Also consider this case. A manager writes a couple of glowing letters of recommendations for a couple of former employees that did great on the job. Wonderful. Now a poor performer asks and the manager doesn't feel comfortable writing a recommendation at all: either they'd risk having to be candid or there's simply no basis for "recommendation" and so the manager refuses.

Well, now even the omission/refusal to write such a letter might get you sued. A policy that says our managers just don't write such letters is absolutely the safest. 1) the company and its managers don't identify in any way their thoughts on performance in a way that might be found prejudicial; 2) they avoid the risk of a poorly worded recommendation that could be called prejudicial; 3) they avoid having to monitor the standards and risks of such statements across possibly many managers that might write such letters absent such a rule.