E-Discovery Law Alert

E-Discovery Law Alert

Developments in Electronic Discovery and Corporate Information Technology

New York Federal Court Weighs in on Apple Encryption Debate

Posted in Legal Decisions & Court Rules, Technology Developments & Issues

Anyone reading recent headlines knows that Apple, Inc. is engaged in a legal, and ultimately political, struggle with the U.S. Government over access to the cell phone of Syed Rizwan Farook, one of the shooters in the December 2, 2015 terror attack at the Inland Regional Center in San Bernardino, California. The core issue in that California proceeding is whether Apple should be forced to “create and load Apple-signed software onto the subject iPhone device to circumvent the security and anti-tampering features of the device in order to enable the government to hack the passcode to obtain access to the protected data contained therein.”

Magistrate Judge James Orenstein in the Eastern District of New York has something to say about the matter. In an action raising similar issues to those in California, Judge Orenstein has held that the All Writs Act does not give the court authority to order Apple to unlock a drug dealer’s iPhone. Judge Orenstein noted that the case before him mirrored at least a dozen other “pending cases in which the government and Apple disagree as to the court’s authority to command Apple to assist the government in defeating the passcode security of devices Apple has manufactured.”

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Signs of Life? – Judge Francis Opines that “Inherent Authority” to Sanction Spoliation Related Conduct Survives Amended Rule 37(e)

Posted in Legal Decisions & Court Rules

In perhaps the first published decision since the amended Federal Rules took effect on December 6, 2015, United States Magistrate Judge James C. Francis IV, a preeminent judicial e-discovery authority, relied upon amended Rule 37(e) and, somewhat controversially, his inherent authority, to sanction a litigant for evidence tampering and spoliation. For prior posts on the amended rules, see our previous blogs from May 5, 2015; September 24, 2014; June 19, 2014; May 27, 2014; and May 6, 2013. The opinion is significant, not solely because it invokes the newly-minted rule, but because it interprets amended Rule 37(e) as not foreclosing the court’s inherent authority as a viable alternative to sanction spoliation-related conduct that may not strictly satisfy the new Rule’s elements.

In CAT3 v. Black Lineage, Judge Francis sanctioned plaintiffs CAT3, LLC and Suchman LLC based both on satisfaction of Rule 37(e)’s stringent standards for imposition of serious sanctions, including an adverse inference, and what Judge Francis opined was the court’s still viable inherent authority to sanction spoliation.

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Proportionality Carries the Day: Amended FRCP 26 Cited to Quash Overbroad Subpoenas

Posted in Legal Decisions & Court Rules

As practitioners are well aware, the recent amendments to the Federal Rules of Civil Procedure took effect on December 1, 2015. (For background information on the amendments, see our previous blog posts from May 5, 2015September 25, 2014June 19, 2014May 27, 2014February 10, 2014; and May 6, 2013). In one of the first applications of amended Rule 26(b)(1), Magistrate Judge James Cott in the Southern District of New York utilized it to quash several overbroad subpoenas.

In Henry v. Morgan’s Hotel Group, Inc., plaintiff Phillip Henry, a gay black man, sued his former employer, defendant Morgan’s Hotel Group, for race and sexual orientation discrimination and retaliation. Henry alleged that his former supervisor routinely disparaged him with racial and homophobic remarks. After Henry complained to upper-level supervisors, he alleged that his former supervisor retaliated against him, and upper-level supervisors largely dismissed his complaints.

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N.Y. Court Grants Spoliation Sanctions for Destruction of Documents Decades Ago

Posted in Legal Decisions & Court Rules

In Warren v. Amchem Products, Inc., Justice Peter Moulton sanctioned defendant J-M Manufacturing Company for destroying documents in 1990 and 1997 – 24 years and 17 years, respectively, before the Warren Estate filed suit against asbestos manufacturers in 2014. The Court granted plaintiff’s motion for spoliation sanctions and ordered that, should the case proceed to trial, the jury will be instructed that it may infer that the destroyed documents would have supported plaintiff’s claims and would not have supported J-M’s defenses.

In 1990, more than ten boxes of documents (possibly as many as 50) were lost during J-M’s cross-country relocation of its corporate headquarters to Livingston, New Jersey. In 1997, former J-M employee James Reichert testified that he destroyed approximately 27 boxes of records in an effort to free up office space and, as he explained, after moving the boxes several times, “you just get tired of moving stuff.”

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N.Y. High Court Weighs in on Failure to Issue Litigation Hold

Posted in Legal Decisions & Court Rules

In Pegasus Aviation I, Inc. v. Varig Logistica S.A., the New York Court of Appeals held that failure to preserve ESI was simple, not gross, negligence, and remanded to the trial court for a determination of whether the destroyed evidence was relevant to the plaintiff’s claims and what sanction, if any, is appropriate.

In this case, various defendants known as the “MP Defendants” were frozen out of defendant VarigLog’s affairs by certain shareholders. During that time, VarigLog breached aircraft lease agreements with plaintiffs. Before suit was commenced in New York, a Brazillian court granted one of the MP Defendants managerial authority over VarigLog. After suit was filed, the MP Defendant in control failed to issue a litigation hold to VarigLog and, after discovery requests were served, VarigLog suffered two computer crashes that caused it to lose ESI.

