question agreements worked out by parties, approve them.
Consider a typical protective order sought by the General Motors Corp. and approved by a California Superior Court judge. A man named Milton Green sued GM after his wife was killed when her Chevrolet Chevette was rear-ended and caught fire. Green alleged that the Chevette was defectively designed with an extremely vulnerable fuel tank located at the back of the vehicle. In discovery, his lawyer asked GM for safety documents and crash test results that might prove his claim. Such information might have been of interest to other persons injured in Chevette fires or their survivors, as well as others who had purchased or were considering purchasing a Chevette. But GM crafted an agreement that conditioned turning over the records to Green's lawyers on their promise not to provide them to anyone else. The agreement added that failure to maintain confidentiality would put Green or his lawyer "in contempt of court ... subjecting the violating party to fine and imprisonment." Not satisfied with this dramatic warning, GM felt it necessary to specifically mention what was likely its biggest concern: "Under no circumstances shall any such information be disclosed or otherwise conveyed to parties, counsel or witnesses (including expert witnesses) in other actions (or claims which have not yet resulted in suit) against General Motors Corporation." (10)
When a number of persons claim injury from the same product, the manufacturer can establish a centralized defense strategy, with in-house corporate counsel or a large outside law firm coordinating efforts, while local attorneys handle day-to-day tasks. What members of the corporate defense team learn in one state -- in terms of facts or legal strategy -- can be passed on to colleagues in another. This approach makes sense; it makes litigation more efficient. Unfortunately, the use of broad secrecy orders can prevent such efficiency on the plaintiff's side; with such orders in place, plaintiffs' lawyers may be unable to pool their knowledge effectively. Often a lawyer bringing a product liability claim must start at square one, making all the discovery requests and dealing with all the same discovery obfuscation faced by lawyers for earlier claimants. Thus, there is delay and expense -- the very features of the tort system about which many corporations complain -- resulting directly from deliberate defense tactics.
One person who recognized this problem was Illinois federal district judge Robert J. Kauffman. He had been assigned a case that arose when an Illinois couple was killed in a fire resulting from a rupture in the fuel tank of their Ford Galaxie after a collision. The defendant, Ford Motor Co., presented Judge Kauffman with a protective order, but Judge Kauffman refused to sign it. He concluded that Ford had not demonstrated that any confidential business secrets were at issue and that Ford simply feared that the information could be used in future lawsuits. He found that the information Ford aimed to keep concealed -- regarding product design and Ford's knowledge of possible defects -- should, in fact, be publicly available in future cases. "The availability of such discovery," Judge Kauffman wrote, "may reduce time and money which must be expended to prepare for trial in those cases and may allow for effective, speedy and efficient representation." (11)
Judge Kauffman issued his decision in 1978, but, nearly twenty years later, product liability defendants continue to press for broad protective orders as the price for disclosure of information to plaintiffs.
5. Failure to comply with discovery requests until plaintiffs complain to the judge
Product liability defendants often respond incompletely or not at all to plaintiffs' discovery requests. They will wait until plaintiffs go to court asking the presiding judge to order the disclosure or to impose sanctions. Or a corporate defendant will refuse to hand over documents until the court actually rules on the plaintiff's motion and orders the defendant to do so. Sometimes defendants will release some of the requested documents to create the appearance of cooperation. Sometimes they will bury relevant documents within huge stacks of irrelevant documents the plaintiff never requested. Often they will fail to produce document indexes that might assist plaintiffs in reviewing the documents, even though such indexes have already been prepared for internal use. Sometimes they will inform the plaintiff that the requested documents are available for inspection at a corporate building hundreds of miles away from the courthouse. And sometimes the defendant will serve a discovery request on the plaintiff, asking for copies of each of defendant's own internal documents already in the plaintiff's possession; some speculate that the purpose of such a request is to permit the defendant to withhold records not previously obtained by plaintiff without fear of getting caught.
