E-Discovery Law Alert

Mark S. Sidoti Featured in The Metropolitan Corporate Counsel

Gibbons P.C. — Tue, 18 Jun 2013 11:08:54 -0500

Are you concerned about understanding the latest E-Discovery trends, rules, and regulations? If so, you are not alone! Trying to stay ahead of the E-Discovery curve can be difficult.

In a recent article, published by The Metropolitan Corporate Counsel, entitled Staying Ahead of the E-Discovery Learning Curve, Mark S. Sidoti, Chair of the Gibbons E-Discovery Task Force, discusses why companies should be focused on electronic discovery and information management, including the latest evolutions in the area, like technology-assisted review of data. Mr. Sidoti explains:

As evidence of how far we’ve come and where we’re headed, the debate has progressed beyond whether it is necessary or appropriate for trained reviewers to conduct a document-by-document, linear review of all documents collected in a data set. Quite simply, it is generally accepted by courts that they do not. Now the discussion is focused on the best combination of human input and technology to discern the greatest number of truly relevant documents in the most efficient and scientifically sound way.

To read more of this article on the latest developments in E-Discovery, click here.

NYC Teacher Nearly Loses Job Due to Facebook Comments About Her Students

Jennifer Marino Thibodaux — Tue, 04 Jun 2013 15:42:53 -0500

Recently, a New York City public school teacher nearly lost her job after posting derogatory remarks on her private Facebook page about hating her students, whom she called “devil[']s spawns.” Although a hearing officer concluded that her employment should be terminated, the Supreme Court vacated that decision, which a unanimous panel of the Appellate Division affirmed.

On June 22, 2010, a student in the New York City public school system drowned during a school trip to the beach. The next day, when the fifth-grade teacher was at home after school, she posted the following comment on the private portion of her Facebook page: “After today, I am thinking the beach sounds like a wonderful idea for my 5th graders! I HATE THEIR GUTS! They are the devils [sic] spawn!” When one of her Facebook friends posted, “[O]h you would let little Kwame float away!” the teacher responded, “Yes, I wld [sic] not throw a life jacket in for a million!!” The postings came to the attention of the school due to the report of one of the teacher’s Facebook friends, who was a colleague at her school.

The teacher initially denied posting the comments, claiming her friend posted them to her account, but later admitted she did, in fact, post them herself. The teacher explained that “she did so after a hard day at work” and deleted the comments three days later. She also apologized, recognized she “chose the wrong forum to vent,” and noted she changed her Facebook usage to keep in touch with close friends and family only and avoided any further expression of her opinions on Facebook.

The hearing officer ruled the teacher should be fired for her misconduct due to the “public nature of the online postings” and her breach of the Department of Education’s trust. In reversing that decision, the Supreme Court declined to consider the merits of the teacher’s claim her comments were protected speech under the First Amendment, but observed that terminating the teacher’s employment would be “inconsistent with the spirit of the [F]irst [A]mendment” because Facebook is a “rapidly evolv[ing]” forum in which “one may express oneself as freely and rapidly as when conversing on the telephone with a friend.” The Supreme Court further reasoned that although the teacher should have known that her postings “could become public,” it was reasonable for the teacher to believe that only her online friends would see her comments, given the “illusion that Facebook postings reach only Facebook friends and the fleeing nature of social media.” The Appellate Division unanimously affirmed in a two-page opinion. Notably, the panel observed that the teacher had posted the comments “to vent her frustration only to her online friends” and not “to the public at large.”

The lesson here is simple: every social media user must exercise the utmost caution and be mindful that any comments made in this context are, or may easily become, “public” and lead to disastrous consequences. Here, the Court ultimately spared the teacher from paying the high price of losing her employment over comments she made about her students that she did not intend to become public. The Court’s decision was based largely on its perception of “the casual and fleeting nature of social media” and its understanding of user perceptions of privacy. However, such understanding is, by no means, uniform; indeed, it is significant to remember that other judges have likened Twitter usage to “screaming out of a window” with no expectation of privacy and, therefore, one might expect a different result in other courts. A good rule of thumb? Think twice before posting -- if you wouldn’t want your boss to see what you have to say, then you probably shouldn’t post it in a social media setting!

Jennifer Marino Thibodaux is an Associate in the Gibbons Business & Commercial Litigation Department and a member of the Gibbons E-Discovery Task Force.

Show Your Work: Google Ordered to Produce Search Terms and Custodians Used When Responding to Apple's Subpoena

Michael C. Landis — Thu, 23 May 2013 15:20:44 -0500

In a recent order in Apple Inc. v. Samsung Electronics Co. Ltd., et al., United States Magistrate Judge Paul S. Grewal reinforced the importance of cooperation and transparency in the discovery process, especially when it involves electronically stored information. The order granted Apple’s motion to compel Google, a non-party, to produce the search terms and list of custodians Google used when responding to Apple’s subpoena. Judge Grewal’s order is significant because it underscores that a responding party, whether or not a party to the litigation, should be prepared to disclose the methodology it used to identify and collect electronically stored information in response to a discovery request.

During the course of its well-publicized copyright infringement litigation with Samsung, Apple subpoenaed Google for certain information related to its claims. Based on its suspicion that Google’s production was deficient, Apple sought from Google the details of how it searched for responsive information. Google opposed Apple’s motion, arguing that producing the search terms and custodians would be “unduly burdensome.” (Google had initially taken the position, which it later abandoned because of adverse case law, that such information was protected by the work-product doctrine.) The Court found that Google provided “no evidence” to support a conclusion that “collecting a list of search terms and custodians compiled within the last six months would be oppressive or burdensome.” Google also argued that it was exempt from any obligation to show the sufficiency of its production because it was a non-party to the litigation and Apple neither identified specific information that was missing from the production nor suggested alternative search terms. Additionally, Google maintained that disclosing its search methodology would lead to overly burdensome requests for additional discovery.

The Court framed the issue as whether it was “extraordinary” to expect third parties to be transparent about their discovery methods. In its analysis, the Court relied primarily on DeGeer v. Gillis, a 2010 case from the Northern District of Illinois. Faced with a similar set of facts, former Magistrate Judge Nan Nolan ordered in DeGeer that the subpoenaed third party produce the search terms and the names of the custodians. The Court in Apple agreed with the Court in DeGeer that “transparency and collaboration is essential to meaningful, cost-effective discovery,” and the Apple court found that Google’s attempt to “stand outside of these tenants because of its third-party status” was “unpersuasive.” However, Apple was chastised as well for its failure to “collaborate in its efforts to secure proper discovery from Google” because it requested the search terms and custodians only after it suspected that Google’s production was deficient, and it “made no effort to explore meaningful collaboration on obtaining the documents it believed were not produced.”

Judge Grewal concluded that “production of Google’s search terms and custodians to Apple will aid in uncovering the sufficiency of Google’s production and serves greater purposes of transparency in discovery.” In keeping with its focus on cooperation, the Court also ordered Apple and Google to meet and confer in person following the production of the search terms and custodians “to discuss the lists and to attempt to resolve any remaining disputes regarding Google’s production.” Judge Grewal’s order makes clear that transparency and cooperation are of paramount importance during the discovery process, especially when electronically stored information is at issue, and that a subpoenaed third party, just like a named party, should be prepared to provide the details of its search methodology.

Michael C. Landis is an Associate in the Gibbons Business & Commercial Litigation Department.

Judge Scheindlin Weighs Comity Concerns and Orders Production of Documents from Bank of China Despite Violation of Chinese Laws

Jeffrey L. Nagel — Fri, 17 May 2013 14:15:28 -0500

In Aerospatiale v. District Court of Iowa the United States Supreme Court admonished lower courts that international comity compels them to “take care to demonstrate due respect for any special problem confronted by the foreign litigant on account of its nationality or the location of its operations, and for any sovereign interest expressed by a foreign state.” As previously noted, some prominent groups such as the ABA and The Sedona Conference® recently have developed principles and standards to help courts heed that advice.