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New “Privacy Shield” Agreement Seeks to Resurrect a Safe Harbor for EU-U.S. Data Transfers – Can it Succeed?

Posted in Legal Decisions & Court Rules, Technology Developments & Issues

On February 2, 2016, the EU Commission and U.S. Department of Justice announced the framework of a deal to allow transatlantic data transfers between the EU and U.S. without running afoul of Europe’s strict data protection directives. It was appropriate that the announcement came on Groundhog Day, because we have been here before.

Fifteen years ago, the so called “safe harbor” agreement that was reached appeared to allow companies to transfer data between the EU and U.S. if certain safeguards were established and companies self-certified compliance. That system, while onerous, worked for a while until challenged by privacy groups and ultimately overturned last October by the European Court of Justice in Schrems v. Data Protection Commissioner (Case C-362/14).

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Facebook Hacking Claims Dismissal Motion

Posted in Legal Decisions & Court Rules

Every now and then, a court issues a decision that is as interesting for its facts as it is for the import of its legal holding. The Second Circuit Court of Appeals recently issued such a decision involving application of the respective statutes of limitation for private claims made under the Stored Communications Act (“SCA”) and the Computer Fraud and Abuse Act (“CFAA”).

The facts of Sewell v. Bernadin (decided August 4, 2015) are not complicated. In August 2011, the plaintiff discovered that her AOL email account password had been changed without her permission and she could not gain access to her account. She also discovered that malicious statements regarding her sexual activities had been emailed to some of her private contacts. Then, in February 2012, she found herself unable to log onto her Facebook account, and in March 2012, someone posted malicious statements on her Facebook page. She filed suit in the Eastern District of New York against her ex-boyfriend in January 2014, alleging violations of SCA and CFAA. The District Court dismissed the case in its entirety on statute of limitations grounds, but the Second Circuit recently revived the claims relating to her Facebook account.

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Rule Amendments Update: U.S. Supreme Court Adopts Proposed Amendments

Posted in Legal Decisions & Court Rules

On April 29, 2015, the United States Supreme Court adopted, without changes, the proposed amendments to the Federal Rules of Civil Procedure. (For background information on the proposed amendments, see our previous blog posts from September 25, 2014, June 19, 2014, May 27, 2014, February 10, 2014, and May 6, 2013. Absent action by the United States Congress, the proposed amendments will take effect on December 1, 2015.

A copy of the proposed amendments as adopted by the Supreme Court and submitted to Congress is available here.

New Jersey Attorneys Must Face Ethics Charges for Facebook Friending

Posted in Legal Decisions & Court Rules, Litigation Preparedness & Strategies

On February 3, 2015, the Appellate Division of the New Jersey Superior Court affirmed the dismissal of a complaint two attorneys filed against the Office of Attorney Ethics and its Director (collectively “OAE”) claiming OAE lacked authority to investigate and prosecute ethics grievances against them for “friending” a party to a litigation on Facebook. The Appellate Division’s decision is significant – it affirms OAE’s power to investigate and prosecute alleged ethical violations and demonstrates the potential consequences for attorneys’ improper use of social media in litigation.

The subject attorneys were retained to defend a town and its police sergeant in a personal injury action. One attorney directed his paralegal to conduct Internet research about the plaintiff. The paralegal accessed the public portions of the plaintiff’s Facebook page, and sent the plaintiff a “friend” request without disclosing her association with the attorneys. The plaintiff accepted the friend request, and the paralegal obtained information the attorneys could use to impeach the plaintiff’s personal injury claims.

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SDNY Clarifies Standard for Allowable “Discovery on Discovery”

Posted in Legal Decisions & Court Rules

A requesting party seeking to compel discovery into the producing party’s document collection processes – sometimes called “discovery on discovery” – has always faced an uphill battle. Courts fear allowing discovery to continue indefinitely. Mere suspicion of deficient document production is insufficient; the requestor must proffer an “adequate factual basis” for its belief. Recently, the Southern District of New York found that such a showing is not made where the requestor produced only limited relevant unproduced emails and the requestor did not specify how its requested relief would remedy the alleged discovery defects.

Freedman v. Weatherford International was a securities fraud case. Plaintiffs alleged defendant Weatherford International Ltd. (“Weatherford”) systematically underreported its taxes and issued false financial statements that inflated Weatherford’s earnings. A senior Weatherford employee called the whistleblower hotline, alleging the head of Weatherford’s tax department had engaged in improper practices. In response, Weatherford hired Latham & Watkins (“Latham”) to conduct an independent review. Latham found no evidence of intentional misconduct and reported this to Weatherford’s auditors, Ernst & Young (“E&Y”), who issued a clean audit opinion. Several months later, Weatherford announced it would restate earnings for the third time, leading Weatherford’s Audit Committee to conduct a second independent review, conducted by its own separate outside counsel, Davis Polk & Wardwell, LLP (“Davis”).

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