6. Failure to comply with court orders compelling discovery
It gets worse. There are many cases where judges have determined that a product liability defendant not only failed to comply with a plaintiff's discovery request but also violated direct court orders compelling the defendant to hand over documents. Often a defendant will explain, if caught in violation, that, without conferring with the judge or the plaintiff, it "interpreted" the discovery order in a manner that limited its response. Or that it misunderstood the judge's order. Or that it had done its best to comply and was sincerely sorry for any errors. But if the defendant is not caught, it can keep damaging documents out of court -- and perhaps win a case where, on the merits, it deserved to lose.
7. Blatant concealment or destruction of documents
Sometimes, in lieu of all the clever artifices described above, corporate defendants and their blue-chip law firms appear to have resorted to the simplest discovery abuse tactic of all: hiding or destroying documents, often while flatly denying that they ever existed. (12)
8. Seeking refuge in the appellate courts
Sometimes all of these strategies fail -- sometimes the discovery lapses are exposed, and the presiding trial judge does not accept the various explanations for them. Outraged by the perceived misconduct, the judge orders the release of closely-guarded corporate records and/or imposes substantial sanctions. Sanctions can include high monetary penalties, punitive evidentiary rulings, such as denying a party the right to present evidence on a matter related to the discovery abuse, or, the ultimate sanction: the ordering of a default judgment, a verdict in favor of one side on the issue of liability.
But when that is the result -- when the exasperated trial judge has been pushed too far -- there is still one more weapon in the obstructionist's arsenal: appeal. Defendants turn to high-priced and well-connected appellate advocates, such as Griffin Bell, Attorney General under President Carter, and Kenneth Starr, the former appeals judge who also serves as Whitewater independent counsel. These respected orators can sometimes convince an appeals panel to direct the trial judge to reconsider a decision to disclose corporate records. Or they will reduce or cancel sanctions imposed by trial judges. Even where the appeals court affirms the lower court's sanctions, an appeal of a strong sanction can sometimes delay final resolution of a case for months or years.
9. The confidential settlement
If they cannot win at trial or on appeal, and they face the imminent disclosure of harmful evidence -- evidence that could be used in cases brought by other victims of a dangerous product -- corporate defendants often agree to settle. But, frequently, they will insist on confidentiality as the price of settlement. Confidentiality usually means that the plaintiff and the trial judge agree that the records of the case -- including all of the information obtained in discovery regarding the defendant's product and sometimes even the transcripts of the public trial (13) -- are sealed and shielded from public disclosure. The defendant sometimes takes possession of the vehicle or other product that caused the plaintiff's injury. (14) Sometimes, corporate defendants have gone as far as to seek an agreement from the plaintiff's lawyer not to represent other clients who claim injury from the same product. (15) Plaintiffs, relieved to finally have the opportunity to obtain compensation for their injuries, often agree to defendants' terms. Overworked judges, anxious to clear cases from their dockets, generally approve the deals. But confidential settlements not only prevent the public and government authorities from learning more about product hazards, they also increase the likelihood that the next trial involving the same product will be prolonged and expensive.
But enough generalities. Let's see some of these tactics in operation.
Malautea v. Suzuki Motor Co.
Fati F. Malautea was driving his 1988 Suzuki Samurai four-wheel-drive vehicle. After a collision with another car, the Samurai rolled over, and Malautea suffered severe head and spinal cord injuries. (16)
Malautea's wife Gayle believed the rollover was caused by a defect in the Samurai. She sued Suzuki in federal court in Georgia. When her lawyer requested documents and answers to interrogatories, Suzuki offered repeated objections and incomplete responses.
Malautea filed a motion to compel Suzuki to be more forthcoming. At a hearing, the trial judge, B. Avant Edenfield, warned Suzuki to comply or face severe sanctions. But six months later, in December 1991, after Judge Edenfield had warned Suzuki's lawyers a second time, the parties were back in court. This time, after another hearing, Judge Edenfield granted a default judgment and ordered Suzuki and, out of their own pockets, lawyers for Suzuki to pay Malautea's court costs and attorney fees. He also fined Suzuki $5000 and fined each defense lawyer $500.
