Are employees' internal communications admissible in a case against the employer?

In a recent case, the California Court of Appeal addressed whether certain internal emails and presentations introduced as evidence by purchasers of a truck were admissible in a suit against Ford Motor Company.

In Ralph Bowser et al. v. Ford Motor Company, a married couple owned a 2004 model of a Ford truck, which turned out to be a lemon. After the dealership assured them that Ford had dealt with the previous problems, the couple bought a 2006 model of the same truck.

However, the 2006 truck and its engine needed numerous repairs after it experienced stalling, acceleration issues, and part failures. The couple mostly stopped driving the truck after it had around 100,000 miles on it.

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In a suit against Ford, the couple made a claim under the Song-Beverly Consumer Warranty Act and a claim for common-law fraud. They introduced numerous Ford internal presentations and emails, some of which stated that their information was secret. The evidence stated that Ford knew that certain parts of the truck’s engine were failing at excessive rates and that Ford struggled to figure out the root cause of the failures.

Ford conceded liability under the Song-Beverly Act but objected to the introduction of the internal emails and presentations. The trial court allowed Ford to make a continuing hearsay objection.

The jury, ruling in the couple’s favour, awarded them compensatory damages under the Song-Beverly Act and for fraud, a statutory penalty under the Act, and punitive damages. The couple decided to recover compensatory damages under the Song-Beverly Act rather than for fraud.

The trial court awarded the couple $836,528.12 in attorney fees plus $94,264.99 in costs. Ford appealed.

The California Court of Appeal for the Fourth District, Division Two found no prejudicial error in the trial court’s decision and affirmed it.

Among the evidence that the couple presented, exhibits 39, 41, 45, 47, 48, 54, 61, 62, 63, 64, 65, 162, 188, and 189 were admissible as authorized admissions. The appellate court explained that the following employees made statements within the scope of their employment:

• The director of North American diesel could discuss issues with the truck’s engine and warranty repairs to it (exhibits 45, 54, 61, 64, and 162);
• The chief engineer of diesel engines could make statements to other Ford employees about problems with the engine (exhibits 39 and 41) and could make second-level hearsay statements about exhaust gas recirculation valves (exhibit 64);
• The warranty program manager for powertrains bought from other manufacturers could tell fellow employees that the engine exceeded Ford’s own cylinder pressure specifications (exhibit 65);
• The director of the customer service division could discuss engine concerns and Ford’s lack of a “definitive repair action” (exhibit 47), as well as discuss replacing fuel injectors to avert buybacks (exhibit 189);
• The tough truck service engineering manager could propose ways to reduce buybacks (exhibit 48);
• A worker focusing on engine research could testify that he gave a PowerPoint presentation to certain employees (inferably exhibit 62);
• The director of truck in product development could list the top issues of the engine (exhibit 63);
• The product concern engineer and reacquired vehicle technical specialist also made statements contributing to the evidence (exhibit 188).

Exhibits 42, 43, 45, 160, and 198 were not admissible as authorized admissions, the appellate court said. However, these exhibits were admissible as nonhearsay evidence that the Ford employees who received them knew about the problems discussed in these exhibits.

They were likewise admissible under the state-of-mind exception to show that the authors who were Ford employees knew about these issues, the appellate court said.