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Proactive Document Management for Device Manufacturers – Part 1



Documents—hard copies and electronic records—are the lifeblood of any corporation. While employees come and go and may change positions within an organization, the design plans, engineering drawings, production procedures, safety memoranda, regulatory filings and marketing strategies they have created are an historical record of the activities of that particular entity. Documents can merely record this history or they can significantly help or hurt the manufacturer, especially in the event of products liability litigation.

Through the discovery process plaintiffs’ attorneys try to identify and obtain harmful documents that they can use to obtain large settlements from, or verdicts against, manufacturers. Some manufacturers are harmed because they failed to create documents showing their concern for safety. Other times documents reflecting safety activities were created but then destroyed before the litigation arose.

Part 1 of this article will discuss the importance of documents in designing and manufacturing products and how the existence of or lack of drawings, plans, and other records has hurt or helped manufacturers’ defense position in products liability suits. Then, Part 2 of this article will discuss document management systems, legal requirements to create documents, and ways in which employees can take affirmative steps toward the creation and retention of helpful documents—and not create unnecessarily harmful documents.

The pervasiveness of electronic records and the correlated ease with which they can be created and stored has greatly increased the number of records a company has, and the length of time this mass of records is kept. In addition, the growth in popularity in the internet and social networking has created more opportunities for the dissemination of potentially harmful information and in turn made such information easier to access by the government, plaintiffs’ attorneys and potential plaintiffs.

Further, life sciences manufacturers must create and retain documents to confirm their efforts to make safe products and to comply with FDA requirements. In doing so, they should think about how they might need to tell their story to a jury, customers, plaintiff’s attorneys, or the government, what story the documents would allow a plaintiff’s attorney to tell, and how to create documents that will tell the story you want told.

Importance of Documents

During the design and manufacturing phases, a manufacturer’s goal is to make a product that reasonably balances the risk of injury from use against the product’s utility, durability, and other attributes. If accidents do occur and products liability claims and litigation result, the manufacturer will have to produce evidence of its consideration of safety and its undertaking of sufficient measures to make a product that will be considered reasonably safe. Thus, the manufacturer should have retained documents that prove its interest in safety and regulatory compliance and describe procedures for evaluating that the product is reasonably safe.

Since the conduct of the manufacturer may be admissible and thus able to be used by either or both of the plaintiff or the manufacturer-defendant in proving their case, documents that describe and memorialize the steps taken by the manufacturer are necessary to present an effective defense and to prove the manufacturer is careful and prudent. On the other hand, many lawyers feel that documents that analyze risk and describe design, production, and marketing processes only hurt manufacturers and never help their case. Therefore, they may not encourage manufacturers to create or retain documents, especially those that deal with safety. Invariably, in the mind of such lawyers, these documents will be harmful and difficult to explain. However, several such documents are required to be created and retained by the FDA, and as such will be available to plaintiffs through discovery.

The potential for creating a record that can hurt the manufacturer is especially important when engineers challenge and question safety during the product’s development phase. This dilemma was described as follows:

The existence of a questioning memo from a designer concerned with safety aspects of a new product, combined with evidence that the designer’s point of view was adequately considered, is probably better in most situations than a “blank record” suggesting that safety-related areas were never considered at all, or that the records have been sanitized to prevent embarrassment in court.

Kolb & Ross, Products Safety and Liability: A Desk Reference, at 91 (1980).

Each manufacturer must decide how to balance the risk of retaining documents that hopefully will be helpful but could be misconstrued and taken out of context and used against the manufacturer in a products liability lawsuit. The goal is to create helpful documents that are not unnecessarily harmful.

Documents that Hurt

Instances where manufacturers have suffered substantial losses because of “bad documents” or “smoking guns” are well known. Not only can such documents result in significant liability, they can also lead to widespread negative publicity and notoriety, and may be used in later claims, lawsuits, and regulatory actions against the manufacturer.

A leading scholar of products liability law, Professor David G. Owen, recognized this dilemma and said:

Manufacturers necessarily create massive documentation of their design and production processes, sometimes amounting to millions of pages of notes, memoranda, and correspondence over the life of a product. Especially during the initial design of the product, but also as information returns on the product’s performance in the field, reports of many instances of one problem or another will be documented, acted upon, and filed away. In fact, the more a manufacturer is truly concerned about its product’s safety, the more it will encourage self-criticism and “negative” analyses of the product within the company.

Owen, “Problems in Assessing Punitive Damages Against Manufacturers of Defective Products,” 49 U.Chi.L.Rev. 1, 17 (1982).

Professor Owen went on to say that:

Cost-benefit analysis is fundamental to the design engineer’s trade… Many hundreds of such choices are made by design engineers in the production of a single complex product, and each such decision involves a range of trade-offs between cost, weight, appearance, performance capabilities…, and safety in one type of accident versus another…. Although much of this decision making involves the application of proven scientific principles, much is art, and some by its nature can be little more than trial and error. (Id. at 24-25).

Despite the wisdom of Professor Owen’s observations, juries are still angered by corporations who consider the dollar value of lives. One troubling aspect of a jury’s reaction to such analysis is that products liability law and safety engineering principles do allow manufacturers to consider cost when determining how safe to make a product. Still, juries express disdain when manufacturers' documents appear to compare product cost with the value of human life and the expense of settling cases for presumed future incidents.