What had Suzuki and its lawyers done to merit the severe sanction? Key information that Malautea's lawyers wanted concerned the proposed marketing of the Samurai by General Motors. Malautea had information that GM had refused to participate in marketing the Suzuki because its own safety testing showed the vehicle was subject to rolling over. This was important evidence for Malautea because it would support her allegation that the Samurai was defectively designed and manufactured.
At first, Suzuki's attorneys refused to answer the interrogatories, arguing that certain words and phrases were undefined. "The Defendants and their lawyers ... have managed to inject ambiguity into . . . ordinary words," Judge Edenfield ruled. These words included, "tests, research or other investigation," "risk of rollover," "risk of personal injury," "substantially similar,@ "change, alteration or modification," and "engineer."
In attempting to justify Suzuki's evasive answers, Suzuki attorney Joe Freeman told Judge Edenfield that a vehicle test was, in fact, not a test: "When we say that General Motors did not do any testing with rollover, there are tests that are done like the circle test and the S-turn, and all of those sorts of things, and impact tests that in some instances will ... be more predictive of the road stability of the vehicle." But such an exercise, according to Freeman, "is not a test. It is simply a calculation ...."
Another Suzuki tactic was to answer a general question by pretending it was a limited one. Thus, when Malautea asked about rollover problems with the Samurai over several model years, Suzuki limited its answer to the 1988 model year. Judge Edenfield concluded, "By restricting their answers in this manner, the Defendants avoided revealing a great deal of discoverable information." Suzuki also failed to turn over deposition transcripts taken in other cases, although the court specifically ordered it to do so.
But Suzuki and its lawyers went beyond refusing to answer. When Malautea asked for information about General Motors' refusal to market the Samurai, Suzuki answered that it was "unaware of any decision by General Motors not to market the Samurai." As at least some Suzuki officials well knew, this was untrue.
Unable to get information he was entitled to discover from Suzuki, Malautea's lawyer subpoenaed documents directly from GM. After a court battle, he received GM documents indicating that Suzuki had not been truthful when it professed to be unaware that GM refused to market the Samurai. For example, a 1984 memo from GM to Suzuki stated that tests of the Samurai, indicating the vehicle's "perceived rollover tendencies," led to GM's decision to decline to market the vehicle. After the documents were disclosed, the head of Suzuki's legal department admitted to Judge Edenfield that Suzuki executives must have known about the 1984 memo. And Suzuki's lead outside counsel admitted knowing of the memo at least since 1989.
Judge Edenfield concluded that Suzuki and its lawyers were guilty of committing discovery abuses willfully and in bad faith. "If the Court," he wrote, "allowed the Defendants their way in this litigation, the Plaintiff would be completely unable to find the truth.... If the Defendants do not deserve the most severe sanction available, then no one does." Having entered a default judgment, Judge Edenfield ordered a proceeding before a jury to determine the Malauteas' damages.
However, Suzuki delayed a jury proceeding by appealing to the Eleventh Circuit Court of Appeals. When the appeal was argued, Suzuki continued the process of obfuscation. Its appellate lawyer told the appeals panel that Suzuki was unable to meet discovery deadlines with respect to the material relating to General Motors because of the time required to translate Japanese documents and ship them to the United States. In its April 1993 decision, the three-judge appeals court, acting unanimously, concluded that it was "difficult to believe that this highly relevant information has not already been translated and provided to Suzuki's defense counsel in the United States." And, the court added, "If our suspicions regarding the General Motors information are true, then counsel's oral argument statement regarding Suzuki's inability to comply was a bold falsity. Of course, the defendants' appellate counsel may have fully believed his representation to this court; he may have just been the innocent lamb which the defendants led to slaughter."
The Court of Appeals upheld Judge Edenfield's decision in all respects. Writing for the three-judge panel, Judge Peter Fay concluded that Suzuki "richly deserved the sanction of a default judgment" because the company and its lawyers "engaged in an unrelenting campaign to obfuscate the truth." Judge Fay added:
[W]e feel compelled to remark on the disturbing regularity with which discovery abuses occur in our courts today.... The discovery rules ... were intended to promote the search for truth that is the heart of our judicial system. However, the success with which the rules are applied toward this search for truth greatly depends on the professionalism and integrity of the attorneys involved. Therefore, it is appalling that attorneys, like defense counsel in this case, routinely twist the discovery rules into some of 'the most powerful weapons in the arsenal of those who abuse the adversary system for the sole benefit of their clients.'
