E-Discovery Law Alert : New York & New Jersey Attorneys for Electronic Discovery and Corporate Information Management Law

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.

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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.”

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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).

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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.

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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).

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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.

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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.”

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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.

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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:

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