The Good News provides a monthly column with important content having to do with topics from the legal community. This month’s offering features a conversation I had with Charles “Chuck” Tatelbaum, a Tripp Scott expert in bankruptcy and creditors’ rights issues but also complex business litigation, on the legal jeopardy electronic communications in general, and texts in particular, can create for your business.
Bill Davell: Chuck, you advise business clients to be extremely cautious about electronic communications.
Chuck Tatelbaum: Indeed I do, given the exposure that any electronic communications, but especially texts, can create. The classic case, of course, was legendary litigator David Boise’s devastating confrontation of Bill Gates with emails in the government’s 1990s antitrust case against Microsoft. In incredibly unguarded messages, Gates wrote or was quoted as saying things about competitors like, “take away (Netscape’s) oxygen supply,” “crush them,” and to AOL, even, “How much do we need to pay you to screw Netscape?”
Since then, an entire industry has arisen around “safety training” in using e-communications, but incredibly, even senior executives haven’t learned their lessons. At a 2020 hearing, the CEOs of Facebook, Amazon and Google were confronted with stunning emails detailing proposed anti-competitive actions against competitors like Instagram and even their own customers.
BD: And when it comes to texts, you advise to refrain completely from their use for business communications. Isn’t that a bit extreme?
CT: Not when you consider the even greater informality and immediacy, and therefore tendency for unguarded use, of texts – we have found that even the most sophisticated business people tend to be less formal and less prudent in what they say and how they say it. Executives and employees tend to let their guard down and make statements that could be derogatory, insulting or admissions against their own or their business’ best interests.
Meanwhile, recent court decisions and revised rules of court procedures have increased the potential liability for businesses, not just as evidence but to actually create legal obligations. For example, a federal appeals court recently held that a business executive’s simple assurance, “I will make sure that you are paid” in a text to a supplier created a fully enforceable personal guarantee for all future indebtedness of the supplier’s business!
BD: How does the informality of texts make the problem worse?
CT: The informal feel of texts lures users into thinking that they are confidential. But text messages are just as “discoverable” in litigation – meaning required to be handed over in pre-trial preparations – as hard copies or emails. In fact, in business litigation today, texts are such a rich evidentiary lode that they are frequently the first materials opposing counsel will seek to have produced, which requires a search through every text from everyone affiliated with the business to find those relating to interactions and especially transactions between the parties.
Besides the substantial time and cost of mining these texts, anything that may have been inadvertently or inappropriately within them becomes part of the court record – which in our experience, has included not just compromising business information but also jokes or other derogatory comments about a customer or client.
BD: What should a prudent business executive do to protect his business?
CT: Again, the simplest rule about texting in a business context is: DON’T! But if you have to text either because a customer prefers that mode of communication or for reasons of time pressure, firms should issue employees separate cell phones for business use to ensure personal texts aren’t intermingled with business communications.
Also, to avoid disasters, every employee should be provided mandatory, regular basic and refresher training as to what to and not to say in business texts and e-communications in general. Tripp Scott (provides/works with providers of) this kind of e-communications “safety” training.
Even better is to create policies and procedures for using and best of all, vetting electronic communications, both internally but especially with external parties. In some cases, in particular memos or other communications involving weighing or potentially establishing legal obligations, such procedures would require pre-clearance either by internal counsel or a firm like Tripp Scott providing external general counsel services.
Tripp Scott’s Complex & General Commercial Litigation and Entrepreneurial Business teams are, available at any time to help your business protect itself against potential legal liability arising from electronic communications.
If you have any topics you think my be of interest to our readers, we encourage you to email us at [email protected]
Read more Ask Bill at: https://www.goodnewsfl.org/author/william-c-davell/