Busting open the big box: Wal-Mart and other large corporations fight hard to keep documents that are relevant to plaintiffs' claims sealed up tight. Here's how to combat discovery abuse and get the evidence your client needs.

In recent years, the term "discovery abuse" increasingly has been associated with litigation against so-called big-box retailers and other large corporations. Wal-Mart is one of the worst offenders.

According to one news report, Wal-Mart was sued 4,851 times last year, and some legal analysts think the company is taken to court more often than any U.S. entity other than the federal government. (1) Claims against Wal-Mart typically involve injuries from falling merchandise, rapes and murders resulting from carjackings and abductions in its parking lots due to inadequate security, and injuries resulting from slips and falls.

The company aggressively fights most of these lawsuits even if it would be cheaper to settle the claim, and the company has been sanctioned repeatedly for "willfully frustrat[ing] discovery." (2) Other corporate defendants have followed suit. Plaintiffs suing Wal-Mart or other large companies often must fight over not only the merits of the case, but also access to documents and other evidence they are entitled to in order to reach the merits. Large corporate defendants have vast resources that can be daunting to even the most sophisticated plaintiffs and their attorneys.

Wal-Mart and other companies use several tactics to stall discovery and delay compensation for plaintiffs. The four most common strategies are burying important documents in subsidiary companies, enlisting outside counsel in order to assert attorney-client privilege, insisting that plaintiffs agree to confidentiality orders, and adopting document retention policies that allow evidence to be lost, modified, or destroyed.

Subsidiary companies. Wal-Mart has a subsidiary, Claims Management, Inc., which it uses to manage, control, and track claims against the parent company. In essence, it is Wal-Mart's self-insurer, claims adjuster, and investigative agent: It "works" the claim, taking statements and obtaining documents in the guise of pursuing settlement. When a plaintiff requests documents regarding prior litigation, Wal-Mart can claim it does not have them.

When you begin discovery, draft your initial requests broadly enough to encompass not only the named defendant, but also any agents and subsidiaries with knowledge and relevant information about its operations. Usually, the defendant will object, claiming that the request is too broad and unduly burdensome or that it cannot retrieve the information the plaintiff seeks.

Do not be deterred. Depose, if necessary, the company's information systems manager. Large corporate defendants (or their wholly owned subsidiaries) have sophisticated computer tracking systems that can pinpoint even the minutest details of an incident. (3)

For example, in a trademark infringement case against Wal-Mart, the company insisted that it could not retrieve data for goods purchased in individual stores for the period requested. In a deposition conducted later in the litigation, the information systems manager revealed that a great deal of information pertaining to that period had been available at the time it was requested, but that it had since been destroyed. The testimony prompted the judge in the case to allow the plaintiffs to conduct an on-site inspection of Wal-Mart's computer records. The court also sanctioned the company for discovery abuse. (4)

Attorney-client privilege. Some companies use outside counsel to help draft risk-management polices and procedures. When a plaintiff requests background information on the policies--such as memos, correspondence, and notes concerning the drafting of and basis for the policies--the company objects, claiming that these documents are protected by the attorney-client privilege and/or work product doctrines.

Fortunately, the Federal Rules of Civil Procedure and some state equivalents do not allow a party to make a blanket assertion of privilege without producing a detailed privilege log. (5) Also, courts have held that communications between a lawyer and a corporate defendant regarding risk-management policies constitute business advice as opposed to legal counsel and are not protected by the attorney-client privilege. (6)

Confidentiality orders. Wal-Mart and other defendants also attempt to thwart plaintiffs' discovery efforts by insisting that the parties enter into restrictive confidentiality orders.

First, the company tries to contain the scope of discovery. When a plaintiff asks for companywide information about prior incidents, audits, surveys, legal claims, and so forth, the defendant contends that only information pertaining to the particular site involved in the case--whether it be a store, apartment complex, hospital, or other premises--is relevant. This is an attempt to isolate the plaintiff. It also delays the litigation, forcing him or her to file motions seeking disclosure of documents and to wait for hearing dates.

Next, defendants often seek protective orders that prevent plaintiffs from disclosing information they obtain in discovery to anyone other than their attorneys and expert witnesses.