In an Order dated May 1, 2013, in Wultz v. Bank of China Ltd., 11-CV-1266 (S.D.N.Y.), Federal District Judge Shira Scheindlin grappled with the plaintiffs’ most recent attempt to obtain documents from the Bank of China (“BOC”) “that would be discoverable under the Federal Rules of Civil Procedure, but that BOC was withholding because production of the documents would violate Chinese bank secrecy laws.” The Court noted that these documents were already the subject of a prior order compelling production that was decided on October 29, 2012 (id. at 5), however BOC’s objections this time stemmed from the fact that the production sought would violate certain Chinese Anti-Money Laundering (“AML”) laws that previously were not brought to the Court’s attention.

Wultz arises out of the death of Daniel Wultz and the injuries of Yekutiel Wultz, suffered in a 2006 suicide bombing in Tel Aviv, Israel. Four members of the Wultz family brought suit against the BOC alleging acts of international terrorism under the Antiterrorism Act (“ATA”). All non-federal claims against BOC were dismissed and the only remaining claim is for acts of international terrorism under the ATA, based on BOC allegedly having provided material support and resources to a terrorist organization. Plaintiffs have long sought information about BOC’s alleged ties to the terrorist organization in question and records indicating that the bank knew about the organization and its funding activity. BOC maintained that the information sought in discovery should not be produced for a variety of reasons, including that the confidentiality provisions of Chinese AML laws, meant to foster communication between banks and regulators, would be violated by such production (id. at 10-11).

The Court acknowledged that, based on the parties’ submissions, “it is more likely than not that BOC is prohibited under Chinese laws and regulations from producing the materials requested by plaintiffs” (id. at 23). When this is established, Aerospatiale and decisions from the Second Circuit require the District Court to analyze seven factors (id. at 13): (1) the importance to the investigation or litigation of the documents or other information requested; (2) the degree of specificity of the request; (3) whether the information originated in the United States; (4) the availability of alternative means of securing the information; (5) the extent to which noncompliance with the request would undermine important interests of the United States, or compliance with the request would undermine the important interests of the state where the information is located; (6) the hardship of compliance on the party or witness from whom discovery is sought; and (7) the good faith of the party resisting discovery.

Taking each factor in turn, the Court noted that there was no question that the documents were important to the case and specifically tailored, and thus factors 1 and 2 favored production. Factor 3 cut against production because the materials originated outside of the United States, but factor 4 favored production because “there may be no alternative source of evidence for establishing one of the central elements of plaintiffs’ claim” -- namely, “that BOC had notice” that the accounts in question “were being used to fund the terrorist organization whose attack on April 17, 2006 killed Daniel Wultz and injured Yekutiel Wultz” (id. at 29).

Factor 5 -- the extent to which noncompliance with the request would undermine important interests of the United States -- also favored production, because the denial of the sought-after discovery could mean that “a bank that recklessly or knowingly funded the terrorists who murdered an American citizen would continue to operate with impunity in the United States, with the benefits and protections of U.S. laws” (id. at 30). The Court did acknowledge that the production of certain documents might “risk infringing China’s sovereignty and violating the spirit of international comity in a way that this Court has sought to avoid” -- but went on to say that China has no legitimate interest in trying to keep “confidential” whether “BOC received warnings” regarding the accounts in question and “may be liable under the ATA for a terrorist attack on American citizens” (id. at 32). Finally, factors 6 and 7 also weighed in favor of production, because BOC could show no significant burden and years into the litigation the evidence of BOC’s selective disclosure, delay, and highly implausible interpretation of past discovery order meant that “BOC has shown bad faith toward its discovery obligations” (id. at 33). Remarkably, the Court noted, after years of discovery it appeared that BOC still “had failed to produce a single e-mail of any kind in this case” (id. at 34 n. 79).

Ultimately the Court ordered production of the documents sought, allowing for certain redactions or highly sensitive material to be first produced in camera for review before the materials were turned over. The Court recognized “the seriousness of this Order” yet believed that it was “compatible with the goals of international comity, including the notion of reciprocity” (id. at 38). Were the circumstances reversed, and a “U.S. bank operating in China were accused of funding a terrorist organization responsible for the death of a Chinese citizen, it would be appropriate in the wake of an ineffective Hague request for a Chinese court to order the U.S. bank to produce equally sensitive documents — appropriately redacted and under protective order, as here.” (Id.) In the end, Judge Scheindlin’s detailed opinion appears to have carefully balanced the interests at stake in this litigation as required by Aerospatiale and gave “due respect” for BOC’s objections.

Jeffrey L. Nagel is a Director in the Gibbons Business & Commercial Litigation Department and a member of the Gibbons E-Discovery Task Force.

Six Gibbons Attorneys to Speak at Upcoming NJSBA 2013 Annual Meeting & Convention

Gibbons P.C. — Wed, 15 May 2013 14:42:53 -0500

The New Jersey State Bar Association 2013 Annual Meeting and Convention will be held May 15-17, 2013, at the Borgata Hotel Casino & Spa. Six Gibbons attorneys will be featured as speakers and moderators at this years convention. The Gibbons attorneys, Fruqan Mouzon, Mary Frances Palisano, Damian V. Santomauro, Judge Edwin H. Stern, Jennifer Marino Thibodaux, and Chief Justice James R. Zazzali, will be covering topics ranging from developments in E-Discovery to white collar crime and the Consumer Fraud Act.

Consumer Fraud Act: Remedies & Defenses for Purchases of Property and Home Renovation Contracts
- Damian V. Santomauro, Director in the Gibbons Business & Commercial Litigation Department
- Thursday, 8:30 - 9:45 am, The Water Club.

This panel will cover the rights and remedies available under the Consumer Fraud Act to consumers who have contracted for purchase of property or for home renovation contracts. Mr. Santomauro will discuss the elements of a CFA claim, specifically construction law cases, businesses as CFA plaintiffs, and individual liability of principals and officers for CFA claims.

White Collar Crime
- Judge Edwin H. Stern, Counsel to the Gibbons Business & Commercial Litigation Department, & Mary Frances Palisano, Counsel to the Gibbons Criminal Defense Department
- Thursday, 10:00 - 11:15 am, The Borgata

Judge Stern and Ms. Palisano will discuss various white collar crimes, including embezzlement and public contract fraud.

Recent Legal and Technological Developments in E-Discovery: What Every State and Federal Practitioner Should Know
- Jennifer Marino Thibodaux, Associate in the Gibbons Business & Commercial Litigation Department
- Thursday, 1:00 - 2:15 pm, The Borgata

Ms. Thibodaux’s panel will discuss important technological and legal developments in E-Discovery, such as predictive coding, recent court decisions related to the use of search terms, social media and information preservation.

Inside Trenton
- Fruqan Mouzon, Director in the Gibbons Business & Commercial Litigation Department
- Thursday, 3:00 - 4:15 pm, The Borgata

Mr. Mouzon will moderate this panel, which will cover the latest developments in Trenton. The panelists will offer insight into the legislative process and hot topics in the capitol such as gubernatorial and legislative races.

Justice at Stake
- Chief Justice James R. Zazzali, Counsel to the Gibbons Business & Commercial Litigation Department
- Friday, 9:45 - 11:00 am, The Borgata

Chief Justice Zazzali’s panel will discuss the threats facing the independence and integrity of the New Jersey Judiciary. The panelists will not only provide a statewide overview, but a national overview of this topic and the challenges that various states are facing.