Undeterred, Suzuki claimed it had done nothing wrong, and the company hired Kenneth Starr, who sought review in the United States Supreme Court. But in October 1993, the high court rejected Suzuki's petition to hear the case. Facing a proceeding on damages before a jury in Judge Edenfield's court, Suzuki settled the case. (17)
Pollock v. Fisons Corp.
Jennifer Pollock, two years old, suffered from asthma. James Klicpera, her pediatrician, prescribed Somophyllin Oral Liquid, marketed by Fisons Corporation, a British pharmaceutical firm. On January 18, 1986, after taking the medication, Jennifer suffered seizures that produced permanent and irreversible brain damage. The seizures were caused by theophylline, the key ingredient in Somophyllin.
As Jennifer's parents and Dr. Klicpera learned much later, Fisons had known for years about the dangers of using Somophyllin, the very dangers that attacked Jennifer Pollock. As Fisons knew, if a child had a viral infection with an accompanying fever, as Jennifer did, the medication would become more powerful, causing the equivalent of an overdose, leading to convulsions and brain damage.
Jennifer's parents sued Dr. Klicpera for medical malpractice and Fisons for product liability in an Everett, Washington, state court. Dr. Klicpera responded by suing Fisons. Fisons, in turn, claimed that Klicpera had misprescribed the medication. One of Seattle's largest corporate law firms, Bogle & Gates, represented Fisons.
In 1989, after three years of discovery, the Pollocks settled their claim against Dr. Klicpera. Klicpera and the Pollocks continued the legal battle against Fisons.
In 1990, the Pollocks' attorneys received an envelope in the mail from an anonymous source. Inside was a Fisons document, a 1981 "Dear Doctor" letter sent by Cedric F. Grigg, Fisons' Manager of Marketing and Medical Communications. The letter had been sent to a limited number of what the company called "influential physicians." It warned of the very side effect suffered by Jennifer Pollock. It noted a recent study that confirmed reports "of life-threatening theophylline toxicity when pediatric asthmatics on previously well-tolerated doses of theophylline contract viral infections." Grigg wrote that if theophylline "is not to fall into disrepute as it did formerly, the physician needs to understand that it can be a capricious drug."
Dr. Klicpera had never received this warning from Fisons, nor was there a warning in the medication's box insert. He prescribed the medication to Jennifer more than four years after the letter had been sent. The letter proved that Fisons knew its medication had a potential lethal defect that could disable or kill children and yet continued to market the drug anyway without warning most doctors of the danger.
But there was more. One of the Pollocks' 1986 discovery requests to Fisons had stated: "Produce genuine copies of any letters sent by your company to physicians concerning theophylline toxicity in children." The 1981 letter fell squarely within this request, yet Fisons had not produced it. The Pollocks and Klicpera filed a motion for sanctions against Fisons for discovery abuse. At the hearing on the motion, the trial court ordered Fisons to produce all documents the other parties had requested related to theophylline. Fisons responded by turning over 10,000 additional documents.
Among these documents was a 1985 Fisons memo, also written by Grigg, that noted "a dramatic increase in reports of serious toxicity to theophylline in 1985 medical journals." The memo called the traditional recommended dosage of the ingredient "a significant 'mistake.'" The memo also noted that the relevant toxicity reports had not been reported in the medical journal read by doctors who most often prescribed the drug and concluded that those doctors might not know of the "alarming increase in adverse reactions such as seizures, permanent brain damage and deaths." In light of these risks, Grigg wrote, "I find it absolutely incredible that theophylline is still widely recommended as the first-line drug for the treatment of asthma...."
Fisons had continued to sell theophylline drugs after the date of the memo. Indeed, Jennifer Pollock took her tragic dose six months afterwards. Nor did there appear to be a good excuse for failing to produce the Grigg memo in response to previous discovery requests.
