Showing posts with label Regulations. Show all posts
Showing posts with label Regulations. Show all posts

Victor Stanley v. Creative Pipe - Preservation Sagas Continue

Daniel Lim The next chapter in the Victor Stanley v. Create Pipe has been entered. Judge Paul Grimm, Chief Magistrate Judge for the Maryland U.S. District Court, recently entered his Order and Recommendations relating to Defendants' preservation failures. A copy of the opinion can be found here.

The case is attracting significant attention because of its finding of civil contempt on the part of the Defendants. Judge Grimm has ordered the Defendant's President to be imprisoned for up to two years, unless and until he pays Plaintiffs' fees and costs relating to the motions for spoliation of evidence. The opinion echoes the continuing frustration of the courts for parties not doing the right thing when they have a lawsuit --- preserve ESI.

Judge Grimm is dumb-founded to find yet another case where a party fails to implement a litigation hold on key data sources and fails to take any reasonable measures to preserve data. Slip op. at 13-14. Moreover, the key bad actor for the Defendant was found to have deleted nearly ten thousand files during the discovery stay. Id. at 24. Judge Grimm observes that the culmination of bad acts and omissions relating to preservation of ESI "constitute the single most egregious example of spoliation that I have encountered in any case that I have handled or an any case described in the legion of spoliation cases I have read in nearly fourteen years on the bench."Id. at 34.

What is clear from Judge Grimm's opinion, as well as the recent Sedona emphasis in proportionality, is that the courts are not looking for organizations to "boil the ocean" and completely revamp their entire IT systems and architecture in order to respond to discovery requests. Judge Grimm echoes the frequent refrain that the preservation duty "pertains only to relevant documents" and is "neither absolute, nor intended to cripple organizations."Id. at 49-50. The court's view of whether preservation conduct is acceptable in a case depends on what is reasonable and whether what was done (or not done) was proportional to the case.

EnCase® eDiscovery's patented Optimized Distributed Search ("ODS") capability helps to demonstrate a defensible and cost-effective preservation process - collect and preserve only what is relevant to a lawsuit from reasonably accessible data sources (laptops, desktops, servers, ECM repositories) when you need it. There's no need to index or archive your entire IT environment.

EnCase® eDiscovery's new First Past Review capability also enhances another important step in the ESI preservation process - assessing the accuracy and validity of selected search terms. This new interface designed for Legal Departments allows non-technical personnel to get granular analytics on the specific impact of search terms on a data set. This functionality is key to demonstrating a defensible process, as Judge Grimm observes that "failure to assess the accuracy and validity of selected search terms also could be negligence." Id. at 64 (citations and internal quotations omitted).

US Supreme Court Weighs In On Instant Messaging Privacy Issues

John Blumenschein Recognizing the growing convergence of law and technology, the Supreme Court of the United States delved into the Constitutional issues of electronic communications in the recent opinion, City of Ontario, California v. Jeff Quon, 2010 WL 2400087 (U.S.S.C., June 17, 2010). In a unanimous decision, in which Justices Scalia and Stevens concurred, Justice Kennedy delivered the opinion which held that the City of Ontario, California did not violate the Fourth Amendment rights of Quon when they searched the electronic text message history of his city-issued pager. Because of the non-work related subject-matter of the texts and the electronic device from which they were sent, some legal commentators believe that this holding has the potential to reach beyond Fourth Amendment search-and-seizure issues, and actually widen the scope of relevant data in civil litigation.

In this matter, the city had acquired pagers capable of sending text messages, and issued them to the officers of the Ontario Police Department (OPD), where Quon was employed as a member of the SWAT team. Quon and other OPD officers used the pagers for personal texts, and some of Quon’s texts were sexually explicit in nature. The department had a defined computer policy in place for email usage, however, they also made clear to employees that they would treat personal text messages on the department-issued pagers the same as emails. Quon, however, received somewhat conflicting information from his superiors regarding personal text messages. After numerous issues involving overages with the pagers, the chief of the OPD conducted an audit to determine whether the charges were personal or work-related. Quon’s personal texts were revealed, and he was subsequently disciplined by the OPD. In response, Quon filed a claim against the city alleging that the search of his text messages violated his Fourth Amendment rights. The district court found for the defendants; the 9th Circuit Court of Appeals reversed, and the Supreme Court reversed the decision of the 9th Circuit.

The Court went onto find that even though Quon had a reasonable expectation of privacy with regard to his text messages, the search conducted by the city did not violate his Fourth Amendment rights. The Court noted the “special needs of the workplace” exception to the warrant requirements of the Fourth Amendment in order to justify the search of the Quon’s text history. The Court found that the under this exception, there were reasonable grounds for suspecting that the search was necessary for the “non-investigatory work-related purpose” of determining whether Quon’s overage charges were personal or work-related.

