Part 1 of this article discussed the importance of documents in designing and manufacturing products and how the existence of or lack of drawings, plans, and other records has hurt manufacturers, as well as how documents have helped manufacturers in their defense.
Part 2 will discuss document management systems, legal requirements to create documents, and ways in which employees can affirmatively create helpful documents—and not create unnecessarily harmful documents.
Document Management Programs
What follows are some guidelines that should be helpful to manufacturers in establishing an effective document management system. Document management includes the development of guidelines and procedures for determining what documents to create, what documents not to create, what words to use and not to use, how long to keep documents, when to destroy and how to destroy them, and in what form documents should be retained.
The pervasiveness of electronic records has made developing such a system considerably more difficult. The document management programs of many manufacturers only address when to discard or delete documents. Such a narrow program is inadequate; there are many other elements of a management program that, if not handled properly, can lead to liability. Any manufacturer concerned about the use of documents in future litigation should implement a comprehensive document management program as part of an overall product liability prevention program.
It is helpful for each manufacturing entity within a corporation to establish a document management policy and guidelines. This policy should confirm that employees are encouraged to bring to management’s attention, orally and/or in writing, all good and bad information about the design and manufacturing process of which they are aware. In other words, within the company, employees should be discouraged from hiding potentially damaging information, and instead encouraged to bring such information to the attention of supervisors.
The policy should also contain guidance on the kinds of documents to be created and guidelines on how they are to be written. It should contain schedules detailing retention periods for all documents including electronic records. The policy should be written in clear, unambiguous language so that all affected employees will be able to comply.
In addition to writing and distributing the policy internally, a periodic audit of compliance with the policy should be performed, for the dual purpose of demonstrating that management is serious about compliance and identifying and correcting problem areas. In some companies, activities that don’t help get products out the door may be ignored if management does not emphasize their importance and establish a specific audit requirement to confirm compliance.
Another essential part of managing the document program is educating employees about the policy and how to comply. The training must clearly show that the company is interested in learning about all good and bad information concerning its products, and that its documents should reflect the concern it has for selling safe products that comply with all applicable laws, regulations, and standards.
Document Creation and Retention Requirements
There are probably thousands of federal and state legal requirements for the creation and retention of documents. The federal requirements have been gathered by CCH in its Guide to Record Keeping Requirements (in the Code of Federal Regulations as of January 2006). The state and federal requirements are also gathered by the Information Requirements Clearinghouse (http://www.irch.com/).
Of course, many of the documents created in pre-market applications to the FDA must be kept, as well as documents evidencing compliance with quality, safety and labeling requirements as well as post-market requirements.
Any manufacturer doing business in the United States must be acquainted with the safety and quality-related document creation and retention requirements imposed by federal and state statutes and regulations. In addition, mandatory and voluntary standards or certifications in the United States and elsewhere must also be considered.
Documentary evidence of compliance with such standards may strengthen the defense’s case in any product liability lawsuit. Such evidence can be used to confirm that the manufacturer took steps to ensure that its products were reasonably safe and complied with all applicable laws, regulations and standards. In other words, both the legally required and voluntary documents reflect that the manufacturer considered safety during the design and creation of the product.
Product History File
A comprehensive program should result in the creation of a file containing a history of the life of the product, from creation through destruction. Such a core history, to be assembled after the development of each product or product line, will allow the manufacturer to prove that it complied with all safety and other requirements on a routine basis. The project manager could gather all documents from all sources within the company pertaining to the project, and organize them into a comprehensive, coherent file that tells the history of the product. Drafts and duplicates of documents should be destroyed so that there is no uncertainty as to which are the correct or final versions of core documents.
Developing this product history file does not mean that potentially harmful documents, such as an internal memo that questions whether the company should continue developing a particular product, should be destroyed. Juries and judges understand that there may be internal differences of opinion during the development of a product. All the manufacturer will need to explain is how this dissenting opinion was handled—that it was fully considered, and then accepted or rejected. Disclosure of dissension within a company can actually be beneficial; it confirms that the manufacturer encourages varying opinions and does not try to hide bad or potentially damaging information. Of course, it can also be harmful if the jury believes that the rejected opinion was correct.