Following these disclosures, Fisons settled with the Pollocks for $6.9 million. But Dr. Klicpera and his insurance company, outraged by Fisons= behavior, pressed on and sought sanctions for abuse of the discovery process.
In answering Dr. Klicpera's charges, Fisons acknowledged that its own internal searches turned up the smoking gun documents, and Bogle & Gates later admitted to having reviewed them by 1987. They argued, however, that those documents did not directly concern the specific product Somophyllin, but instead only concerned Somophyllin's primary ingredient, theophylline. When the plaintiffs in 1986 had asked for materials related to theophylline toxicity, Fisons had replied that no such documents existed "regarding Somophyllin Oral Liquid." Fisons and Bogle & Gates contended that by referring in their answer to Somophyllin they were signaling to the plaintiffs that Fisons objected to producing documents, like the Grigg memos, that were not filed in Fisons' Somophyllin files. In sum, Fisons and its lawyers insisted that the plaintiffs had simply failed to ask and pursue the precise questions needed to elicit the documents. Fisons enlisted fourteen specialists in legal ethics as expert witnesses for the proposition that this conduct was permissible.
The trial judge agreed with Fisons and denied the motion for sanctions. However, on review, the Washington state Supreme Court unanimously denounced Fisons and its lawyers for their tactics. (18) The court found that Fisons had carried out a prolonged shell game, replete with "misleading" answers that were "contrary to the purposes of discovery and ... most damaging to the litigation process." The Court added, "Having read the record herein, we cannot perceive of any request that could have been made to this drug company that would have produced the smoking gun documents."
The court sent the case back to the trial court with directions to impose sanctions "severe enough to deter these attorneys and others from participating in this kind of conduct in the future." Bogle & Gates then agreed to settle by paying $325,000 and admitting that its attorneys advised Fisons not to produce the smoking gun documents and that such advice violated court discovery rules.
Writing in The American Lawyer, commentator Stuart Taylor, Jr., lamented the astonishing show of support Fisons had managed to place before the trial court. He wrote, "I fear [that] the discovery process has been clogged by a culture of evasion and deceit that accounts for much of its grotesque wastefulness, and the adversary system has been perverted from an engine of truth into a license for lawyerly lies." (19)
DuPont and the Benlate files
The giant chemical manufacturer DuPont Co. made a substance called Benlate 50DF. (20) It was supposed to aid plant growth by killing funguses. But nurseries began complaining of stunted growth in plants treated with the chemical. Then other nurseries reported rotting plants and dead roots. Fruit and vegetable growers using Benlate reported fields of dead plants. A DuPont executive who investigated reported that many growers faced the loss of their businesses. "Lives are being shattered," he wrote. He expressed concern that Benlate had been contaminated by new, powerful DuPont weedkillers called sulfonylureas, or SUs, which were made in the same DuPont plant as Benlate. An internal DuPont memo found "overwhelming circumstantial evidence that Benlate is likely responsible for the damage in some way." DuPont took Benlate off the market and began compensating growers.
Soon thereafter, however, the company reversed course and claimed that further testing showed that Benlate was, in fact, safe. In response, about 500 growers sought recovery from DuPont. One lawsuit was filed in a Georgia federal court by four nursery owners. Their attorney, C. Neal Pope, sought access to DuPont tests concerning SUs. DuPont's lawyers refused to provide the information. In October 1992, the presiding judge, J. Robert Elliot, found that DuPont had invoked attorney-client protections for over a million documents without inspecting them. Judge Elliot accused DuPont and its lawyers, from the Atlanta firm Alston & Bird, of stonewalling "under the guise of attorney-client privilege and work-product protection." When DuPont continued to drag its feet, the judge threatened to hold the company in contempt. Following further delay by DuPont, Judge Elliot concluded that the company had "engaged in a continuous scheme and pattern of bad faith and discovery abuse." He fined the company $500,000, to be waived if the company at last fulfilled its discovery obligations. Two months later, he doubled the fine, concluding, "I haven't found a case where the deliberate actions on the part of a defendant to obstruct the discovery process approach what has happened here." He subsequently concluded that DuPont had withheld information about herbicide contamination of Benlate.
