E-Discovery Law Alert

E-Discovery Law Alert

Developments in Electronic Discovery and Corporate Information Technology

Think Before You Send: Communications to an Attorney Using Work Email May Not Be Protected Under the Attorney-Client Privilege

Posted in Legal Decisions & Court Rules

Generally, a confidential email sent to one’s personal attorney is protected under the attorney-client privilege. But what if the communication is sent using a business email account? Will a corporate policy entitling the company to access “all communications” sent on work computers undermine the privilege? Followers of this blog will recall, among other posts, our detailed recap of the extensive discussion of this issue at our Annual E-Discovery Conference in the wake of the New Jersey Supreme Court’s decision in Stengart v. Loving Care Agency, Inc., upholding the privilege where the employee used a company computer to communicate with her attorney via a personal password-protected internet based e-mail account, and sanctioning the employer’s attorneys for failing to turn over the protected communications. Readers may also recall our discussion of US v. Hamilton, where the United States Court of Appeals for the Fourth Circuit held that a husband waived the marital communications privilege when he sent messages from his work email account to his wife, but took no steps to protect their sanctity. Since those decisions, courts nationwide have continued to wrestle with these issues. Most recently, a Delaware Court held an employee waived the attorney client privilege where he used his work email account to email his lawyer with knowledge of the company’s policy establishing its right to access all communications on work computers.

In re Information Management Services, Inc. Derivative Litigation, Consol. C.A. No. 8168-VCL (Del. Ch. Sept. 5, 2013) involved a derivative action brought by two family-owned trusts (“Plaintiffs”) who alleged the company’s officers breached their fiduciary duties by mismanaging company funds. During discovery, Information Management Services, Inc. (“IMS”) advised Plaintiffs that two of the officers (the “Officers”) used their work email accounts before and after the filing of the lawsuit to communicate with their personal lawyers. Plaintiffs requested the emails be produced, but the Officers refused, citing the attorney-client privilege. Plaintiffs claimed that the Officers’ waived the privilege when they used work email accounts through the company servers. Plaintiffs also cited the company’s written policy notifying employees of its unrestricted access to communications sent through company computers and that personal use should not be considered private.

The court considered whether the emails constituted “confidential communications” under Delaware Rule of Evidence 502 (governing attorney-client privilege), which protects as confidential communications “not intended to be disclosed to third persons other than those to whom disclosure is made in furtherance of the rendition of professional legal services to the client or those reasonably necessary for the transmission of the communication.” The Court employed the following four factor test to determine whether the Officers had a reasonable expectation of privacy in work emails: 1) is there a company policy banning “personal or other objectionable use,” 2) does the company monitor employee email or computer use, 3) do third parties maintain a right of access to email or the computer, and 4) was the employee notified by the company, or was the employee otherwise aware of the use and monitoring policies?

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Takeda Part Two: Destroy Evidence, Pay the Price — Eli Lilly and Takeda Pharmaceutical Co. Get Hit For $9 Billion Punitive Damages Verdict

Posted in Legal Decisions & Court Rules

Recently, in In re Actos (Pioglitazone) Products Liability Litigation, MDL No. 11-2299, a Louisiana federal jury awarded $9 billion in punitive damages against Takeda Pharmaceutical Co. (“Takeda”) and Eli Lilly & Co. (“Lilly”).  The verdict was delivered on the heels of Judge Rebecca Doherty’s January opinion, previously covered by this blog, which lambasted Takeda for failing to (1) enforce its own litigation hold and (2) follow its document retention procedures, which led to the destruction of relevant evidence that Judge Doherty found would have likely been beneficial for the plaintiffs’ case. 

The verdict represented the first federal jury decision in multidistrict litigation against Takeda – Asia’s largest drug company – and Lilly, its American partner.  The plaintiffs alleged that the companies actively concealed the cancer risks of the diabetes drug Actos.  Takeda was hit for $6 billion, while Eli is responsible for $3 billion.  Despite the massive verdict, the jury only found that the plaintiffs were entitled to $1.5 million in actual damages. 