While there is debate as to what kind of impact this decision will have on subsequent cases (most notably cases involving electronic discovery), Ontario v. Quon is one of the first rulings by the United States Supreme Court to address the ever-increasing issues surrounding the use of electronic evidence and technology in litigation.

US Supreme Court Weighs In On Instant Messaging Privacy Issues

John Blumenschein Recognizing the growing convergence of law and technology, the Supreme Court of the United States delved into the Constitutional issues of electronic communications in the recent opinion, City of Ontario, California v. Jeff Quon, 2010 WL 2400087 (U.S.S.C., June 17, 2010). In a unanimous decision, in which Justices Scalia and Stevens concurred, Justice Kennedy delivered the opinion which held that the City of Ontario, California did not violate the Fourth Amendment rights of Quon when they searched the electronic text message history of his city-issued pager. Because of the non-work related subject-matter of the texts and the electronic device from which they were sent, some legal commentators believe that this holding has the potential to reach beyond Fourth Amendment search-and-seizure issues, and actually widen the scope of relevant data in civil litigation.

In this matter, the city had acquired pagers capable of sending text messages, and issued them to the officers of the Ontario Police Department (OPD), where Quon was employed as a member of the SWAT team. Quon and other OPD officers used the pagers for personal texts, and some of Quon’s texts were sexually explicit in nature. The department had a defined computer policy in place for email usage, however, they also made clear to employees that they would treat personal text messages on the department-issued pagers the same as emails. Quon, however, received somewhat conflicting information from his superiors regarding personal text messages. After numerous issues involving overages with the pagers, the chief of the OPD conducted an audit to determine whether the charges were personal or work-related. Quon’s personal texts were revealed, and he was subsequently disciplined by the OPD. In response, Quon filed a claim against the city alleging that the search of his text messages violated his Fourth Amendment rights. The district court found for the defendants; the 9th Circuit Court of Appeals reversed, and the Supreme Court reversed the decision of the 9th Circuit.

The Court went onto find that even though Quon had a reasonable expectation of privacy with regard to his text messages, the search conducted by the city did not violate his Fourth Amendment rights. The Court noted the “special needs of the workplace” exception to the warrant requirements of the Fourth Amendment in order to justify the search of the Quon’s text history. The Court found that the under this exception, there were reasonable grounds for suspecting that the search was necessary for the “non-investigatory work-related purpose” of determining whether Quon’s overage charges were personal or work-related.

While there is debate as to what kind of impact this decision will have on subsequent cases (most notably cases involving electronic discovery), Ontario v. Quon is one of the first rulings by the United States Supreme Court to address the ever-increasing issues surrounding the use of electronic evidence and technology in litigation.

Delaware Chancery Court Vice Chancellor Derides Lax Attitude Toward eDiscovery and Custodian Self-Collection

Patrick Burke A transcript of an April 8, 2010 conference call [transcript] reveals a senior Delaware judge chastising defense counsel for their unsatisfactory approach toward electronic discovery in Roffe v. Eagle Rock Energy GP, L.P., a proposed class action and derivative lawsuit. The conference was called to discuss the failure of defense counsel adequately to produce e-mail sent or received by the chair and two other members of defendant’s conflicts committee.

Defendants’ counsel argued that it should be found sufficient that e-mail was collected only from two of the three Eagle Rock Energy conflict committee members, with those committee members having personally selected the particular e-mails to be were produced. Defense counsel Gerald L. Bracht, a partner in Andrew Kurth LLP’s Houston office, argued in the transcript that he thought it unnecessary to search the e-mail of the Chairman of the conflicts committee, because it would take time, cost money and because that individual used his personal computer for e-mail and the relevant e-mails are “interspersed with his personal e-mails, his other business e-mails, and he estimates that he receives about 150 e-mails a day.” He also posited that the Chair’s e-mails would likely duplicate those of the two other committee members.

“This is not satisfactory,” Vice Chancellor J. Travis Laster is quoted in the transcript as saying. As to defendants’ counsel producing only those e-mails selected for production by the two committee members, the Vice Chancellor said “First of all, you do not rely on a defendant to search their own e-mail system. Okay? There needs to be a lawyer who goes and makes sure the collection is done properly.” “[W]e don’t rely on people who are defendants to decide what documents are responsive,” said Laster, “at least not in this Court.” He went on “[T]he real question in my mind is whether at this point it’s enough to do the production the way it should have been done in the first place, or whether there needs to be some additional steps taken to actually image these drives and do some searching to make sure that things haven’t been lost since what should have been done in the first place hasn’t been done.”

Turning to defendants’ resistance to collecting e-mail from the Chair of the conflicts committee because they were on his personal computer, Vice Chancellor Laster said “somebody should have been on a plane a long time ago to go though his e-mails. And if he chose to use his personal computer, well, that was his bad choice…. That makes it all the more essential that a lawyer get on a plane, and go and sit down with [the Chairman], and go through his e-mail and make sure that … what is responsive is appropriately produced.” He went on: “And whoever it is better check his auto-delete settings, and they had better find out if these things have been auto-deleted every 30 days or 60 days or 90 days, and they better think through, as somebody properly should have done, whether there needs to be some type of, again, image and forensic check, to make sure that something hasn’t been lost in what sounds to me to be a lackadaisical [sic], unsatisfactory process.”