For more information on the other panel discussions going on throughout the convention, please click here.

This blog post originally appeared on the Gibbons Business Litigation Alert on May 15, 2013.

Update of Proposed Rule Changes: A Universal Federal Sanctions Standard for the Failure to Preserve ESI Could be a Reality

Sandro G. Ocasio — Mon, 06 May 2013 14:32:33 -0500

The United States Courts’ Advisory Committee on Civil Rules (“the Committee”) has proposed various amendments to the Federal Rules of Civil Procedure that, if adopted, will profoundly affect the range and scope of sanctions a court may impose for failures to preserve electronically stored information (“ESI”). F.R.C.P. 37(e), which currently addresses sanctions in those instances, is one of several rules slated for amendment.

The current rule prohibits a court from imposing sanctions on a party that fails to provide ESI that was lost as a result of the “routine, good-faith operation of an electronic information system” absent exceptional circumstances. The federal courts have applied the rule differently with prevailing culpability standards currently ranging from negligence to willfulness or bad faith (this blog has commented on such disparate cases including New York, New Jersey, and Arizona.) The Committee seeks to address these discrepancies by adopting a single standard.

The proposed rule states that sanctions may be ordered in two limited instances -- when the failure to preserve: 1) “was willful or in bad faith and caused substantial prejudice in the litigation” or 2) “irreparably deprived a party of any meaningful opportunity to present a claim or defense.” Thus, the proposed rule rejects case law precedent in some jurisdictions that mere negligence constitutes a sufficient culpability to support sanctions. The proposed rule adds an adverse-inference charge to the jury to the list of sanctions already available -- like issue preclusion and outright dismissal -- under referenced F.R.C.P. 37(b)(2)(A).

The proposed rule also identifies factors a court may examine to determine whether the party failing to preserve ESI acted with the requisite culpability, including the extent to which a party was on notice that litigation was likely, the reasonableness of a party’s preservation efforts, the issuance of litigation holds, the proportionality of the preservation efforts to any anticipated or ongoing litigation, and whether the party sought guidance from the court regarding unresolved disputes concerning ESI preservation.

According to the minutes from the Committee meeting held this past January, “the proposed amendment is designed to provide more significant protection against inappropriate sanctions, and also to reassure those who might in its absence be inclined to overpreserve to guard against the risk that they would confront serious sanctions.”

Indeed, parties may find some relief in the fact that, under the proposed rule, negligent behavior would no longer be punishable. However, practitioners must be mindful of the interpretation of “willfulness” and “bad faith” in their jurisdiction because the proposed rule does not clarify those terms. According to the Committee Notes “courts have considerable experience dealing with these concepts, and efforts to capture that experience in Note language seemed more likely to produce problems than provide help.”

Furthermore, application of the proposed factors, particularly factors such as “reasonableness,” will vary from jurisdiction to jurisdiction. Thus, although the level culpability may be standardized, the rule will undoubtedly be interpreted and applied differently among the federal courts.

Publication of the proposed amendments is expected late this year providing they are approved by the Standing Committee at their June meeting. Stay tuned to this blog for updates on these critical developments.

Sandro G. Ocasio is an Associate in the Gibbons Real Property & Environmental Department and a member of the Gibbons E-Discovery Task Force.

Federal Judge in New Jersey Issues Adverse Inference Instruction Due to Plaintiff's Failure to Preserve Facebook Information in Personal Injury Action

Jennifer Marino Thibodaux — Mon, 22 Apr 2013 08:51:06 -0500

Recently, a federal judge in New Jersey imposed sanctions for a personal injury plaintiff’s failure to preserve his Facebook account. The Court concluded that it was “beyond dispute that Plaintiff had a duty to preserve his Facebook account,” and granted the defendant’s motion for an adverse inference instruction.

The plaintiff allegedly suffered serious injuries at work, which purportedly left him permanently disabled, unable to work, and limited in his “physical and social activities.” The defendants sought the plaintiff’s Facebook information, alleging it related to damages, but the plaintiff declined to provide an authorization form for Facebook. During a settlement conference, the Magistrate Judge ordered the plaintiff to execute the appropriate form, and the plaintiff agreed to change his account password to allow defense counsel to access his Facebook page. Defense counsel then accessed his account and printed portions of the plaintiff’s Facebook page.

Days later, plaintiff’s counsel told defense counsel that the plaintiff had received a Facebook alert indicating that an unknown IP address in New Jersey accessed his account. Defense counsel confirmed that the plaintiff’s account was accessed, and the parties disagreed as to whether defense counsel was able to directly access the account. Defense counsel also advised that the defendants served a subpoena on Facebook, enclosing the authorization form executed by the plaintiff, to obtain the plaintiff’s account information.

Facebook objected to the subpoena, citing the Federal Stored Communications Act, and recommended that the plaintiff download his Facebook information and provide it to defense counsel. The parties disputed whether the plaintiff agreed to take these steps. Weeks later, defense counsel learned that the plaintiff deactivated his Facebook account, and then Facebook automatically deleted his account fourteen days later, so all account information was lost.

The defendant requested an adverse inference instruction or monetary sanctions. The Magistrate Judge applied the four factor test for sanctions as set forth by the Third Circuit in Schmid v. Milwaukee Elec. Tool Corp., 13 F.3d 76, 79 (3d Cir. 1994). The Magistrate Judge found that the deletion of the Facebook account “clearly” satisfied the first, third, and fourth Schmid factors: the Facebook information was within the plaintiff’s control as the accountholder; the Facebook account was relevant because the plaintiff put his social and physical activities at issue in the litigation, i.e., the “posts, comments, status updates, and other information posted or made by the Plaintiff subsequent to the date of the alleged incident” would bear upon damages; and it was reasonably foreseeable that Facebook information would be sought because the defendant requested the social media information months before the plaintiff deactivated his account, and the parties previously discussed the Facebook information during a settlement conference with the Court. Consequently, the Magistrate Judge concluded that “it is beyond dispute that Plaintiff had a duty to preserve his Facebook account at the time it was deactivated and deleted.”

With respect to whether the plaintiff actually suppressed or withheld the Facebook information, the plaintiff argued that he was involved in a “contentious” divorce and his Facebook account had been “hacked into” many times before, so he acted reasonably when he deactivated his account after receiving the Facebook notification. The plaintiff also argued that he did not mean to permanently delete his account, only deactivate it, and that it was deleted automatically due to Facebook policy; he also alleged that he unsuccessfully attempted to restore the account. The Court reasoned that even if the plaintiff did not intend to delete his account, his intent was of no matter because the spoliated evidence was relevant, and “there is no dispute that Plaintiff intentionally deactivated the account.” The Court concluded that the plaintiff “failed to preserve relevant evidence” despite the alleged unauthorized access by defense counsel and the plaintiff’s unsuccessful restoration efforts. Because the defendants were prejudiced by the failure to obtain Facebook information that was relevant to damages and credibility, the adverse inference instruction was appropriate. The Court did not find, however, that an award of fees and costs was appropriate.

Attorneys, pay attention: if your client uses Facebook, it must be maintained like any other electronically-stored information or hard copy document -- particularly if its import is specifically sought in discovery or discussed with the Court. This is not the first time that a federal judge in New Jersey has awarded sanctions for failure to preserve social media, and it likely will not be the last.

Jennifer Marino Thibodaux is an Associate in the Gibbons Business & Commercial Litigation Department and a member of the Gibbons E-Discovery Task Force.

