Tuesday, April 29, 2008
Power Of The Press: 7th Circuit Finds Subsequent Remedial Measure Evidence Inadmissible In Class Action Suit Against the Trib
The Seventh Circuit's recent opinion in Pugh v. Tribune Co., 2008 WL 867739 (7th Cir. 2008), provides a nice illustration of the rule precluding the use of subsequent remedial measures to prove, inter alia, negligence or culpable conduct. In Pugh, shareholders of the newspaper publishing company the Tribune Company brought a securities class action against it, four of its executive officers, and five employees of its subsidiary, arising from fraudulent boosting of newspaper circulation figures at subsidiary in effort to increase advertising revenue. One of the plaintiffs' allegations was that the Tribune and the other defendants "intentionally or recklessly created weak circulation controls."
The plaintiffs attempted to prove a specific control deficiency by arguing that, unlike other publishers, the Tribune Company had not required that its circulation figures be certified before they were submitted to the Audit Bureau of Circulations. This allegation seized upon the Tribune Company's disclosure, at the end of an internal investigation, that in the future it would require certain executives to certify the accuracy of their newspaper's circulation figures. The Seventh Circuit, however, found that this evidence was inadmissible under Federal Rule of Evidence 407, which states in relevant part: "When, after an injury or harm allegedly caused by an event, measures are taken that, if taken previously, would have made the injury or harm less likely to occur, evidence of the subsequent measures is not admissible to prove negligence [or] culpable conduct."
The reasoning behind this rule is that (1) the fact that a defendant adopts a subsequent remedial measure does not necessarily mean that prior measures were insufficient, and (2) we don't want to discourage defendants from making things safer. As the Seventh Circuit stated with regard to the Pugh case, "adding a certification requirement does not show that Tribune's existing controls were insufficient, much less that any individual defendant knew of or was recklessly indifferent to an actual, ongoing fraud."