Posted on: 3/7/2012
Jeffrey S. Eden, Schwabe Williamson & Wyatt
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Manufacturer, well respected for the safety and quality of its products, discovers a potentially dangerous defect in a product. It conducts a voluntary recall whereby it offers to repair the defect, complies with the self-reporting requirement under the Consumer Products Safety Act (CPSA), 15 U.S.C. §§ 2051-89, by reporting to the Consumer Product Safety Commission (CPSC), and goes back to business.
Years later, Consumer is injured while using Manufacturer’s product, which had not been repaired through the voluntary recall. Consumer sues Manufacturer. During discovery and pursuant to FRCP 34, Consumer requests production of all documents relating to Manufacturer’s disclosure to the CPSC regarding the defective product. Consistent with its document retention policy, Manufacturer no longer has possession of the documents. Undaunted, Consumer files a Freedom of Information Act (FOIA) request with the CPSC in the hope that the CPSC has retained copies of Manufacturer’s documents.
For a number of reasons, Manufacturer does not want Consumer to obtain those documents. Some of the documents Manufacturer submitted to the CPSC are not relevant to Consumer’s case and others contain proprietary information. But Manufacturer has only limited protections with respect to the documents that it disclosed to the CPSC. Although the CPSA restrains the CPSC from disclosing certain proprietary documents that it obtains from a manufacturer, that restraint is inapplicable to discovery in civil litigation. Depending on the jurisdiction, Manufacturer may rely on the critical self-analysis privilege or an attorney-client privilege based on a theory of limited waiver. Absent those protections, Manufacturer must seek a protective order.
The CPSA’s limitations on disclosures are inapplicable in the context of civil litigation.
Manufacturer’s problem has its roots in 1972, when the CPSA was enacted. Section 15(b) of the CPSA mandates that manufacturers report to the CPSC upon learning that a product does not comply with a product safety rule promulgated by the CPSC, has a substantial product hazard, or has a defect that creates a substantial safety hazard. Section 19 provides criminal and civil sanctions for manufacturers that fail to report in compliance with Section 15. The CPSC will often retain a manufacturer’s submissions for a time period that exceeds a manufacturer’s typical document retention policy.
In the event of a request to the CPSC for Manufacturer’s disclosures, the CPSA does afford some limited protections to Manufacturer’s submission. Section 6 requires the CPSC to provide notice to a manufacturer whose identity could be ascertained from a proposed disclosure and give the manufacturer an opportunity to review the proposed disclosure and object or comment upon its fairness or accuracy. The CPSC is further prohibited from disclosing proprietary information that has been designated as such by the manufacturer. And Section 6(b)(5) prohibits CPSC from disclosing statutorily compelled disclosures with some exceptions. But this last protection is cold comfort: Most courts have held that Section 6 of the CPSA applies to the CPSC and does not provide immunity from discovery in civil litigation. See Winstanley v. Royal Consumer Info. Prods., 2006 U.S. Dist. LEXIS 44702 at *2-3 (D. Ariz. June 27, 2006) (collecting cases for that proposition). As the court pointed out in Roberts v. Carrier Corp., 107 F.R.D. 678 (N.D. Ind. 1985), “Pared to its bare essentials, the last paragraph of [Section] 6(b)(5) . . . states that ‘the provisions of this paragraph shall not apply to the public disclosure of information . . . in the course of or concerning a judicial proceeding.’ The language would make no sense if [Section] 6(b)(5) provided an absolute privilege against disclosure in civil discovery.” (Second omission in Roberts).
Accordingly, in litigation with Consumer, Manufacturer cannot rely on any discovery immunity or privilege under the CPSA as a basis to refuse production of otherwise non-protected and relevant records in its possession, custody or control. And accepting receipt of the documents from the CPSC in order to exercise its right to review those documents may trigger Manufacturer’s duty to produce those documents to Consumer. Nonetheless, Manufacturer can take other approaches to avoid disclosure of its CPSC submissions pursuant to the CPSA.
The critical self-analysis doctrine may provide complete discovery immunity (or may be completely rejected by the court).
Manufacturer should consider possible application of the critical self-analysis doctrine. The District of Columbia District Court was first to recognize the critical self-analysis doctrine in Bredice v. Doctors Hospital, Inc., 50 F.R.D. 249 (D.D.C. 1979). At issue was whether reports from hospital staff reviews were subject to discovery. The court concluded that confidentiality of hospital review reports was essential to hospital improvement. To allow disclosure of those reports would likely chill discussions that could spur hospital safety. Following Bredice, most courts describe the critical self-analysis doctrine as generally applying, if ever, when the public interest in maintaining confidentiality outweighs the need for discovery.
When parties have asserted the critical self-analysis doctrine outside of the medical peer review context, many courts have criticized its apparently unbounded scope. Lamite v. Emerson Electric Co., 142 A.D. 2d 293, 298, 535 N.Y.S. 2d 650 (N.Y. App. Div. 1988) (observing that the critical self-analysis doctrine “remains largely undefined and has not generally been recognized.”). Courts recognizing the doctrine have split over its limits, with some applying it to seemingly all in-house evaluations aimed at rectifying problems with products. Others allow a more narrow application, limiting the privilege to evaluative materials, as opposed to underlying data, in legally mandated reports. See id.