"Persnickety, Persistent" Questions: The Stored Communications Act

Paul E. Asfendis — Mon, 01 Apr 2013 08:45:24 -0500

The Stored Communications Act (“SCA”) prohibits internet service providers from disclosing the “content” of electronic communications. What constitutes “content” of an electronic communication? It may be easier to rephrase the question: What doesn’t constitute content? According to the U.S. District Court for the Northern District of California, the answer is: very little.

Optiver Australia Pty. Ltd. & Anor. v. Tibra Trading Pty. Ltd. & Ors., 12-cv-80242 (N.D. Cal., Jan. 23, 2013), involved a subpoena issued by the plaintiff to Google in connection with a foreign action in Australia. The plaintiff sought information regarding a number of its adversary’s emails for a two year period, including recipient, sender, subject, the dates sent, received, read and deleted, and attachments for emails that contain certain terms relevant to the case.

The defendant moved to quash and the Court granted the motion, in part. In doing so, the Court relied on the broad definition of “content” under the SCA, defined as “any information concerning the substance, purport or meaning of that communication.” The Court interpreted this to prohibit disclosure of content-related information, “no matter how insignificant.”

As noted by the Court, the use of search terms would necessarily reveal that the emails contained those terms, and thus qualified as “content.” Likewise, disclosure of an email subject line would reveal information about the substance of the email. The Court did order Google to produce “non-content” metadata, but commented that such information would likely be useless to the plaintiff in prosecution of its claims.

This is not the first case where the SCA has stymied efforts to obtain email communications directly from service providers. The well known Crispin case involved a similar situation. Perhaps the most important take-away from these cases is that a party seeking electronic communications might avoid the pitfalls of the SCA altogether by requesting the communications directly from the adversary, who would be considered to have custody or control over those communications by virtue of its ability to obtain them from the service provider. This would allow a party requesting electronic communications to steer clear from the “persnickety, persistent” questions addressed by the Court in Optiver.

Paul E. Asfendis is a Director in the Gibbons Products Liability Department and a member of the Gibbons E-Discovery Task Force.

An International Standard for E-Discovery?

Sandro G. Ocasio — Mon, 18 Mar 2013 08:03:30 -0500

The International Organization for Standardization (“ISO”) is forming a new e-discovery committee tasked with the development of standards for e-discovery processes and procedures. The international standard “would provide guidance on measures, spanning from initial creation of [electronically stored information] through its final disposition which an organization can undertake to mitigate risk and expense should electronic discovery become an issue” according to a draft committee charter.

ISO is the world’s largest developer of voluntary international standards comprised of a network of standards bodies in more than 160 countries. Since its inception over 60 years ago, ISO has created more than 19,500 international standards for nearly every aspect of technology and businesses.

The proposed standard would cite ISO 9001, a part of the ISO 9000 family of standards that sets forth an internationally accepted consensus on good quality management practices. ISO 9001 defines minimum requirements for a company’s Quality Management System and is used by more than 1 million businesses in over 180 countries.

Reactions to the concept of promulgating an international e-discovery standard are mixed. Opponents contend that such a standard is not feasible in light of the rapidly changing landscape of e-discovery and the unpredictable nature of litigation. Supporters argue that e-discovery is a technology and engineering issue that can be standardized. All critics seem to agree, however, that e-discovery standardization is a central need for the industry as a whole.

Indeed, the potential benefits of a uniform standard would inure to practitioners, clients and the judicial system. Creation of such a standard should significantly reduce, if not eliminate, disputes regarding how e-discovery should proceed, thereby significantly reducing litigation costs and promoting judicial economy. E-discovery software companies may also be able to differentiate themselves from their competitors by meeting the standard and branding their products as standards-compliant.

The establishment of the committee appears to be a certainty with support from the United States, Italy, Japan, South Africa and the U.K. Should the project move forward, a draft report would be submitted sometime in July, followed by a comment period beginning in August. This blog will continue to track the progress of this important e-discovery development.

Sandro G. Ocasio is an Associate in the Gibbons Real Property & Environmental Department and a member of the Gibbons E-Discovery Task Force.

A Bad "Day" for a Company Whose In-House Attorney Failed to Properly Preserve Relevant Documents

Susan L. Nardone — Thu, 28 Feb 2013 12:52:22 -0500

An Arizona federal court has determined that default judgment, an adverse instruction and monetary damages are proper remedies for in-house counsel’s failure to take the proper steps to preserve potentially relevant evidence after receiving notice of potential litigation. In Day v. LSI Corporation, Docket No. CIV-11-186-TUC-CKJ, the United States District Court for the District of Arizona granted, in part, the plaintiff-employee’s motion for entry of a default judgment and imposed additional sanctions against the defendant-employer, concluding that the employer’s in-house attorney had a “culpable mind” and acted willfully in failing to carry out the company’s preservation obligations.

During his October 2010 exit interview, the employee complained about alleged discrimination. Three months later, in January 2011, the company received a letter from an attorney representing the employee setting forth various contractual and other claims. In-house counsel was aware of both the exit interview complaint and the attorney letter and, in January 2011, issued a written document retention notice. The notice was not sent to a critical witness with relevant knowledge of some of the claims, though the company maintained that the witness was not identified in the attorney letter and that it was not aware that the witness had potentially relevant knowledge until receiving the employee’s initial disclosures seven months later. By then, the witness was no longer with the company and his emails had been purged from the company’s server.

The Court’s decision contains a lengthy discussion of the parties’ spoliation-specific discovery dispute, which included the depositions of the in-house attorney and members of the company’s IT department. There are some important lessons to be learned from the missteps in this case:

1. A legal hold notice directing employees to preserve paper and electronically stored documents and information should be issued to all witnesses with potentially relevant knowledge or information, not just those specifically identified in an attorney letter or lawsuit. Here, the Court determined that the witness’ involvement “should reasonably have been known” to the company and that had notice been issued as required, relevant documents would have been preserved. A “culpable mind” or willfulness on the part of the non-preserving party may be imputed where, as here, the in-house counsel knew or should have known of the importance of the witness.

2. Where in-house counsel assumes responsibility for litigation hold and preservation activities, s/he should investigate not only the identity of potential witnesses, but also work closely with the company’s IT professionals to identify the sources of or locations where relevant data may be stored. In this case, the in-house attorney testified that he directed the preservation of data and electronic files, wherever they may have been located (a “universal hold”), though the company disputed that a universal hold was required, relying on Fed.R.Civ.P. 26(b)(2(C) and Zubulake v. UBS Warburg, LLC, 220 F.R.D. 212 (S.D.N.Y. 2003). Contradictory testimony was offered by the company’s IT staff that only specific locations were identified by the in-house counsel and only those were searched and preserved. Whether the search was intentionally limited or the result of mere miscommunication, the end result for this company was a default judgment as to the claim for which the employee was substantially prejudiced because of the missing documents, an adverse instruction as to the remaining claims, and an award of $10,000 in monetary damages.

3. Courts are not afraid to impose serious sanctions for spoliation. The District Court for the District of Arizona determined that a default judgment was appropriate as to one of the claims because the company’s conduct led to the destruction of evidence that would have assisted the employee in the litigation, the public’s interest in expeditious litigation was hampered by the company’s failure to timely provide relevant discovery, and the employee was substantially prejudiced by the destruction of evidence, which “threatened to interfere with the rightful decision of the case.” Lesser, though still severe, sanctions were imposed concerning the employee’s other claims only because the Court determined that the risk of substantial prejudice was not significant.

Susan L. Nardone is a Director in the Gibbons Employment & Labor Law Department and a member of the Gibbons E-Discovery Task Force.