The lesson to be drawn from such cases is not that manufacturers should avoid creating or retaining documents concerning their design and manufacturing processes and procedures. Rather, the lesson is that employees need to be trained about what to write and how to write defensively and how to follow up on documents when safety concerns are raised. This should be done, not solely for litigation purposes, but to record clearly and accurately the reasons for design and manufacturing decisions.

Lack of Documents Hurts

The lack of documents can also hurt the defense of a case. For example, if the manufacturer performs an adequate safety analysis in its design process, it should also create proper records so it can defend the process later in court. Appropriate testing needs to be done and documents need to be created that describe the tests and results. Doing the tests in “your head” is not enough, especially when the design is challenged many years later.

Even if the engineer can remember doing safety testing, the jury may not believe that the manufacturer performed the tests since no documents were created or kept. An absence of documents of this kind will allow a plaintiff’s attorney to create doubt as to whether testing was done or whether safety is important, reasoning that if safety was so important, why didn’t the company keep documents concerning the testing. This can be an especially effective tactic when there has been turnover in the company, such that there is no one left who remembers the reasoning. Assurances that whatever they did must have been correct are unpersuasive.

In addition, one of the most significant defenses to a products liability claim is that there have not been prior similar accidents involving the product. However, a lack of good documentation to prove the lack of similar accidents can be devastating in efforts to successfully have this evidence admitted and considered by a jury.

A majority of jurisdictions require a substantial showing on the part of a manufacturer to admit evidence of no prior accidents. Two criteria are generally used to determine if the evidence will be allowed. First, there must be proof that the lack of accidents pertained to products that are substantially identical to the one at issue and used in sufficiently similar settings and circumstances to those surrounding the product at the time of the accident. Second, the defendant must demonstrate that a communications system was in place whereby accidents could or would be reported or recorded. Documentation of past complaints—demonstrating a robust complaint-handling system—are going to be needed to satisfy the latter requirement.

Documents that Help

Many litigators feel that corporate documents more often hurt their defenses than help. Of course, the only documents that plaintiffs will want to have admitted are going to help their case. And, if the company has helpful documents, the plaintiffs will do what they can to keep those out or maybe not raise issues that will allow for these “due care” documents to be admitted. Despite that, there are some cases where documents can help.

I mentioned above that a systematic record of prior accidents can support testimony that there have been no prior similar accidents. But I also firmly believe that documents evidencing a concern for safety and “trying to do the right thing” will go a long way towards at least defusing any thoughts by plaintiffs of seeking punitive damages. Documents proving compliance with voluntary safety standards are very important. And after sale, documents evidencing efforts undertaken in a recall can be crucial in defending the adequacy of the program, especially when you can prove that the plaintiff received a recall notice before the accident.

The reality is that if you don’t have any safety programs or if you have safety programs but disposed of the related documentation, the plaintiffs may get excited. And, if you have safety programs and have the documents, the plaintiffs will likely obtain the documents, scrutinize them for flaws or shortcomings, and the company will have to defend them. I’d rather defend a comprehensive and documented safety program any day.

Documents on Post-Sale Issues

A manufacturer or product seller can be potentially liable under a theory of negligence after sale of their product. In addition, current U.S. regulatory and common law requirements apply to information that was obtained or should reasonably have been obtained that identify an unsafe condition. The potential liability for violations of U.S. and possibly foreign regulatory laws is always present. All of these laws contain a duty to report to the government if threshold safety events occur. This enhanced focus makes it even more important that a manufacturer gather, analyze and document safety information received from anywhere in the world.

Anything less than a “reasonable” effort at obtaining and analyzing post-sale information may be considered negligent by a U.S. jury in determining whether the manufacturer should have known about the problem before the accident occurred or by a government agency in deciding whether the manufacturer should have reported the safety issue to the government. Therefore, deciding what is reasonable under the circumstances is important to determine and document.

Manufacturers will receive documents and information from consumers, health care professionals, government agencies, consumer groups, and plaintiffs’ attorneys. The growth of the internet and social networking has made it even easier to find this information if you are looking for it and easier for manufacturers to receive this information from those who want to communicate it to them. Many of these documents and reports will be unverified, overstated, inaccurate, and incomplete. Nonetheless, the existence of such communications means that the manufacturers cannot claim they did not have notice of such incidents or complaints. Manufacturers will have to decide how to follow-up and investigate these reports to get to the truth but also to minimize the unnecessary and unsupported problems that they could cause.

It is very important for the manufacturer and others in the chain of production and distribution to establish procedures to identify, review and analyze all of the information that might relate to the safety of their products in use and to funnel it to trained personnel to evaluate so that a decision can be made about any appropriate actions. In addition, this will help the company respond to inquiries concerning safety made by the government, the press, or consumers. Being aware of all information – good and bad, true and untrue, complete and incomplete – can be helpful as long as the important information can be sorted out and adequately evaluated and documented. Part 2 of this article will deal with these issues.

Kenneth Ross

Kenneth Ross is Of Counsel to the Minneapolis office of Bowman and Brooke LLP where he practices in the areas of product safety and liability prevention and advises manufacturers, product sellers and insurers on ways to identify, evaluate and minimize the risk of products liability and contractual liability. These guides do not constitute legal advice and are very general. You should consult competent legal counsel or Medmarc Loss Control before acting on any of the information in these guides.

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