As trial approached, the two sides agreed that the key issue was whether soil from the plaintiffs' properties contained SUs. DuPont hired Alta Analytical Laboratories Inc. of El Dorado Hills, California to test soil samples. The results were to be shared with the plaintiffs. The lab found low-level amounts of SUs in the samples. It conveyed these results to DuPont's lawyers. But instead of passing on the results to Pope, DuPont's lawyers ordered more testing. Still more SUs were found in the samples. Alta's lead scientist, acting, as he later said, at his own initiative, then doubled the threshold for a positive SU finding, but that still didn't eliminate positive tests in some samples. So these samples were retested. This time, finally, they came up "clean."
All that Pope received was a report showing no SUs at all. The underlying test records, with repeated references to suspected SUs, were withheld from Pope, as well as from the expert witness who was hired to support DuPont at trial. At the conclusion of the evidence at trial, DuPont's lawyer, Dow N. Kirkpatrick, rose and told the jury, "The evidence shows that sulfonylureas are not present in the plaintiffs' Benlate soil ... The scientific evidence supports our position."
Concerned about the possible outcome, Pope's clients settled with DuPont during jury deliberations for $4.25 million -- less than one percent of their claimed damages. DuPont's chairman called the result "a victory for DuPont, our employees and our science."
There the matter might have rested, if not for separate Benlate litigation in Hawaii state court. There, attorneys pursued the question of whether there was underlying data relating to the Alta lab tests. There was, but DuPont refused to disclose it, and the company fought the issue all the way to the Hawaii Supreme Court. The plaintiff prevailed, however, and the records were disclosed. The Hawaii trial judge, Ronald Ibarra, slapped DuPont with a $1.5 million sanction for intentionally misleading the court concerning the testing records. "The issues are complex enough without misconduct in discovery by counsel," Judge Ibarra said.
This development sent attorney Pope, from the Georgia case, back to Judge Elliot, who ordered a hearing. DuPont responded by seeking to disqualify Judge Elliot and by filing an emergency appeal. When the appeal was denied, Judge Elliot commenced hearings, after which, in August 1995, he issued an opinion finding "a pattern of concealment and misrepresentation" by DuPont and its lawyers. "It is clear," he wrote, "that DuPont continues to evidence an attitude of contempt for the court's orders and processes and to view itself as not subject to the rules and orders affecting all other litigants." He continued: "Put in layperson's terms, DuPont cheated. And it cheated consciously, deliberately, and with purpose. DuPont has committed a fraud on this court, and this court concludes that DuPont should be, and indeed must be, severely sanctioned if the integrity of the court system is to be preserved."
Judge Elliot fined DuPont $115 million for its misconduct, but added that $101 million of the fine would be canceled if DuPont published full-page advertisements in the Wall Street Journal and three local newspapers acknowledging the wrongdoing. (DuPont had taken out an ad in the Journal denying any discovery misconduct.) DuPont, represented by Edward Warren, a law partner of Kenneth Starr at the Washington, D.C., office of the firm Kirkland & Ellis, appealed. (21)
Back in Hawaii, Judge Ibarra, revisiting his case in the wake of Judge Elliot's findings, concluded that George Frank, a DuPont in-house lawyer, and an outside firm representing the company, Washington D.C.'s Crowell & Moring, made fraudulent representations in his court. Mr. Frank, Judge Ibarra ruled, had told the court in July 1993 that DuPont had no "ongoing" Benlate testing and that the company had turned over all documents sought by the plaintiffs. These statements, the judge said, were "fraudulent by clear and convincing evidence." Crowell & Moring, meanwhile, had assured the court that the Alta test data was confidential attorney work-product, without mentioning that the test summaries had already been disclosed in the Georgia trial. Judge Ibarra found that DuPont's lawyers had engaged in "abusive litigation practices" and "intentional misconduct." DuPont appealed Judge Ibarra's $1.5 million fine, as well as a jury verdict awarding plaintiffs in that case $23.9 million for Benlate damage.