Use of Work Computer Results in Waiver of Marital Communication Privilege

Kevin G. Walsh — Thu, 21 Feb 2013 11:35:29 -0500

In U.S. v. Hamilton, the United States Court of Appeals for the Fourth Circuit found that a husband who sent messages from his work email account to his wife, yet took no steps to protect the sanctity of those emails, waived the marital communications privilege, thus subjecting the emails to disclosure during discovery. This case serves as an important reminder that employees do not necessarily enjoy an expectation of privacy in the emails they send from their work accounts or while using their employers’ computers.

The defendant in Hamilton, who was a state legislator and simultaneously worked for a public school system, was convicted of bribery and extortion. The defendant’s trouble came when he provided legislative assistance to a university in exchange for employment. In the time between his initial meetings with university officials and the employment offer, the defendant exchanged emails with his wife regarding their financial situation and the salary he sought from the university. In that same time span, the defendant also exchanged emails with a dean of the university pertaining to his potential employment and legislation he would initiate that would be favorable to the university. All of these emails were sent to or from the defendant’s workplace computer through his work email account.

On appeal, the defendant argued that the Trial Court erred by admitting into evidence incriminating emails he had sent to his wife. The defendant claimed that the marital communications privilege, which generally provides that private communications between spouses are confidential, protected the emails from disclosure. The Fourth Circuit affirmed, relying in large part on the employer’s written computer policy. The policy stated that employees had “no expectation of privacy in their use of the Computer System” and that all information “created, sent, received, accessed, or stored . . . [was] subject to inspection and monitoring.” Although the defendant argued that the emails were sent before the computer policy was enacted, the Court found that he waived the marital communications privilege because he took no steps to protect the previous emails even after the computer policy was enacted.

Even though Hamilton is not binding outside the Fourth Circuit, the opinion may nonetheless be viewed as conflicting with governing law in other states, including New Jersey. As readers of this blog may recall from our prior discussion of the decision in Stengart v. Loving Care Agency, Inc., the Supreme Court of New Jersey held that an employee’s emails with her attorney, though sent from her work computer, were protected by the attorney-client privilege and therefore did not have to be disclosed to her employer, whom she accused of discrimination. The Stengart decision may, however, be distinguished from Hamilton on several grounds. First, unlike the emails in Hamilton that were sent from the defendant’s workplace computer through his work email account, the emails in Stengart were sent from a personal, web-based, password-protected email account. Second, in contrast to the clear “no expectation of privacy” policy in Hamilton, the employer’s policy in Stengart regarding personal email accounts was obscure. Finally, the privileges at issue were different. In Stengart, the New Jersey Supreme Court opined that the public interest in attorney-client privilege is of such importance that waiver should not easily be inferred. It is possible that the New Jersey Supreme Court might not accord the marital privilege the same level of sanctity. In any event, although the Hamilton and Stengart courts reached what may be viewed as divergent conclusions, both sought to balance the terms of the employer’s policy with efforts by the employee to maintain privacy, in addition to affording deference to traditionally privileged communications, such as those between attorney and client or husband and wife.

With the proliferation of personal devices, such as smart phones and tablets, employers and employees should be aware that communication privileges can be waived when sent through non-protected media. To avoid confusion, employers ought to have in place clear, comprehensive information technology policies. Employers should also consider encouraging their employees to engage in personal communications using only personal devices rather than employer-owned equipment. If employers are successful in convincing their employees to abide by clear information technology policies, they will reduce confusion in the workplace and avoid discovery disputes in the event that litigation between employer and employee unfortunately comes to fruition.

Kevin G. Walsh is a Director in the Gibbons Business & Commercial Litigation Department. Marc D. Bianchi, an Associate in the Gibbons Business & Commercial Litigation Department, co-authored this post.

Magistrate Judge Orders Production of Social Media Discovery But Fashions Novel Protocol Designed to Protect Privacy Concerns

Melissa DeHonney — Thu, 07 Feb 2013 09:59:35 -0500

Where the requesting party makes a threshold showing of relevance, courts now routinely grant discovery of social media notwithstanding so-called “privacy objections.” Indeed, as one court recently noted, there is “no principled reason to articulate different standards for the discoverability of communications through email, text message, or social media platforms.” But on November 7, 2012, in EEOC v. Original Honeybaked Ham Co., Magistrate Judge Michael E. Hegarty of the United States District Court for the District of Colorado ordered all class members to produce social media discovery to the defendant subject to what the EEOC ultimately called a “somewhat unusual procedure.”

Dispensing with the plaintiffs’ relevancy objection, the Court first found that the defendant was not engaging in “the proverbial fishing expedition,” since it had already demonstrated the relevancy of content from the Facebook wall of one plaintiff. Though relevancy was no obstacle, the Court took heed of the plaintiffs’ “privacy concerns” and established a “process designed to gather only discoverable information”:

First, the class members were required to produce to a court-appointed special master cell phones used during the relevant period, and information necessary to access social media websites, email accounts, blogs, or other platforms “used for communications or pictures” during the relevant period.
Second, the parties were ordered to create and provide answers to a questionnaire to identify sources of discoverable information, and to provide the special master with instructions defining the discovery parameters.
Third, the Court would conduct an in camera review, culling that which it found “legally relevant under the applicable rules.”
Fourth and finally, the EEOC could then conduct a privilege review of this data, ultimately producing only non-privileged, relevant materials to the defendant, together with the requisite privilege log, if any.

It is curious that the Honeybaked Ham Court took these precautions in response to the plaintiffs’ privacy concerns. As noted, many other courts, in contrast, have held that there can be no expectation of privacy in social media. In Zimmerman v. Weis Markets, for example, the Court noted that “[a]ll the authorities recognize that Facebook and MySpace do not guarantee complete privacy.” (You can read a detailed discussion of Zimmerman here.) The Zimmerman Court “flatly rejected” a proposal similar to the protocol that the Honeybaked Ham Court ordered since it would impose “an unfair burden” on the court and require it “to guess as to what is germane to defenses which may be raised at trial.” What’s more, the Honeybaked Ham Court itself specifically likened social media to “a file folder titled ‘Everything About Me,’” which was “voluntarily shared with others.” Under the circumstances, it is difficult to justify an expectation of privacy.

Addressing another hot topic — cost shifting — the Honeybaked Ham Court initially ordered the parties to split the costs of the forensic evaluation, notwithstanding its finding that “the potential cost of producing the discovery is commensurate with the dollar amount at issue.” The Court further indicated that it would “relieve the Plaintiff / Claimants of monetary responsibility” if “this effort produces little or no relevant information.” The Court later issued an amended order modifying the discovery protocol to allow an EEOC employee with forensic qualifications to undertake the tasks previously assigned to the special master, “at the cost of the EEOC (utilizing outside vendors as necessary).” Thus, it seems that the EEOC will bear the costs of this endeavor.

Notably, on November 21, 2012, the EEOC filed objections to the Magistrate Judge’s Order pursuant to Federal Rule of Civil Procedure 72. The defendant responded on December 10, 2012, but significant portions of that response are not publicly available. Thus, it remains to be seen whether the rulings discussed above are final. Any further significant developments will be reported here.

Melissa DeHonney is Counsel to the Gibbons Business & Commercial Litigation Department and a member of the Gibbons E-Discovery Task Force.

Delaware Court of Chancery Announces Rule Amendments and New "Must Read" E-Discovery Guidelines

Christopher Viceconte — Mon, 04 Feb 2013 14:49:17 -0500

Effective January 1, 2013, the Delaware Court of Chancery Rules 26 (General provisions concerning discovery), 30 (Depositions upon oral examination), 34 (Production of documents) and 45 (Subpoenas) were amended, consistent with similar amendments to the Federal Rules of Civil Procedure, to refer to discovery of “electronically stored information” (“ESI”) in addition to “documents” and “tangible things” and explain how parties are to respond to requests for ESI.

