E-Discovery Law Alert

E-Discovery Law Alert

Developments in Electronic Discovery and Corporate Information Technology

Second Circuit Vacates Defendant’s Conviction Due to Government’s Failure to Authenticate Social Media Evidence

Posted in Technology Developments & Issues

The Second Circuit Court of Appeals has reversed a conviction for unlawful transfer of a false identification document (a forged birth certificate) because the district court abused its discretion and committed error in admitting a Russian social media page — akin to Facebook — that the government failed to authenticate as required by Federal Rule of Evidence 901.

In the trial underlying U.S. v. Vayner, et al., the government offered into evidence a printed copy of a web page from VK.com, “the Russian equivalent of Facebook,” claiming that it was defendant Aliaksandr Zhyltsou’s profile page. At trial, the government offered evidence from Vladyslav Timku, a cooperating witness who had plead guilty to conspiracy to commit wire fraud, aggravated identity theft, and impersonating a diplomat. Timku testified that he was familiar with Zhyltsou’s forgeries because he had hired Zhyltsou to create false documents for him, including the forged birth certificate at issue. Timku testified that Zhyltsou e-mailed the forged birth certificate to him using the Gmail address “azmadeuz@gmail.com.” Timku’s testimony was the only evidence connecting Zhyltsou to this Gmail address.

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#Do-Not-Disclose — Twitter Sues Government Alleging Free Speech Violation

Posted in Legal Decisions & Court Rules

Twitter’s ubiquitous 140-character-or-less tweets are not, the company argues, sufficiently similar to email or other forms of stored electronic information to warrant lumping them together with the likes of Google, Microsoft, Facebook, Yahoo!, or Apple, all of which have agreed to restrictive limitations on their public reporting of government surveillance. Twitter has sued the U.S. Government in federal court in California to make its point.

The case arises because the federal Stored Communications Act (“SCA”) authorizes the FBI to issue National Security Letters (“NSLs”) to electronic communication service providers, such as Twitter, compelling them to disclose “subscriber information and toll billing records information” upon an FBI certification that the information sought is “relevant to an authorized investigation to protect against international terrorism or clandestine intelligence activities.” 18 U.S.C. § 2709(a), (b). In addition, various sections of the Foreign Intelligence Surveillance Act (“FISA”) permit the government to seek court-ordered real-time surveillance or disclosure of stored records from an electronic communication service provider; and again various laws prevent recipients of a FISA court order from disclosing information about that order. See 50 U.S.C. § 1805(c)(2)(B); 18 U.S.C. § 793.

Twitter argues that these statutory restrictions prevent it from countering “inaccurate information reported in the media, statements of public officials, and related public concerns regarding [Twitter’s] involvement with and exposure to U.S. surveillance efforts.” Twitter also believes that these various laws — and the government’s interpretation of and reliance on them — are facially invalid and, as applied, violate Twitter’s First Amendment right to engage in speech regarding a matter of significant public concern.
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Rule Amendments Update: Judicial Conference Approves Proposed Changes

Posted in Legal Decisions & Court Rules

On September 16, 2014, the Judicial Conference approved, without changes, the proposed amendments to the Federal Rules of Civil Procedure. (For background information on the proposed amendments and the approval process, see our previous blog posts from June 19, 2014, May 27, 2014, February 10, 2014, and May 6, 2013.) The proposed amendments, which include changes to the definition of the scope of discovery in Rule 26(b)(1) and the applicable standard courts should apply when considering sanctions for ESI spoliation under Rule 37(e), will now be submitted to the U.S. Supreme Court for consideration and approval. If adopted by the Supreme Court before May 1, 2015, and Congress does not intervene, the proposed amendments will take effect on December 1, 2015.

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

Attempting to Shoot for the Moon and Settle For the Stars During the Meet and Confer Process May Result in Obtaining Neither

Posted in Legal Decisions & Court Rules

A recent decision out of the Northern District of California provides a sobering reminder that a party’s obligation to meet and confer must be undertaken in good faith. If a party is overly aggressive – and therefore perceived not to be acting in good faith – it may wind up with nothing.

Boston Scientific Corporation v. Lee, was a fairly typical case involving a former employee’s alleged theft of trade secrets. Defendant Dongchul Lee (Lee) left Plaintiff Boston Scientific Corp. (Boston) and began working for a competitor, nonparty Nevro Corp. (Nevro). Shortly thereafter, Boston sued Lee, claiming theft of trade secrets and violation of a confidentiality agreement. Boston alleged Lee had downloaded its confidential information onto a USB thumb drive, and used these trade secrets in his subsequent employment with Nevro.