In October 1996, a federal appeals court reversed the $115 million penalty imposed by Judge Elliot in the Georgia case. The Court held that a reasonable fact-finder "could conclude beyond a reasonable doubt" that DuPont "willfully failed to obey" Judge Elliot's discovery order. And it added, "In light of the serious nature of the allegations against DuPont and its counsel, we assume the appropriate U.S. Attorney will shortly begin an investigation into this matter (if he or she has not already done so)." (In fact, soon after Judge Elliot's ruling, federal prosecutors in Georgia launched a criminal investigation of DuPont=s conduct.) However, the appeals court concluded that the sanctions Judge Elliot imposed were criminal in nature, in that they were designed to punish the company rather than to convince it to comply with court rulings. Thus, the appeals court sent the case back to Judge Elliot to conduct formal criminal contempt proceedings. (22)
In another Benlate case in Florida, Dade County Circuit Court Judge Amy Steele Donner considered evidence that DuPont had destroyed data from testing conducted in Costa Rica. In June 1996, Judge Donner granted a default judgment in favor of the plaintiffs and fined DuPont $20,000. Her conclusion: "DuPont and its lawyers have participated and continue to participate in utter disregard for orders of the court, and for the rules of evidence and ethics .... This is a pattern, it is willful, it is deliberate, and it is intended to thwart the orders of this court." DuPont quickly settled the case on a confidential basis. The records of the case were ordered sealed.
DuPont continues to deny that it engaged in improper conduct.
Tobacco Litigation
In recent years, the newspapers have been full of revelations suggesting that tobacco companies have sought to obscure the harmful effects of cigarettes. One of the key developments in opening the tobacco files was discovery in a lawsuit brought against four major cigarette makers in federal court in New Jersey by Susan Haines, the daughter of a smoker who died from lung cancer. Haines' lawyers sought documents concerning the Council for Tobacco Research (CTR), an organization that presented itself to the public as an independent research institute studying the health effects of smoking but that was funded by the tobacco companies. Haines' lawyers contended that CTR had established a special section, directed by attorneys, where data considered damaging to tobacco company interests would be filed and protected from disclosure through claims of attorney-client privilege, while evidence suggesting tobacco's safety would be released by CTR.
When lawyers for the tobacco companies did assert the privilege in response to Haines' request for the CTR documents, Haines' lawyers responded that the documents should be disclosed under the "crime/fraud exception" to this privilege. The crime/fraud exception permits the release of attorney-client communications where the client obtained the attorney's advice for the purpose of furthering an ongoing criminal or fraudulent scheme. Haines' lawyers argued that the CTR lawyers group functioned precisely to hide evidence of the harmful effects of smoking from the public.
On February 6, 1992, after lengthy, heavily-contested proceedings over the tobacco defendants' refusal to release the documents, the trial judge, H. Lee Sarokin, ruled that the crime-fraud exception did compel the release of certain CTR documents he had reviewed. In support of his ruling, Sarokin quoted from some of the documents the industry had fought so hard to keep concealed. Minutes of a 1981 meeting of top tobacco industry lawyers quoted one participant as saying: "When we started the CTR Special Projects, the idea was that the scientific director of CTR would review a project. If he liked it, it was a CTR special project. If he did not like it, then it became a lawyers' special project.... We wanted to protect it under the lawyers. We did not want it out in the open."
"No evidence," Judge Sarokin concluded, "could be more damning." He also cited a CTR memorandum recounting an industry presentation. It said that CTR "was set up as an industry shield" and that CTR "has acted as a front." Judge Sarokin concluded that there was evidence that CTR was "nothing but a public relations ploy -- a fraud -- to deflect the growing evidence against the industry, to encourage smokers to continue and non-smokers to begin, and to reassure the public that adverse information would be disclosed." Clearly angry at what he had learned, Judge Sarokin stated that "the tobacco industry may be the king of concealment and disinformation."
The tobacco makers subsequently convinced a federal appeals court that Judge Sarokin had committed procedural errors
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