Discovery rules permit parties to seek protective orders to shield them from "annoyance, embarrassment, or oppression." These include orders that preclude or restrict the dissemination of a trade secret or other confidential research, development, or business information. (7)

Although legitimate trade secrets ought to be protected from public disclosure, the primary reason a defendant in a premises liability or other personal injury case seeks a protective order is to prevent plaintiffs from sharing information. In some cases, plaintiffs seek a compromise order prohibiting them from sharing information with a defendant's competitors or others, such as the press, but allowing disclosure to other plaintiffs. Defendants typically refuse to agree to such an order. (8) Clearly, their motivation is to isolate plaintiffs from each other.

Before agreeing to a restrictive confidentiality agreement, remember that the burden is on the party seeking the order to show good cause for the court to grant it. (9)

Spoliation. In jurisdictions where courts have acknowledged the duty to preserve evidence that is potentially discoverable in pending or foreseeable litigation, intentional and negligent spoliation of evidence has been recognized as an independent tort. (10) Once you have identified your client's potential claim, you should put all potential defendants on notice not to destroy any possibly relevant evidence.

After you have filed suit, inquire about the defendant's document retention policies. (11) Be sure to ask for all documents associated with the policy--such as those modifying, suspending, or interpreting it--and records of documents that have been destroyed.

If you suspect discovery misconduct, press forward vigorously with motions to compel disclosure of the materials you seek, and do not be shy about pursuing sanctions for a defendant's disregard of discovery rules and court orders.

Statistics and sanctions

In 1994, Wal-Mart conducted its now infamous study of how implementing security measures affects the level of crime in its parking lots. The study was the basis for a 1996 article written by Wal-Mart's vice president of loss prevention, Dave Gorman, and published in Security Management magazine. (12)

Before conducting the study, Wal-Mart had reviewed crime statistics from its stores for a one-year period. It found that 80 percent of crimes occurred in parking lots or around a store's exterior perimeter.

As a result of that survey, the company tested a security program in September 1994 at several of its Florida locations. Wal-Mart parking lots were outfitted with highly visible roving patrol vehicles driven by uniformed security personnel equipped with two-way radios. According to Gorman, the results were "outstanding, both in terms of reduced crime and customer satisfaction." (13)

For example, before the program was implemented at a store in a high-crime area, the crimes reported in the parking lot included 226 car thefts, 25 purse snatchings, 32 burglaries, 14 armed robberies, 3 assaults, and 1 arson in a single year. Four months after the security patrol began, reports of each of these crimes dropped to zero.

The study became a contentious issue in a Tennessee lawsuit. In 1991, Roger McClung sued Wal-Mart after his wife was abducted from the parking lot of a store in Memphis, raped, and murdered. (14) In 1997, his lawyers deposed Gorman and asked Wal-Mart to produce all documents from the crime survey that supported the finding that 80 percent of crimes on store premises occurred in the parking lots.

At Gorman's deposition, Wal-Mart's attorneys claimed that they had not received the plaintiff's request for documents. Nevertheless, they produced a one-page document, claiming it was the only one in existence pertaining to the study.

Persistence and communication among plaintiff attorneys eventually led to the disclosure--in other cases--of the actual study, a manual entitled "Keeping Our Customers Safe," as well as several other related documents from 1994 and 1995. The manual has now been admitted into evidence in several cases against Wal-Mart, although it has never been produced in, McClung's case.

In 1999, the company's repeated failure to disclose the manual and other relevant documents led to an $18 million sanction in Meissner v. Wal-Mart Stores, Inc., an inadequate security case filed in Beaumont, Texas. (15) Sanctions in other cases followed.

Last year, Wal-Mart Chief Executive H. Lee Scott Jr. vowed that the company had cleaned up its act and would avoid sanctions in the future. (16) In May 2000, the judge in Meissner withdrew the sanction after Ron Williams, Wal-Mart's assistant general counsel, publicly apologized to the court, promising that the company was "engaging in a searching reevaluation of the litigation processes." (17) General Counsel Robert Rhoads claimed that the problems in the case were an aberration. (18)

Actions, however, speak louder than words. Even after being sanctioned and ordered to produce documents regarding other inadequate security cases in the Meissner litigation, Wal-Mart failed to produce a critical memorandum from Williams to five company executives, including Rhoads and Gorman. (19)

That April 1995 memo discusses Wal-Mart's knowledge of nine lawsuits against the company involving attacks in its parking lots between 1991 and 1994. In the memo, Williams acknowledges that the company is "on notice of the violence that is happening on [its] parking lots in the Houston area, and [it] must therefore maintain security on these parking lots." Donna Meissner was abducted from a WalMart parking lot and raped a year after the memo was written.