It is highly likely that Judge Doherty’s opinion played a substantial role in the jury’s decision making.  Although she has not yet imposed any formal sanctions as a result of Takeda’s destruction of relevant documents and emails, she instructed the jury after closing arguments Monday that they could take Takeda’s evidence spoliation into account.  Additionally, throughout the trial, the jurors were exposed to voluminous evidence detailing Takeda’s conduct in destroying the relevant evidence. 

While Takeda and Lilly may succeed in getting the punitive damage verdict greatly reduced, Takeda’s spoliation may continue to haunt it.  Since this is a multidistrict litigation, this issue is certain to arise in future trials.  Regardless of the future ramifications, the Actos matter acts as yet another reminder to companies of the importance of following proper document retention procedures.  Further, organizations are reminded to follow the terms of their own litigation holds, and appropriately draft their scope.  Failure to do so may result in drastic consequences.

Christian A. Stueben is an Associate in the Gibbons Business & Commercial Litigation Department and a member of the Gibbons E-Discovery Task Force.

Takeda Part One: Prelude To Disaster? — Takeda Can’t Narrow Its Broadly-Written Litigation Hold

Posted in Legal Decisions & Court Rules

An opinion from Judge Rebecca Doherty in In re Actos (Pioglitazone) Products Liability Litigation, MDL No. 11-2299, provides valuable lessons on the consequences of drafting overly-broad litigation hold notices, as well as the importance of providing evidence from knowledgeable witnesses in defense of document retention procedures.

In a Rule 37 and spoliation motion, the plaintiffs alleged that defendants, Takeda Pharmaceuticals U.S.A., Inc. and several of its affiliates in the United States, Japan, and Europe (collectively “Takeda”), purposefully deleted the files of 46 former employees, including several high-level officers. The plaintiffs sought a default judgment or, in the alternative, a combination of sanctions that included an adverse inference jury instruction, cost-shifting, and a fine.

The court first addressed whether Takeda had a duty to preserve the deleted information and, if so, when that obligation arose. Takeda argued its obligation was triggered on February 15, 2011, when it issued a litigation hold notice specifically limited to bladder cancer product liability litigation. However, Takeda acknowledged that liability claims involving Actos (the product at issue) went back as far as 2002 and that the company had issued a “general Actos ‘products liability’ litigation hold” in July 2002 in connection with litigation over liver injuries. Importantly, the broadly-written 2002 litigation hold, which was subsequently “refreshed” five times, instructed recipients to “preserve any and all documents and electronic data which discuss, mention, or relate to Actos,” and it explicitly stated that the hold was to be interpreted “in its broadest sense to prevent the deletion or destruction of any recorded information and data relating in any way to Actos.” Takeda argued that, despite the clear language to the contrary, the 2002 litigation hold was limited to information relating to liver injuries and, therefore, the company did not have an obligation to preserve information related to bladder cancer at that time.
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New Jersey Law Journal Names Gibbons the 2014 “General Litigation Department of the Year”

Posted in General Litigation

The New Jersey Law Journal has named Gibbons P.C. the “General Litigation Department of the Year” for 2014, the top award presented in its second annual “Litigation Departments of the Year” awards program. The general litigation award recognized the firm’s litigation strength in several areas, including commercial litigation, products liability, employment, intellectual property, and media law. In 2013, the firm’s Business & Commercial Litigation Department was named the “Commercial Litigation Department of the Year” in the same awards program.

The 2014 award also recognized the extensive value-added services Gibbons offers litigation clients, including its E-Discovery Task Force, comprehensive Litigation Support Department, innovative and custom alternative fee arrangements, and recruitment focus on former judicial clerks and retired jurists.

The competition was open to any law firm with a litigation practice and New Jersey presence. According to Ronald J. Fleury, Editor in Chief of the New Jersey Law Journal, “In just the second year that the Law Journal has been rating law firm litigation departments based on their recipes for success, participation among firms was noticeably more enthusiastic, and consequently, competition was keener. It was no easy task deciding on winners and finalists among a field of such strong contenders.”