There are no specific or universal guidelines on how long such documents should be kept. The company does need to comply with certain legal requirements. Otherwise, documents that are necessary to explain a product's design should be kept as long as they might be needed to defend the manufacturer. Decisions on retention time must be made on a case-by-case basis; considerations include the life expectancy of the product, applicable statutes of repose, and a prediction of the period of time after the product’s life is over that claims or lawsuits might be anticipated.
Some documents should be kept forever even if they represent an old design. Subsequent designs and redesigns are often based on the earlier design. Products evolve over time, and therefore the earliest product development documents may be needed to explain later designs.
As a result, it is possible that the product history file, if developed, should be kept permanently. Assuming that this file is organized and duplicates and drafts are discarded, the quantity of documents may not be so large that permanent retention becomes a problem. And they can be converted into electronic records so that files subject to future discovery can be easily found.
In the FDA’s Quality System regulations, there is a similar concept called Device Master Record. The FDA describes it as follows:
Device master record (DMR) is the term used in the Quality System (QS) regulation for all of the routine documentation required to manufacture devices that will consistently meet company requirements. Section 820.3(j) of the QS regulation defines device master record as a compilation of records containing the procedures and specifications for a finished device. (See relevant Device Advice on the FDA website here.)
Creating Documents for Defense
Documents relevant to product safety and liability generally fall into seven categories:
- product design and development, including labels and instructions;
manufacturing and quality control;
merchandising and sales;
service and installation;
post-sale including complaints and incidents;
management and coordination.
Documents detailing a manufacturer’s activities in the above categories will present a comprehensive history of the life cycle of the product including manufacturing, design, sales and post-sale.
Each of these documents should be prepared in such a way as to not unnecessarily increase potential liability in the event of claims or lawsuits. This is usually called “defensive writing.” Writing defensively does not mean that the manufacturer is trying to hide bad information or evidence or shading the truth. On the contrary, a company's policy and educational programs must stress to employees that they should raise all issues, good or bad, during the development of the product.
The documents must portray correctly and accurately the manufacturer’s rationale for designing and making its product. A record of this rationale is necessary for designing future similar products and for good historical corporate recordkeeping. In addition, if the content of some documents challenge or discuss safety, they must be written in a way so as not to create a misleading impression or written in a way that they can be quoted out of context and unfairly used against the manufacturer in litigation.
Those employees who draft the manuals, plans, specifications, and other documents—the “writers”—should be encouraged to avoid legal terms that describe theories that may be presented to a jury in a product liability lawsuit. These terms include “defect, negligence, misrepresentation, and reckless.” Use of these and related legal terms by internal writers may lead a jury to decide that the company has admitted that its product is defective or unreasonably dangerous or in some other way legally deficient.
While the writer will have a chance to tell the jury why the word "defect" did not really mean defect in a product safety sense, the presence of such a loaded word in, for instance, a report on the development of a new product, gives the plaintiff an advantage in presenting her case to the jury.
Additional phrases and words in documents that can cause problems for the defense include overstated expressions, characterizations, or opinions. For example, phrases such as “occurs often” or “occurs frequently” should not be used when the engineer has only noticed two or three occurrences. The word “catastrophic” should not be used in connection with a product failure unless it was truly catastrophic; this may be a commonly understood term among engineers but may be misunderstood when heard by a jury.
Another term to avoid is “crisis.” Writers trying to get the attention of their supervisors may want to call every problem a crisis. This is an unnecessary overstatement; it suggests that the company is having huge problems all the time. Similar terms are “smoking gun,” “ticking time bomb,” and “sitting on a powder keg.” They are inflammatory and unnecessary.
In addition to being careful about the choice of words and phraseology, companies must organize their flow of documents to ensure that bad reports or criticisms written by lower-level employees are read, analyzed, and responded to. This is called “closing the loop.” Suppose a supervisor, such as an engineering manager, receives a memo from one of his employees that expresses concerns about the safety or quality of the product. The supervisor must analyze the problem and respond in writing to the employee. Then, the original letter and the response must be attached or stored together so that if these documents are obtained later in litigation, the original criticism and the response will be considered together. Otherwise, the criticism—without the response—might be discovered, giving the plaintiff the opportunity to portray the manufacturer as willfully disregarding safety by not considering or responding to concerns or criticism.
In summary, writers of company documents should consider the following guidelines when creating documents:
Assume that what you write will exist forever.
Assume that your document will be read on national television.
Avoid unnecessary documents; provide copies to the minimum number of people necessary.
Avoid documents that blame someone else in the company or describe internal disputes.