If Manufacturer happens to litigate in a jurisdiction that applies the critical self-analysis doctrine to all in self-evaluative materials, no further analysis is required. But as to the courts that require a legally mandated disclosure, more care is required. Although the mandatory reporting requirement in Section 15(b) of the CPSA appears to satisfy the mandatory reporting requirement of the critical self-analysis doctrine, some courts also require that the reports be prepared for the mandatory disclosure. Roberts v. Carrier Corp., 107 F.R.D. at 284. Thus, when a manufacturer discovers that one of its products contains a defect that creates a substantial safety hazard, it should make clear that its CPSC report on the defect is being made pursuant to the mandatory disclosure requirement.
Returning to Manufacturer’s predicament, if the litigation is in a jurisdiction that has not considered the critical self-analysis doctrine, Manufacturer should focus on the public policy basis for the privilege. Courts like Bredice have been sympathetic to the medical profession’s efforts at self-improvement. Manufacturer can argue that its efforts to improve the safety of its products are equally laudable and protectable. And, because the CPSA mandates disclosure, Manufacturer can season its arguments with fairness considerations. Manufacturer’s arguments will likely face a general suspicion of common law privileges. For example, in Scroggins v. Uniden Corp. of Am., 506 N.E. 2d 83, 85 (1987) the court rejected the critical self-analysis privilege because it was not recognized by statute and the court’s research had “not produced a single privilege in Indiana that is not statutory.”
Finally, if the litigation is in a jurisdiction rejecting the self-critical analysis doctrine, Manufacturer may need to choose a different tack.
In at least the Eighth Circuit, the selective waiver doctrine may be applicable.
Manufacturer might also consider asserting the attorney-client privilege applies to the documents it submitted to the CSPC. The attorney-client privilege generally protects confidential communications between clients and attorneys to encourage complete candor, an element of effective representation. Generally, the privilege is waived when the communications are disclosed to a third party. But the Eighth Circuit has adopted a doctrine of selective waiver that applies when the waiver is made to cooperate with an ongoing government investigation. Diversified Industries, Inc. v. Meredith, 572 F.2d 596 (8th Cir. 1977).
If the litigation is in the Eighth Circuit and Manufacturer had its attorneys sufficiently involved at the critical self-analysis stage, the attorney-client privilege may apply. To avoid the waiver issue, Manufacturer must demonstrate that its disclosure to the CPSC was required by the CPSA and therefore qualifies as a government mandated disclosure. Manufacturer’s compliance with that mandate is akin to cooperating with an ongoing government investigation.
A drawback to the limited waiver theory is that it has been roundly rejected by virtually all other courts. Most circuits have rejected the privilege outright, while the Third Circuit has suggested that it will only enforce selective waiver agreements if the disclosure is mandated by a subpoena. Westinghouse Electric Corp. v. Republic of Philippines, 951 F.3d 1414 (3d Cir. 1991). Because the CPSA mandates disclosure, that formulation of the limited waiver doctrine is unlikely to help Manufacturer. Indeed, in light of the “overwhelming amount of authority” that has found the selective waiver argument “wholly unpersuasive,” SEC v. Brady, 238 F.R.D. 429, 440 (N.D. Tex. 2006), Manufacturer should not hold its breath while making a selective waiver argument.
But wait, there’s more: By not taking possession of documents or seeking a protective order, Manufacturer may limit production of documents.
Consumer’s FOIA request to the CPSC has placed Manufacturer in a delicate position. If it takes possession of the CPSC documents to exercise its right to review and designate documents pursuant to Section 6, it may then also have a duty to produce some of those documents to Consumer. But if Manufacturer waives its right of review, the CPSC will likely produce all of Manufacturer’s submission, even if the proposed disclosure is inaccurate, unfair or contains Manufacturer’s undesignated proprietary or identifying information.
There are no clear answers. Perhaps a middle ground exists whereby Manufacturer can designate a third party, such as outside counsel, to perform an on-site review of the CPSC documents without actually taking possession for the purposes of FRCP 34. Although courts generally have held that a party controls documents that it has the legal right to obtain upon demand, Searock v. Stripling, 736 F.2d 650, 653 (11th Cir. 1984), some courts have required parties to obtain documents that they have a practical ability to obtain. Colon v. Blades, 268 F.R.D. 129, 132 (D.P.R., Apr. 14, 2010). Either way, the CPSA does not grant manufacturers any greater right to obtain possession of submissions than any other member of the public. By having an outside agent review a proposed disclosure for purposes of Section 6 of the CPSA, a manufacturer may avoid enhancing its possession of the submission for purposes of FRCP 34.
In a similar vein, courts are willing to grant protective orders with respect to mandatory disclosures under the CPSA. In Scroggins, for example, the court rejected the defendant’s arguments for a CPSC privilege and self-critical analysis privilege. Yet it noted that, on remand, “The trial court may enter appropriate protective orders to prevent unnecessary publication of the matters discovered.” 506 N.E.2d at 86. Consistently with Scroggins, Manufacturer can seek a protective order with respect to any required disclosure of documents that might be restricted from CPSC disclosure by Section 6 of the CPSA.
A manufacturer is generally required to disclose its discovery of potentially dangerous product defects to the CPSC. Those disclosures can complicate subsequent litigation related to that product. Although various arguments exist to limit the disclosure of the documents, some of those arguments have been rejected by most jurisdictions. Thus, a manufacturer must take a multifaceted approach to protect against disclosure of documents that the government originally demanded upon pain of civil or criminal liability. But in the final analysis, these once-lost CPSC documents can also assist the Manufacturer’s defense in showing the affirmative steps it took to remedy a potential problem before anyone was hurt.
Jeffrey S. Eden
Schwabe, Williamson & Wyatt