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Rule Amendments Update: Standing Committee Approves Proposed Changes

Posted in Legal Decisions & Court Rules

On May 29-30, 2014, the Judicial Conference’s Standing Committee on Rules of Practice and Procedure (the “Standing Committee”) met and approved the proposed amendments to the Federal Rules of Civil Procedure. (For background information on the proposed amendments, see our previous blog posts from May 27, 2014, February 10, 2014, and May 6, 2013.) The Standing Committee approved the entire slate of proposed amendments, including changes to the scope of discovery, as defined in Rule 26(b)(1), and changes to the standard to be applied by courts when imposing curative measures or sanctions for the spoliation of electronically stored information, as per Rule 37(e). Before approving the proposed amendments, the Standing Committee made several minor revisions, including changes to the proposed Committee Notes to Rules 26 and 37 (the meeting minutes setting forth the precise changes were not available as of writing). The Agenda Book from the Standing Committee’s meeting is available here.

The full Judicial Conference will take up the proposed amendments during its next meeting in September 2014. If approved by the Judicial Conference, the proposed amendments will then be submitted to the U.S. Supreme Court for consideration and approval. If adopted by the Supreme Court before May 1, 2015, the proposed amendments would take effect on December 1, 2015.

Michael C. Landis is an Associate in the Gibbons Business & Commercial Litigation Department and a member of the Gibbons E-Discovery Task Force.

ABA Says that Attorneys May Investigate Jurors’ Social Media Presence, Even if Automatic Notifications are Generated

Posted in Legal Decisions & Court Rules

The American Bar Association’s Standing Committee on Ethics and Professional Responsibility recently weighed in on the ethical parameters of attorneys’ investigation of jurors’ social media presence. In ABA Formal Opinion 466, the Committee concluded that an attorney may review a juror’s social media presence; an attorney may undertake that review even if the social media website issues a notice to the juror that the attorney viewed his social media profile; and an attorney may not request private access to a juror’s social media profile.

Attorney review of jurors’ profiles is a hot-button topic in light of ABA Model Rule 3.5, which prohibits ex parte communications with a juror “unless authorized to do so by law or court order.” And importantly, ABA Model Rule 8.4(a) prohibits a lawyer from causing another to take actions that a lawyer cannot.

With these Model Rules in mind, the Committee reasoned that “passive review” of jurors’ publicly-available social media is permissible because a lawyer or his agent may, for example, “drive[] down the street where the prospective lawyer lives to observe the environs in order to glean publicly available information that could inform the lawyer’s jury-selection decisions.” (Indeed, this blog has previously suggested the consideration of “non-cyber” situations as a good “rule of thumb” for evaluating ethical boundaries in the evolving area of social media.) The Committee concluded that such non-invasive investigation would not run afoul of Model Rule 3.5.

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Appellate Division Says Adverse Inference Inappropriate Where Records Were Ultimately Produced

Posted in Legal Decisions & Court Rules

In a recent decision, the New Jersey Appellate Division held that a trial court’s adverse inference instruction for e-discovery misconduct was an unreasonably harsh penalty where the electronically stored information (ESI) was eventually produced. The Appellate Division’s opinion in Liberty Mutual Insurance Co. v. Viking Industrial Security, Inc. illustrates and reaffirms the principle that discovery sanctions must be just and reasonable, and proportional to the prejudice caused to an adversary, regardless of bad faith or willfulness of the misconduct.

In Liberty Mutual, defendant Viking Industrial Security (“Viking”) allegedly understated its payroll for the purpose of reducing workers’ compensation insurance premiums. Liberty Mutual terminated Viking’s policy and litigation ensued. During discovery, Viking was evasive in responding to Liberty Mutual’s request for electronic payroll records, first claiming the records didn’t exist and then claiming a lack of proficiency with the computer program where the records were maintained. When finally ordered to turn over the records, Viking produced another disc, this time missing information. Ultimately, the court granted Liberty Mutual direct access to Viking’s computer program to download the electronic records itself.

Thereafter, Liberty Mutual moved for sanctions. The court found Viking had acted in bad faith and engaged in a “calculated method of discovery misconduct,” and awarded Liberty Mutual costs and fees associated with obtaining the ESI. The court also issued two spoliation orders, conclusively establishing certain claims and granting an adverse inference as to others.
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Exploration of Sophisticated Cloud Computing Abilities Unnecessary When Responding to Discovery Demands

Posted in Legal Decisions & Court Rules

A new decision out of the District of New Jersey holds that a company need not utilize its cloud-based comprehensive document search tools absent evidence that its standard custodian-based approach to data collection was deficient.