“The cases we have litigated for clients in the past year address some of New Jersey’s more significant projects and hot-button issues,” notes Patrick C. Dunican Jr., Chairman and Managing Director of Gibbons. “Our representative matters included the largest litigation our client had ever faced; one of the most complex groups of business bankruptcies ever filed; a major FINRA arbitration; a huge pharmaceutical class action; and a precedent-setting appellate decision.”

Daughter’s Bragging to Facebook Friends Renders $80,000 Settlement Unenforceable

Posted in Legal Decisions & Court Rules

Recently, a Florida appellate court held that a former headmaster was not entitled to an $80,000 payment pursuant to a settlement agreement with his former employer, all thanks to his chats with his daughter about the settlement, and her subsequent Facebook post bragging about the settlement.

Patrick Snay sued Gulliver Schools, Inc. for age discrimination and retaliation. Gulliver agreed to pay Snay, in part, $80,000 to settle all claims. The parties’ agreement contained a non-disclosure provision requiring the existence and terms of the settlement be kept confidential, and upon breach by Snay or his wife, the disgorgement of the $80,000 payment.

Four days after the parties executed the settlement agreement, Gulliver notified Snay that he had breached the agreement due to Snay’s daughter’s Facebook post: “Mama and Papa Snay won the case against Gulliver. Gulliver is now officially paying for my vacation to Europe this summer. [expletive].” The post from Snay’s college-aged daughter, a former Gulliver student, reached her nearly 1,200 Facebook friends, including current or former Gulliver students.

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Delaware Adopts Less-Stringent Approach to Authentication of Social Media Evidence: The Jury, and Not the Trial Judge, Ultimately Decides

Posted in General Litigation

In a recent decision, the Delaware Supreme Court held a proponent of social media evidence may authenticate that evidence using the same forms of verification available under Delaware Rule of Evidence 901 to authenticate any other type of evidence, including witness testimony, corroborative circumstances, distinctive characteristics, or descriptions and explanations of the technical process or system that generated the evidence in question. In Parker v. State of Delaware, Delaware’s high court held that the trial judge may admit a social media post when there is evidence sufficient to support a finding by a reasonable juror that the proffered evidence is what its proponent claims it to be, leaving the jury to decide whether to accept or reject the evidence.

While mindful of the concern that social media evidence could be falsified, the Court rejected the higher standard for authentication adopted by the Maryland Court of Appeals in Griffin v. State that social media evidence may only be authenticated where the proponent can convince the trial judge — through the testimony of the creator, documentation of the internet history or hard drive of the purported creator’s computer, or information obtained directly from the social networking site — that the social media post was not falsified or created by another user. Rather, the Court held that the Texas approach outlined in Tienda v. State — that the jury, and not the trial judge, should ultimately resolve any factual issue on the authentication of social media evidence — better conforms to the requirements of Rules 104 and 901 of the Delaware Rules of Evidence.

Applying the rule adopted, the Court found that the subject print out of the Facebook post purportedly belonging to the defendant was properly authenticated by the State through witness testimony and circumstantial evidence, including the substance of the post referencing the underlying altercation, the timing of the post the day after the altercation, the victim’s testimony as to having viewed and shared the post on her own Facebook page, and the presence of the defendant’s name and photograph on the post. Collectively, the Court found that this evidence was sufficient for the trial court to find that a reasonable juror could determine that the proffered evidence was authentic.
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Forgive Me Not: Privacy Advocates Challenge Facebook’s WhatsApp Deal

Posted in Legal Decisions & Court Rules

In their latest effort to curb potential consumer privacy abuses, the Electronic Privacy Information Center and the Center for Digital Democracy are challenging the potential misuse of data about WhatsApp users’ data as a result of WhatsApp’s acquisition by Facebook for $16 billion. WhatsApp is a popular App that allows users to send messages without the regular cost associated with SMS text messaging. According to the complaint, the company “processes over 10 billion messages per day from approximately 450 million users.”