In addition to amendments to the Rules, the Court has expanded its Guidelines for Practitioners, issued in January 2012, to include guidelines regarding discovery, including electronic discovery procedures, the overall scope of discovery, preferred procedures for the collection and review of discoverable material, including ESI, the privilege assertion process, and the role of Delaware counsel in the discovery process. As explained by the Court, the new guidelines “encourage communication among counsel and are intended to assist the Bar in developing reliable and transparent procedures for electronic discovery.”

Some of the highlights of the new guidelines are as follows:

Collection and Review of ESI

Similar to the requirements of the Federal Rules of Civil Procedure, counsel are encouraged to meet and confer promptly after the start of discovery to develop a plan for electronic discovery. Transparency to the other parties regarding the process and parameters used to collect documents is essential.
Experienced outside counsel, rather than the interested parties, should be actively involved in establishing and monitoring the procedures used to preserve, collect and review documents to determine that reasonable, good faith efforts are undertaken to ensure that responsive, non-privileged documents are timely produced. When practicable, outside counsel and professionals acting under their direction should conduct the document collection and review.
In establishing an approach to electronic discovery, counsel should consider issues of burden and expense, taking into account the needs of the case, the amount in controversy, limitations on the parties’ resources, and the relative importance of the various issues at stake in the litigation. Because the Court has not adopted a one size fits all approach, it is essential and not optional that the parties candidly discuss these issues directly to try to reach a case-specific arrangement.

Assertion of Privilege and Preparation of Privilege Logs

The guidelines caution against the tendency of lawyers to overdesignate documents as privileged. As a general matter, only communications involving an attorney acting as an attorney for the purpose of facilitating the provision of legal advice may properly be designated as attorney-client privileged.
The guidelines recognize that the privilege analysis and the creation of privilege logs is time-consuming and expensive. Accordingly, parties are generally not expected to log post-litigation communications, they may agree to log certain types of documents by category instead of on a document-by-document basis, and they may dispense with a log for partially redacted communications where the face of the document provides the factual information that otherwise would appear on the log.
When a document-by-document log is warranted, it must sufficiently describe the document being withheld, without revealing information that is itself privileged or protected, so that the opposing party and the Court can assess the propriety of the asserted basis for withholding the document. This should include document-specific descriptions, the context of the document, and information about the individuals identified on the log, including whether they are attorneys, their titles, and their affiliations.

The Role of Delaware Counsel

Consistent with one of the overall themes of the Guidelines, the new discovery guidelines emphasize the Court’s expectation that Delaware counsel play an active role in the collection, review and production of documents, including ESI, and in the assertion of privilege.
With respect to electronic discovery, the guidelines recommend that Delaware counsel and co-counsel collectively maintain a written description of the discovery process, including detailed information regarding efforts to preserve documents, custodians identified, search terms used, and what files were searched. They also include a checklist that is intended to assist counsel in developing a sound document collection process, subject to modification depending on the needs of the case.
With respect to privilege issues, the guidelines instruct that senior Delaware lawyers must take reasonable steps to ensure that privilege only has been asserted in accordance with a good faith reading of Delaware law, that there has not been systematic overdesignation of privilege, and that the privilege log contains sufficient descriptions of the documents in question.

As the Chairman of the Court of Chancery Rules Committee has noted, the Guidelines, including the new discovery guidelines, “speak directly to what works well in Chancery litigation and what does not work so well” and are a “must read” for anyone who practices in the Delaware Court of Chancery.

Christopher Viceconte is a Director in the Gibbons Business & Commercial Litigation Department.

New York State Courts Look to Adopt Rules Requiring Parties to Discuss E-Discovery at the Outset of Litigation

Paul A. Saso — Thu, 31 Jan 2013 11:50:15 -0500

The E-Discovery Working Group has recommended changes to the New York State Court rules concerning e-discovery that would significantly expand litigants’ obligations to confer concerning anticipated e-discovery issues. Currently, only the rules that govern cases pending before the Commercial Division require that parties confer about expected e-discovery issues at the outset of a litigation. (See Section 202.70 Rule 8 of the Uniform Rules). The E-Discovery Working Group has not only recommended that this rule be expanded to include all New York State Courts, but also to provide specific guidance concerning what e-discovery issues ought to be discussed by the parties. These issues include identifying potentially relevant categories of data and relevant computer servers, implementing measures to preserve relevant information, agreeing to procedures for parties to recall any privileged information that they provide by accident and discussing the likely cost and allocation of e-discovery between the parties.

While these e-discovery issues, and the need to discuss them at the early stages of a litigation, should not be viewed as novel concepts to those that regularly practice before the Federal Courts, the State Courts have been slower to adopt these guidelines. By discussing and preparing for these issues at the outset of a case, litigants may be able to avoid costly and difficult e-discovery disputes later in a case.

Paul A. Saso is a Director in the Gibbons Business & Commerical Litigation Department and a member of the Gibbons E-Discovery Task Force.

Netflix Case Illustrates Potential Social Media Pitfalls Facing Public Companies

Elizabeth Ann Fitzwater — Fri, 18 Jan 2013 10:28:41 -0500

As we reported in the Gibbons E-Discovery Law Alert in May 2012, “Reg FD” could present a potential pitfall for those that post material non-public information via social media platforms. In early December 2012, that “pitfall” became a reality for Netflix Inc. CEO Reed Hastings. In July 2012 Hastings published on his public Facebook page a 43-word post concerning viewership statistics, including that Netflix subscribers had watched one billion hours of video the previous month.

The post presents at least two questions. First, whether Hastings’s statement constitutes “material” information falling within the purview of Reg FD. As a reminder, Reg FD mandates that, when an issuer, or a person acting on behalf of the issuer, discloses material non-public information to certain enumerated persons (generally, securities market professionals and security holders who may trade on the basis of the information), it must make public disclosure of that information simultaneously (for intentional disclosures), or promptly (for non-intentional disclosures).

The second -- and far more novel -- issue is whether posting to over 200,000 people constitutes a “public” disclosure. The SEC staff does not seem to think so. On December 6, 2012, Hastings disclosed in an SEC filing that Netflix had received a “Wells notice” from the SEC staff, recommending that the agency bring an enforcement action against Netflix over the July post. Specifically, the SEC is concerned that Hastings’s post violated Reg FD in that a post on Facebook is not a disclosure to all investors at the same time. The Wells notice does not mean the SEC will actually prosecute Netflix. Moreover, such a prosecution would likely face serious challenges because a lynchpin is proving that a public posting on Facebook is not public dissemination. That said, a company like Netflix that has struggled to maintain relevancy in an increasingly digital age nonetheless felt the sting of a decreasing stock price in the wake of the announcement of the Wells notice.

While regulators and public companies find their footing in applying a 12 year old rule to new technologies, it is still a good idea to: (i) ensure that their message is being simultaneously delivered to a wider audience instead of to a fraction of subscribers to a particular social media platform; and (ii) have documented policies and procedures concerning the use of social media. Otherwise, a public company may find itself under unwanted public scrutiny with undesirable consequences regardless of culpability.

Elizabeth Ann Fitzwater is Counsel to the Gibbons Business & Commercial Litigation Department and a member of the Gibbons E-Discovery Task Force.

Independent Agents Subject to Litigation Hold

Marc D. Bianchi — Fri, 11 Jan 2013 11:51:40 -0500

In Haskins v. First American Title Insurance Co., the United States District Court for the District of New Jersey expanded the reach of a “litigation hold” to include independent agents of a title insurance company. The Court held that once litigation was reasonably anticipated, First American Title Insurance Company (“First American”) had a duty to instruct its independent insurance agents to preserve all potentially relevant documents and to suspend routine destruction of such documents. The ruling in Haskins gives important e-discovery guidance for many companies, as it clarifies that document preservation rules apply to independent agents in addition to a company’s in-house employees.