Head-on approach

Clearly, Wal-Mart's discovery abuse is an ongoing problem, and other corporate defendants are following its example. Plaintiffs need to address this head-on: Put defendants on notice to preserve evidence when a potential claim has been established. Once a lawsuit has been filed, determine as soon as possible what potentially discoverable evidence exists.

Communication among plaintiff attorneys is the key to leveling the playing field. Talk to other plaintiff counsel with similar cases, and compare documents. Use resources such as the Internet and your local trial lawyer association. ATLA has a valuable repository of briefs, depositions, and discovery requests. (20)

Do not accept restrictive confidentiality agreements. Be persistent, file motions to compel disclosure of documents, obtain written orders, and do not hesitate to seek appropriate sanctions against a defendant for discovery abuse.

Corporate abuses of discovery will probably persist until companies determine that using these tactics is no longer cost-effective. Plaintiff lawyers must make sure that happens as soon as possible.

Notes

(1.) Richard Willing, Lawsuits Follow Growth Curve of Wal-Mart, USA TODAY, Aug. 14, 2001, at A1.

(2.) Osterhoudt v. Wal-Mart, No. 86433 (N.Y. App. Div. July 2000). The court granted the plaintiff's motion for a mistrial when, after years of refusing to produce names of witnesses and copies of reports, statements, and documents regarding maintenance procedures in a slip-and-fall case, a Wal-Mart store manager turned over the requested documents for the first time at trial. See John Caher, Justices Blast Wal-Mart's Late Discovery Reply, N.Y.L.J., June 28, 2000.

(3.) See Wendy Zellner, Wal-Mart: Why an Apology Made Sense, BUS. WK., July 3, 2000, at 65; Gilbert T. Adams III & Alto V. Watson III, Big Box Retailers: Discovery Abuse, TRIAL, Apr. 2000, at 38, 40.

(4.) GTFM, Inc. v. Wal-Mart Stores, Inc., No. 98 Civ. 7724 (RPP), 2000 WL 335558 (S.D.N.Y. Mar. 30, 2000); see also Zellner, supra note 3.

(5.) FED. R. CIV. P. 26 (b)(5).

(6.) See, e.g., Fine v. Facet Aerospace Prods. Co., 133 F.R.D. 439 (S.D.N.Y. 1990); United States v. Int'l Bus. Mach. Corp., 66 F.R.D. 206 (S.D.N.Y. 1974).

(7.) FED. R. CIV. P. 26(c).

(8.) FRANCIS H. HARE JR. ET AL, FULL DISCLOSURE: COMBATING STONEWALLING AND OTHER DISCOVERY ABUSES 160 (1994).

(9.) See, e.g., Earl v. Gulf & W. Mfg., 366 N.W.2d 160 (Wis. Ct. App. 1985).

(10.) See, e.g., Natale v. Gottlieb Mem'l Hosp., 733 N.E.2d 380 (Ill. App. Ct. 2000); Smith v. Atkinson, 771 So. 2d 429 (Ala. 2000); see also Russ M. Herman & Steve Herman, Understanding Spoliation of Evidence, TRIAL, Mar. 2000, at 45.

(11.) See, e.g., Anderson v. Cryovac, Inc., 862 F.2d 910 (1st Cir. 1988).

(12.) Dave Gorman, Loss Prevention Racks Up Success, SECURITY MANAGEMENT, Mar. 1, 1996, at 55.

(13.) Id.

(14.) McClung v. Delta Square Ltd., 937 S.W.2d 891 (Tenn. 1996).

(15.) Meissner v. Wal-Mart, No. 4-159, 432 (Tex., Jefferson County Dist. Ct. Apr. 8, 1999).

(16.) Zellner, supra note 3.

(17.) Id.

(18.) Id.

(19.) Bob Van Voris, Wal-Mart Failed to Follow Counsel's Shopper Security Ideas, Company Memo Shows, NAT'L L.J., Aug. 27, 2001.

(20.) Members of ATLA's Wal-Mart Litigation Task Force are entitled to all documents, discovery materials, and briefs obtained or written by other members. In return, members are required to submit all such materials not subject to confidentiality orders to the task force. Inquiries regarding the task force should be directed to its chair, Bruce Kramer.

Bruce Kramer practices law with Borod & Kramer in Memphis, Tennessee. Elaine Sheng is an associate at the firm.