Always close the loop.
Do not discuss liability issues except when requested by the company’s lawyer.
Do not speculate, exaggerate, or editorialize.
Do not make unsupported statements, conclusions, or opinions.
Use data or facts to support conclusions.
Do not be funny or humorous.
Avoid drawing “funny pictures” or making handwritten notes in the margins.
Be careful when discussing product safety issues in financial terms.
Do not write documents outside your area of expertise or responsibility.
Avoid using words or expressions (including legal terminology) that are ambiguous or could be misinterpreted (perhaps intentionally) by the plaintiff.
Following these guidelines will not necessarily prevent the creation of potentially harmful documents. That is not the goal. The goal is to not create documents that unnecessarily and incorrectly create an impression that the manufacturer did not sufficiently care about safety.
The Danger of Not Retaining Documents
Documents that describe a manufacturer’s concern for and incorporation of safety into the design of its products are of little litigation value if they are not retained long enough to be introduced in a future lawsuit. In fact, the lack of documents might be used against the manufacturer by raising a presumption that the documents were incriminating and that is why they were destroyed.
Suppose, for instance, that during the design phase the engineers considered three alternative designs, each with differing levels of cost and safety. In selecting the final design, the company recognized that one of the other two may have been a reasonable alternative design, but it was nevertheless considered and rejected on other grounds.
When the final design is selected, the manufacturer must document and justify why that design was selected and why the resulting product was reasonably safe. The fact that there were safer alternative designs that were rejected does not necessarily mean that the manufacturer is going to be liable in a subsequent lawsuit. The question is whether it is necessary or useful to keep documents on all three designs.
Some defense lawyers would prefer that their clients destroy any such reports shortly after product launch to prevent a plaintiff’s expert from arguing that one of the rejected alternative designs should have been adopted. However, with no documents on which to rely, the company witness will have to describe from memory what alternative designs were considered and rejected, what safety tests were performed during the design of the product, and how the company decided to incorporate safety into the final product. Moreover, the company’s liability may well rest on the company witness’s credibility in front of a jury rather than on the actual facts of the design process.
Unfortunately, a jury may not believe that the company cared about safety if no documents are retained that prove that such matters were considered. The jury might believe that if safety were so important, the manufacturer should be able to present written proof that safety was considered. In addition, a judge may even tell the jury that it can infer from the lack of certain documents that they would have been harmful to the manufacturer’s case.
A Document Retention System
Establishing an effective, rational, practical and comprehensive document retention system is not easy. It is impossible to propose a program that can be used by any specific company. In fact, each company must set up a customized schedule that is practical and effective for the amount of documents it creates, the places where they are kept, and the legal and technical requirements for retaining documents.
There are many sources for samples of document retention programs such as the records management association, ARMA International (www.arma.org) and Information Requirements Clearinghouse (http://www.irch.com/). These samples can be very helpful to the manufacturer that has not yet established its program. The samples contain extensive lists of the types of documents that are kept by a company, where these documents are to be stored, how long they are to be kept in the company’s offices, and how long they are to be retained after they are moved to storage. The documents can also be classified as to their importance, and a description made as to the form in which they can be stored. ARMA and IRCH also publish best practices on all aspects of the organization, maintenance and retention of electronic records.
Each manufacturer must establish its own system and schedules in accordance with its peculiar needs. One schedule may indicate the method of destruction for certain kinds of documents. Some may need to be shredded if they could contain trade secrets or other business confidential information. Others may need to be burned, and some can merely be thrown out in the trash. Of course, it is particularly difficult to destroy electronic records. Therefore, the schedules need to address when to delete certain files on the computer, what documents to back up, and what electronic documents to keep forever.
The document retention program should include procedures for the periodic moving of documents from the company's offices to a storage site or to a backup tape. It should indicate the individual with responsibility for approving the moving of documents to storage and approving their eventual destruction. A record of what happened to certain documents, when they were destroyed, and who approved the destruction should be kept.
In the history of product liability litigation, documents have proven to be both helpful and harmful to plaintiffs and defendants. Unfortunately, one does not know whether what they are writing today will be helpful or harmful later. To curb that uncertainty, manufacturers can and should proactively establish document management systems that ensure compliance with FDA’s legal requirements and will result in creation of a story of the development of the product. The system must also include procedures that will minimize the creation of misleading and unnecessarily harmful documents.