In Haskins, the plaintiffs sued First American for allegedly overcharging customers for title insurance. Thereafter, the plaintiffs sought discovery of insurance agents’ closing files to determine the extent to which customers may have been overcharged. Faced with a discovery motion, the Court addressed whether First American had a duty to issue a “litigation hold” to its agents to ensure that the potentially relevant documents were preserved. The Court’s resolution of this issue hinged on whether First American had “possession, custody, or control” of the agents’ documents pursuant to Fed. R. Civ. P. 34(a).

The Court explained that physical possession is not a prerequisite of control; rather, control may exist where a party “has the legal right to obtain documents from another source upon demand.” The Court found that First American had the requisite “control” over the agents’ files based on the language of the agency contracts. The Court noted that First American’s agency contracts contained clauses requiring agents to maintain and preserve all documents, and that First American had the authority to inspect and examine these documents upon request. Once the Court determined that First American did have “control,” the duty to preserve the agents’ documents followed. Thus, the Court held that when litigation was instituted or reasonably anticipated, First American had a duty to issue a “litigation hold” to its current and former independent insurance agents.

In holding that First American had a duty to issue a “litigation hold” to its independent agents, the Court placed great emphasis on the language of First American’s agency contracts. This should serve as a reminder to litigants and potential litigants to be aware of contract clauses regarding access to and control of documents. Such clauses may give rise to discovery obligations involving documents maintained or physically possessed by agents or independent contractors. Identifying the extent of discovery obligations and taking action is imperative to avoid potential litigation sanctions, ranging from fees, cost shifting, or adverse jury instructions, to dismissal or judgment.

Marc D. Bianchi is an Associate in the Gibbons Business & Commercial Litigation Department.

Taking Over Former Employee's LinkedIn Account Not a Violation of Federal Law, According to Pennsylvania District Court

Mitchell Boyarsky — Mon, 05 Nov 2012 10:51:06 -0500

A Pennsylvania Federal District Court has decided that an employer did not violate the Federal Computer Fraud and Abuse Act (“CFAA”) or the Federal Lanham Act, when it took control of a departed employee’s LinkedIn account. The Court ruled that (1) the CFAA, which in part prohibits unauthorized access to a computer with the intent to defraud, did not come into play and (2) no trademark infringement in violation of the Lanham Act had occurred.

Factual Background

In Eagle v. Moran et al. plaintiff Eagle was employed as the CEO of Edcomm, Inc., a company that provided training services. In accordance with company practice, Eagle set up a LinkedIn account and gave another employee the password to her account. Edcomm followed a policy of asserting “ownership” over the account when an employee departed the Company; it would extract data and incoming information from the LinkedIn account, but took steps to avoid stealing the former employee’s identity. After Eagle’s involuntary termination, Edcomm used her password to change Eagle’s LinkedIn profile to that of the incoming CEO, and it replaced the photographs and information to reflect that of the new employee. Plaintiff claimed that when searches were done for her, the name and photograph of her replacement was displayed, yet Eagle’s awards, recommendations and contacts remained unchanged. In her lawsuit, Plaintiff claimed violations of the CFAA, the Lanham Act and state common law arising from the loss of business opportunities, relationships, reputation and trust caused by the change to her LinkedIn profile.

Court’s Ruling

In order to prove a violation of the CFAA, a federal statute that prohibits unauthorized access and use of computers, a plaintiff must show actual damages. As the Court held, potential loss of future business -- particularly as plaintiff speculatively claimed -- is insufficient. Similarly, a loss to one’s reputation or relationship with clients does not arise to the level of a CFAA violation. The District Court dismissed Eagle’s CFAA claim, finding that Eagle’s simply claiming a loss of business opportunities by her lack of access to and control of her LinkedIn account for four months, failed as a matter of law to establish a CFAA violation. In addition, plaintiff was not claiming a monetary loss because her computer was inoperable or she expended money to repair damage to it (typical of a CFAA claim).

The Court also dismissed Eagle’s claim under the Lanham Act, the federal statute relating to trademark protection which prohibits unfair competition in goods and services through use of a word, term, name, symbol or device (or a combination of them) that is likely to confuse, mislead or deceive regarding the affiliation, sponsorship or approval of such goods, services or commercial activities. A viable claim under the Lanham Act requires a showing of a legally protectible mark, the plaintiff owns the mark and the defendant’s use of the mark to identify goods and services is likely to cause confusion. The Court considered the Third Circuit’s Lapp factors -- a non-exhaustive list of factors used to determine whether the mark is likely to cause confusion -- and concluded that the use of the LinkedIn account by the incoming CEO is unlikely to confuse a viewer. The Court did so reasoning that the account was changed to reflect the name, photograph and information of the incoming CEO. Also, Edcomm made no attempt to portray the new CEO as the former one or to claim the outgoing CEO was affiliated with or endorsed by Edcomm.

Finally, the Court maintained jurisdiction over the plaintiff’s state law claims, noting that the trial date was only 2 weeks away and that it would be unfair to dismiss those claims at such a late date.

Conclusion

The law with regard to social media -- especially professional social media -- is constantly evolving. Efforts by an employer to assert protections over company sponsored or directed social media activity is likely to face challenges by employees asserting privacy and property rights. Employers should consider these and other related social media activities when preparing social media policies and enforcement measures. For answers to questions regarding social media issues, please feel free to contact any of the attorneys in the Gibbons Employment & Labor Law Department.

Mitchell Boyarsky is a Director in the Gibbons Employment & Labor Law Department. This blog post originally appeared on the Gibbons Employment Law Alert on November 5, 2012.

Florida Joins the Growing Number of States That Have Adopted Specific Rules Addressing Electronic Discovery

Robert D. Brown, Jr. — Mon, 22 Oct 2012 10:30:28 -0500

Effective September 1, 2012, Florida joined the long list of states that have adopted specific rules of procedure governing electronic discovery, which follows the July 5, 2012, announcement by the Supreme Court of Florida of its proposed amendments to seven civil procedure rules aimed at addressing the specific dilemmas facing litigants when e-discovery is sought. Florida's Supreme Court approved and adopted the amendments in a formal opinion issued on July 5, 2012. While these amendments generally mirror the amendments to the Federal Rules of Civil Procedure first adopted by the United States Supreme Court in 2006, they diverge from the Federal Rules in some critical areas.

Similarities to the Federal Rules

Florida’s new rules, like the Federal Rules, permit parties to object to requests for electronic discovery on grounds of undue burden and cost or on grounds that the information sought is not reasonably accessible. Unless the parties otherwise agree, Florida’s rules also permit litigants and non-parties alike to produce ESI in the form in which it is ordinarily maintained or in a reasonably usable form. Florida Rule 1.280 also provides Florida courts with the discretion to set certain conditions of discovery including the ability to shift some or all of the expense associated with complying with the discovery. That same rule also requires that the Court limit the frequency or extent of discovery if it determines that the information sought is (i) unreasonably cumulative or duplicative, or can be obtained from another source or in another manner that is more convenient, less burdensome, or less expensive; or (ii) the burden or expense of the discovery outweighs its likely benefit. Florida’s rules also provide a safe harbor from spoliation sanctions if the unavailable information has been lost as a result of the routine, good-faith operation of an electronic information system. The Committee Notes for this amendment make clear, however, that simply allowing the destruction of ESI through the routine operation of an electronic information system when preservation or production is required may not be viewed as acting in good faith under these rules.