The advocates have filed a complaint with the Federal Trade Commission over the potential Facebook acquisition. The crux of the action, under 15 U.S.C. §§ 45(a) and (n), is that WhatsApp is engaging in deceptive and unfair practices by its inconsistent positions. WhatsApp has always represented that it will not collect or use personal information. However, after the acquisition by Facebook, the company would implicitly reverse this policy and permit access to WhatsApp’s phone numbers. It’s better to ask for “forgiveness than permission” is the essence of the argument against Facebook’s method of using a target company’s client’s personal data following an acquisition.

The advocates cite to express representations relied on by consumers contained in WhatsApp’s privacy policy and blog (including its founder) about not using mobile numbers (and other personal information) without the user’s consent, while pointing to alleged examples, generally, where Facebook accesses and utilizes such personal data following an acquisition (e.g., Instagram). The advocates also cite to alleged statements by users and “[i]ndustry experts” who are concerned that Facebook will have access to telephone numbers and other data. Other countries have begun investigating the potential privacy issues raised by the acquisition. Continue Reading

Tweets Contradict Court Filings, Leading to Judgment of Conviction and Appeal

Posted in Legal Decisions & Court Rules

We have been covering a case pending in the Criminal Court of the State of New York in which the State sought discovery and use of a criminal defendant’s tweets for use in his trial. Malcolm Harris was accused of disorderly conduct when he and others allegedly marched on to the Brooklyn Bridge during an Occupy Wall Street protest. For nearly a year, Harris argued in court papers that he was not guilty because the N.Y.P.D. had allegedly led the protestors onto the roadway of the Brooklyn Bridge as the protest swelled.

Harris’s tweets, however, told a different story: “They tried to stop us, absolutely did not want us on the motorway,” Harris tweeted during the October 1, 2011, protest. “They tried to block and threaten arrest. We were too many and too loud. They backed up until they could put up barricades.” After these tweets and others were revealed in court for the first time, Mr. Harris pled guilty to disorderly conduct. Judge Sciarrino offered Mr. Harris the option of a sentence of three days of community service or six days of community service if Mr. Harris wanted to choose his own program to whom he would donate his services.

Nevertheless, Harris has filed an appeal from the judgment of conviction and the criminal court’s finding that he could not challenge the subpoenas that were served on Twitter, seeking a retrial without the use of Mr. Harris’s incriminating Tweets. Stay tuned, we will continue to provide updates on this story as they develop.

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

Court Threatens to Compel Hiring of Vendor if Document Production Problems Persist

Posted in Legal Decisions & Court Rules

Litigants who fail to meet e-discovery obligations run the risk not only of being sanctioned, but also of being subject to a court order compelling them to retain an e-discovery vendor. While the use of e-discovery vendors is becoming a common practice, it may add considerable expense to the already costly discovery phase of litigation. Additionally, compelled retention of a vendor may reduce litigants’ control over their own document production.

In Logtale, Ltd. v. IKOR Inc., the United States District Court for the Northern District of California warned defendants that continued problems with their document production would result in a court order compelling them to retain an e-discovery vendor. Plaintiff argued that defendants failed to adequately search for responsive electronically stored information (“ESI”) and that their document productions were incomplete. Defense counsel explained he had instructed his clients to search their computers and produce responsive documents, and acknowledged there were deficiencies in the first production. When a second search was also deficient, plaintiff moved to compel discovery.

The court found defense counsel had not been sufficiently proactive in ensuring his clients were conducting thorough and appropriate document searches. The court explained “it is not enough for counsel to simply give instructions to his clients and count on them to fulfill their discovery obligations.” As the court further observed, Rule 26(g) of the Federal Rules of Civil Procedure places “an affirmative obligation on an attorney to ensure that a client’s search for responsive documents and information is complete.” The court concluded that where “counsel notices obvious gaps in the production of documents by his client, he is obligated to make reasonable inquiry as to the thoroughness of that search.”

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