Personal Liability and Records Management
Montana, John, Records Management Quarterly
In the business environment, the specter of litigation is a reality. In similar fashion, records managers are accustomed to the necessity of producing large volumes of records for investigations and lawsuits. Unfortunately, we have become equally accustomed to the notion that litigation and document production are a game in which the parties attempt to circumvent the rules and avoid producing relevant material.
If, in fact, litigation and discovery are a game, then there are winners and losers. Some of the losers have become well known - large organizations have either lost lawsuits or been forced to settle on unfavorable terms when discovery abuses such as concealment of records have been revealed. Many of these outcomes have resulted in potential losses of hundred of millions or billions of dollars, making these organizations clear losers. Often, however, the temptation arises to assume that the people who have created these situations escape personally unscathed, and that the only risk in engaging in such tactics is to the organization itself. If this were ever true, the situation is changing rapidly. This article will examine recent cases in which those who attempted to circumvent the judicial process through improper discovery practices have been sanctioned by courts.
HOW PERSONAL LIABILITY ARISES
Commonly, we assume that, when acting in the course of our jobs, that it is our employer who takes responsibility for our official actions. This is true - under the legal doctrine of Respondent Superior, the master (in our case, our employer) is always responsible for the wrongdoing of his or her servant (in our case, the employee), and if an employee causes harm to a third party, the employer is liable to that third party. This is not, however, the end of the matter. Personal liability cannot be handed off like a football. However much an employer is liable for an employee's wrongdoing, the employee also remains fully liable. This liability runs to the injured third party, but it also runs to the employer. Thus, if an employer is required to pay a money judgment to an injured third party due to an employee's wrongdoing, the employer is entitled to sue the employee and recover the money paid from the employee. In similar fashion, the third party may elect to sue both the employee and the employer. Finally, the employee is always criminally liable for his or her own actions.
In the context of records management, a variety of scenarios exists in which a wrongful act could occur which might result in liability. The obvious one is litigation - the discovery process requires you to produce information and evidence for your opponent, and the temptation may arise to hide or dispose of material which would benefit that opponent. In similar manner, if records must be kept for the purposes of audit by a government agency, the temptation may arise to create false or misleading records. An employee might feel that doing these things is beneficial for the organization, or officials of the organization might encourage them as a strategic matter. In either case, succumbing to the temptation may be a serious mistake.
EMPLOYER RESPONSE TO IMPROPER ACTIVITY
Consider the 1996 case of Texaco Oil Co. Texaco was sued by a group of plaintiffs alleging discriminatory employment practices. At a meeting of high level executives, a plan was allegedly made to destroy certain evidence pertaining to the lawsuit. When the meeting and its agenda were made public, the reaction was immediate: Texaco immediately settled the suit for in excess of $180 million(1) and exerted strenuous efforts to disavow the actions of the employees involved. However, the repercussions for the involved employees were nearly as immediate. A finance department executive who attended the meeting and was laid off subsequently was informed that the company was suspending payments to him under a payment plan for downsized executives. …