In Koninklijke Philips v. Hunt Control Systems, a multi-billion dollar trademark dispute, defendant Hunt Control Systems, Inc. (“Hunt”) served plaintiff Koninklijke Philips N.V. (“Philips”) with discovery demands that included requests for production of electronically stored information (“ESI”).  To prepare its response, Philips requested information from eight specific employees.

Hunt was dissatisfied with Philips’ response, claiming it was able to locate numerous significant documents not produced by Philips, and hence Philips’ custodian based approach was ineffective. Hunt’s expert provided a declaration stating that “due to its cloud-based IT structure, Philips has available to it some of the most sophisticated and comprehensive state-of-the-art document search and location tools” and alleged that “Philips refuses to use these tools to satisfy its obligations.” Hunt sought a Rule 30(b)(6) deposition of Philips’ IT witness to “understand why and how these sophisticated tools are somehow inappropriate in spite of their clear design to accommodate eDiscovery.” Continue Reading

Rule Amendments Update: Advisory Committee Approves Proposed Changes, But Not Before Rewriting Rule 37(e)

Posted in Legal Decisions & Court Rules

Like many, we’ve been following closely the process to amend the Federal Rules of Civil Procedure. (See our previous blog posts from May 6, 2013 and February 10, 2014.) Last month, the Advisory Committee on Rules of Civil Procedure took the next step in that process by approving the proposed amendments and submitting them to the Standing Committee on Rules of Practice and Procedure for its review and possible approval (the Agenda Book from the Advisory Committee’s April 10-11, 2014, meeting is available here). But before doing so, the Advisory Committee took the particularly noteworthy step of completely rewriting the proposed amendment to Rule 37(e).

The rewriting of the Rule 37(e) amendment was prompted by the nearly 2,500 comments that the Advisory Committee received during the public comment period that was open from August 2013 to February 2014. Among other changes, the revised version of the amendment to Rule 37(e) explicitly limits the application of the rule to electronically stored information. The revised version also removes any reference to “sanctions” or Rule 37(b)(2)(A) as a source of sanctions, and it reinstates some of the inherent judicial discretion that had been removed by the previous version.
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Adverse Inference Instruction Warranted For Insurer’s Breach of Retention Policy

Posted in Legal Decisions & Court Rules

It should come as no surprise that litigants continue to ignore such basic discovery obligations as the duty to preserve potentially relevant documents once litigation is reasonably anticipated. A recent case out of the Northern District of New York exemplifies the importance of patience in establishing a record of discovery abuses, including data deletion, before seeking sanctions to address such situations.

In Dataflow, Inc. v. Peerless Ins. Co., 3:11-cv-1127, NYLJ 120263980764 (N.D.N.Y., Jan. 13, 2014), Dataflow sought insurance coverage under a policy covering employee dishonesty where a Dataflow employee misappropriated over $1M and later pled guilty to felony grand larceny and forgery. Peerless denied coverage and Dataflow filed suit. In discovery, Dataflow sought Peerless’ internal communications and investigations related to its claim. Notwithstanding two requests for production, Peerless failed to produce internal communications regarding its analysis of Dataflow’s claim. During the deposition of the Peerless representative who handled the Dataflow claim, Dataflow learned that Peerless regularly used email to discuss the claim. Following the deposition, Dataflow repeated its demand for production of emails, but Peerless claimed the emails were unavailable because of a system change and that emails not actively marked for preservation were deleted, notwithstanding Peerless’ internal policy requiring preservation of all business records related to a potential claim.

The Magistrate Judge granted Dataflow’s motion for sanctions, including a request for an adverse inference and attorney’s fees and costs associated with the motion. In its objections to the Magistrate Judge’s Report-Recommendation, Peerless argued it was not grossly negligent and that Dataflow failed to demonstrate prejudice and/or that the destroyed emails were not relevant. The Court rejected Peerless’ contentions, observing that Dataflow had identified several deleted and not-produced emails regarding the insurance claims. The Court further explained that Dataflow demonstrated that the emails “may have been more generally harmful to [Peerless]” in light of the fact that Peerless admitted destroying emails in a system change after having notice of a potential claim. Furthermore, the Court noted that Peerless appeared “purposefully sluggish” in admitting that any relevant emails existed. Accordingly, the Court found an adverse inference instruction to be warranted.

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