Divergence from the Federal Rules

Florida’s new rules diverge from the Federal Rules in two key areas. Unlike the Federal Rules, Florida’s rules do not require the parties to “meet and confer” in advance of the initial case management conference to attempt to work out a discovery plan regarding the production and preservation of electronically stored information. Although Florida Rule 1.200 mentions a discussion by the parties at the initial case management conference regarding the potential for an agreement regarding electronic discovery issues, there is no meet and confer requirement in advance of such conference. In addition, Florida’s rules do not address preservation of ESI. Although the Committee Notes make some reference to the parties discussing the scope of preservation, the amendments and Committee Notes are silent on a party’s obligation to preserve ESI.

Florida practitioners and litigants will no doubt be faced with a myriad of ESI issues arising from the adoption of these amendments. Practitioners who are knowledgeable about both these amendments and the more encompassing Federal Rules will be best prepared to tackle the electronic discovery disputes that will surely follow in the wake of these amendments.

Robert D. Brown Jr. is Counsel to the Gibbons Products Liability Department and a member of the Gibbons E-Discovery Task Force.

Broken Record? Maybe, But Even Government Entities Cannot Escape the Failure to Preserve

Jeffrey L. Nagel — Fri, 19 Oct 2012 09:17:30 -0500

Obtaining electronic discovery from a city or municipality in civil litigation can be a slow process. But, in DMAC LLC and Fourmen Construction, Inc. v. City of Peekskill, plaintiffs’ task was made impossible because of the City of Peekskill’s failure to implement a “formal e-mail retention policy,” leaving it up to the “sole discretion” of City staff and elected officials whether to retain or delete their e mails. When the City and other defendants were sued in 2009 for stopping a real estate development project that began back in 2007, allegedly for political reasons, that lack of any e-mail retention policy came back to haunt the defendants.

Plaintiffs in DMAC are the owners and developers of a townhouse project begun in January 2007. In March of that year, the City issued a stop work order. Plaintiffs commenced litigation against the City in 2009. During the course of that litigation, plaintiffs requested e-mails from the City to establish that political motivations were the underlying cause of the stop work order. The City maintained that it did not have the e-mails sought, explaining that at the relevant time (in 2007) it had no formal e-mail retention policy notwithstanding the fact that it did produce some e-mails among City employees. Plaintiffs were able to piece together some relevant correspondence between City officials and third parties; and thereafter moved for spoliation of evidence sanctions against the City for failing to preserve its e-mail records, including records about its decision-making process to stop the project.

In ruling on plaintiffs’ motion, Magistrate Judge Yanthis of the Southern District of New York set forth the now-familiar factors that must be examined when deciding a sanctions motion for spoliation of evidence, explaining that the movant must prove “1) that the spoliating party had control over the evidence in question and a duty to preserve it at the time it was destroyed, lost, or significantly altered; 2) that said evidence was destroyed, lost, or significantly altered with a culpable state of mind; and 3) that said evidence was relevant to the moving party's claims or defenses.”

Judge Yanthis found the first prong clearly satisfied because the City was silent regarding its duty to preserve (focusing instead on only culpability and relevance). In beginning the analysis on culpability, the Court deemed the failure was “at least negligent.” Ultimately, it found the City to be grossly negligent because (1) relevant New York State law (federal discovery rules aside) independently required the City records sought in the case to have been maintained and (2) the City had commenced two actions against the plaintiffs two years earlier for alleged building violations, which triggered the City’s legal obligation under applicable federal discovery rules to preserve the data in question. Finally, the Court held that the destroyed e-mails were relevant, especially in light of other e-mails that plaintiffs were able to uncover from third party sources and which a reasonable trier of fact could conclude were favorable to plaintiffs’ case. Finding all of the salient factors satisfied, the Court next examined what sanctions were most appropriate, concluding that “an adverse inference instruction to the effect that the City negligently destroyed e-mails . . . and that said e-mail would have been favorable to plaintiffs’ case” was warranted. The Court also awarded “plaintiffs costs and fees arising from the instant motion.”

The case highlights a number of important points. First, a party does not need to be sued before its legal hold obligations are triggered. In fact, such obligations can be triggered in multiple ways, including by state action affirmatively instituting a regulatory or criminal proceeding that is related to the ultimate civil action against the government in question. Second, the failure to implement a document and e-mail retention policy can be viewed by courts as grossly negligent, at a minimum, and thus deemed to satisfy the “culpable state of mind” requirement for sanctions to issue. Third, municipalities and other state governmental entities involved in federal civil litigation will be held to the same discovery rules and standards as corporations and individuals. Finally, the costs of a successful spoliation sanctions motion, including attorneys fees, can be recovered, which provides additional incentives for such motions to be made where the evidence of spoliation is clear and where it can reasonably be inferred that the destroyed materials would have been favorable to the movant’s case.

Jeffrey L. Nagel is a Director in the Gibbons Business & Commercial Litigation Department and a member of the Gibbons E-Discovery Task Force.

No Fishing Expeditions Allowed When It Comes to Discovery of Social Media

Gibbons P.C. — Fri, 12 Oct 2012 09:55:20 -0500

A recent decision in California, Mailhoit v. Home Depot, U.S.A., Inc. et al., Civ. No. 11-03892 (D.E. 105, C.D. Cal. Sept. 7, 2012) reiterates the limits to which social media information is discoverable. Consistent with Fed. R. Civ. P. 26(b)(1) and 34, the Court made clear in the context of a motion to compel that “discovery requests for social networking site content must be reasonably calculated to lead to the discovery of admissible evidence and describe the information to be produced with ‘reasonable particularity.’”

At issue in Mailhoit were four categories of discovery sought by the defendant in connection with the plaintiff’s claims of discrimination and emotional distress:

Any profiles, postings or messages. . . from social networking sites from October 2005 (the approximate date Plaintiff first claimed she was discriminated against by Home Depot), through the present, that reveal, refer, or relate to any emotion, feeling, or mental state of Plaintiff;
Third-party communications to Plaintiff that place her own communications in context;
All social networking communications between Plaintiff and any current or former Home Depot employees that pertain to her employment at Home Depot or this lawsuit; and
Any pictures of Plaintiff taken during the relevant time period and posted on Plaintiff’s profile.

In analyzing categories 1, 2 and 4, the Court determined that although some communications could support or refute Plaintiff’s claims of emotional distress, Defendant had failed to put “a reasonable person of ordinary intelligence’ on notice of which specific documents or information would be responsive to the request,” thereby failing Rule 34(b)(1)(A)’s “reasonable particularity” requirement.” As a result, Defendant failed to make the “‘threshold showing’ that the request at issue is reasonably calculated to lead to the discovery of admissible evidence.” Indeed, although evidence from social networking sites is neither privileged nor protected for privacy reasons, the requesting party does not have “a generalized right to rummage at will through information that [the responding party] has limited from public view.” Rather, consistent with Fed. R. Civ. P. 26(c), information requests must be “tailored” so that it “appears reasonably calculated to lead to the discovery of admissible evidence.” Simply because a communication may, for example, reflect one’s state of mind, that communication is not necessarily discoverable under Fed. R. Civ. P. 26(c) if it does not relate to the cause of action or damages at issue.

In contrast, Category 3 was deemed a permissible request because it placed Plaintiff on adequate notice of the materials sought and was reasonably calculated to lead to the discovery of admissible evidence.

As a practical matter, when seeking social media discovery, attorneys should ensure that the requests are tailored to the claims at issue. What does that mean? Based upon the reasoning contained in this order, if you are dealing with a personal injury plaintiff who claims disability and loss of enjoyment, you should request, for example, any profiles, posts or messages that reflect the plaintiff’s participation in any travel, sports, recreation or related activities. Simply making a blanket request for all posts will not suffice under the standard set forth in Mailhoit.