E-Discovery Law Alert

E-Discovery Law Alert

Developments in Electronic Discovery and Corporate Information Technology

Robot Associates and the Future of Law

Posted in Technology Developments & Issues

In the last 10 years, robotic surgical systems have revolutionized the way doctors approach minimally invasive surgery, especially laparoscopic and arthroscopic procedures. AI-enabled systems can also provide doctors with suggestions based on symptoms, learning from medical diagnoses and the outcomes of the symptoms. As with medicine, the field of law will be revolutionized in the coming years by the application of AI-enabled systems and networks to the practice of law.

Those systems are here today. Systems like ROSS, which is built on IBM’s cognitive computer Watson, are designed to read and understand natural language, develop theories of a case when asked questions, and conduct legal research. It is now being deployed by at least one major law firm to assist with Bankruptcy work.
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Regulations Proposed by NY Department of Financial Services are a Significant Development for Regulated Entities … and Everyone Else

Posted in Technology Developments & Issues

On September 13, 2016, New York Governor Andrew M. Cuomo announced new first-in-the-nation proposed regulations to protect against the ever growing threat of cyber-attacks in the financial services industry.

The proposed regulations, to be enforced by the New York State Department of Financial Services, would apply only to an entity regulated by the NY Department of Financial Services – from a multi-national bank to a “mom-and-pop” operation. However, the regulations are important for all companies to review and consider, regardless of their location or scope of operations, because the proposal represents an important step in the ongoing national dialogue about reasonable and necessary cybersecurity standards for all businesses.
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Court Compels Arbitration of Lawsuit Filed by Employees Discharged After Discovery of Personal Text Messages About a Coworker on a Company-Issued iPad

Posted in General Litigation, Technology Developments & Issues

A recent decision from the District of New Jersey granting a motion to compel arbitration not only reinforces the strong federal policy in favor of arbitration, but also highlights issues pertaining to company-issued devices and employees’ personal use of these devices.

While employed by Anheuser-Busch, Victor Nascimento received a company-issued iPad. Nascimento and other employees exchanged text messages about a coworker over their personal cell phones outside of the work day, but the messages were received on Nascimento’s company-issued iPad because the iTunes account on his iPad was linked to his personal cell phone. The company-issued iPad was later reassigned to the coworker who was the subject of the text messages, and that person discovered the text messages on the device and inferred that they were about him. Following an investigation by Anheuser-Busch, Nascimento and several other employees were fired. The terminated employees later sued Anheuser-Busch, alleging violations of the Law Against Discrimination.

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Second Circuit Reverses Lower Court Microsoft Decision and Holds That Email Evidence Stored Abroad Cannot Be Gathered Pursuant to Criminal Warrant Issued Under Stored Communications Act

Posted in Legal Decisions & Court Rules

In a prior post, we reported that Southern District of New York Magistrate Judge Francis determined that Microsoft must comply with a U.S. Government’s warrant seeking a user’s email content, even though the emails are stored in Microsoft’s datacenter in Dublin, Ireland. After the lower court declined to quash the subpoena and held Microsoft in contempt for failing to turn over customer content stored abroad, Microsoft appealed to the Second Circuit. On July 14, 2016 the appeals court issued an extensive opinion reversing the lower court’s ruling.

The Second Circuit held that the obligation of an Internet Service Provider (“ISP”) like Microsoft to disclose to the U.S. Government customer information or records is governed by the Stored Communications Act (“SCA”), which was passed as part of the Electronic Communications Privacy Act of 1986 and codified at 18 U.S.C. §§ 2701-2712 (“ECPA”). The warrant in this case, obtained under SCA Section 2703(a) after a showing of probable cause as required by the Federal Rules of Criminal Procedure (see Fed. R. Crim. P. 41(d)(1)), authorized the search and seizure of information associated with a specified web-based e-mail account that is “stored at premises owned, maintained, controlled, or operated by Microsoft Corporation.”

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New “Privacy Shield” for EU-U.S. Data Transfers Gains Acceptance by Europe and U.S. Regulators

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

As previously noted, in response to the European Court of Justice ruling in Schrems v. Data Protection Commissioner (Case C-362/14) striking down as inadequate the so-called “safe harbor” agreement that existed for more than a decade, 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. Described as the EU-U.S. “Privacy Shield” agreement, that framework has now been vetted by EU Member States, modified in certain respects, and formally adopted on July 12, 2016 by the European Commission.

As adopted, the agreement contains a number of requirements with respect to data collection of personal information and cross-border data transfers, consists of Privacy Principles that companies must abide by, and sets forth commitments on how the arrangement will be enforced, including:

  • Regular reviews by the U.S. Department of Commerce of participating companies to track compliance with the new rules and impose sanctions and possible removal from the complying companies.
  • Limitations of privacy data access by public authorities for law enforcement and national security purposes. Indiscriminate mass surveillance of personal data transferred to the US under the EU-U.S. Privacy Shield arrangement is prohibited and bulk collection of data is only allowed under specific preconditions and should be as targeted and focused as possible.
  • The establishment of a system to lodge any complaints about data collection through an ombudsman process established by the US Department of State, as well as the creation of alternative dispute mechanisms for citizens to petition companies concerning the handling of their personal data.

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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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