The transcript – while not a published decision – certainly puts all Delaware corporations on notice of the expectations of the Chancery Court that a more defensible, forensic approach be taken toward electronic discovery, without custodian self-collection or assumptions that some key custodians need not be collected from because their ESI might be the same that could be obtained from alternative custodians.

Jones v. Bremen High School District 228, 2010 WL 2106640 (N.D. Ill. May 25, 2010)

Patrick Burke In a decision filed May 25, 2010, US Magistrate Judge Susan E. Fox sanctioned defendant Bremen High School District 228 for its reckless and grossly negligent failure to impose an effective legal hold, again highlighting the perils of employee self-collection as a method for preservation of ESI.

Defendant learned in October 2007 that Plaintiff Victoria Jones had filed a race discrimination claim against them with the US Equal Employment Opportunity Commission. As a result, defendant’s counsel asked three employees to search their own personal e-mail and cull out relevant documents, but failed to supervise the employees’ preservation. After plaintiff filed her federal lawsuit in June 2008, defendants’ counsel asked additional employees to cull their e-mails in addition to the original three but, again, did not supervise their preservation. During this time period, employees could permanently delete e-mails in a manner that made them unrecoverable, as defendant’s e-mail backup tapes were overwritten every 30 days. It was not until October 2008 that defendant began preserving all employees’ e-mails in a searchable archive. This despite having a published document retention policy dating back to 2003 which stated that defendant would maintain and preserve all evidence of its “organization, function, policies, procedures or activities.”

Plaintiff moved for sanctions due to spoliation. She sought an adverse inference instruction to the jury that the destroyed documents would have supported her claims by containing discriminatory statements. Plaintiff also asked that defendant be precluded from arguing that the absence of discriminatory documents in extant documents showed that no such comments were made and/or that plaintiff was not subject to discrimination or a hostile work environment.

Judge Cox found that plaintiff had demonstrated:

1. that defendant had not reasonably prevented employees from destroying documents concerning the case

2. defendant had failed to adequately supervise employee preservation

3. that some relevant e-mails probably were lost as a result.

Finding defendant’s conduct reckless and grossly negligent, she ordered, among other things, that the jury should be told that the defendant had a duty to preserve all e-mail concerning plaintiff’s allegations beginning in November 2007 but did not do so until October 2008 and, therefore, defendant would be precluded from arguing that the absence of discriminatory statements from the period November 2007 to October 2008 is evidence that no such statements were made. However, because the Court did not find that there was a deliberate effort on defendant’s part to conceal harmful evidence, she denied plaintiff’s request for an adverse inference instruction.

Clearly Written Policies Give Companies The Right To Search Company-Owned Computers for ESI

Guidance Software Employers who wish to investigate employee electronic communications need to have clearly articulated written policies that employees do not have any expectation of privacy in their usage of employer provided computers.

In a recent decision by the New Jersey Supreme Court in Stengart v. Loving Care Agency, Inc., a former employee sued her employer for violating New Jersey’s Law Against Discrimination. In response, the employer searched the former employee’s company-owned laptop computer and found, in the web browser’s history, emails she had exchanged with her attorney using her own private, password protected email account. The e-mails were obtained by the forensic imaging of the employee’s company-owned computer.

The employer contended that the employee waived her privilege by using the company’s computer to send emails to her attorney, citing the company’s electronic communications policy, which stated, “Occasional personal use is permitted” and then described several prohibited uses including soliciting for outside business ventures, charitable organizations, or sending inappropriate sexual, discriminatory, or harassing messages.

However, in an effort to protect attorney client communications, the Court concluded that “[A]s written, the policy create[d] ambiguity about whether personal email use is company or private property when using a company owned computer.”

If the attorney / client privilege was not an issue, this case would likely have been decided differently. Why? Because although the Court correctly held Stengart had a limited expectation of privacy when communicating via email with her lawyer, the Court cited the ambiguity of the policy as the reason for its decision. In fact, the Court went on to say that “companies can adopt lawful policies relating to computer use to protect the assets, reputation, and productivity of a business and to ensure compliance with legitimate corporate policies.”

Here’s another example.

The United States Supreme Court recently granted review in Quon, et al. v. Arch Wireless, City of Ontario 2008 WL 2440559 (9th Cir. 2008), in which the Ninth Circuit Court of Appeals found the Ontario Police Department violated the Fourth Amendment when the Police Chief and others read an employee's text messages on employer-provided two-way pagers. This was another case in which the workplace policy regarding text messages was unclear.

It is expected that the Supreme Court will use the Quon case to make it clear that a company’s need to protect its intellectual property and monitor the workforce outweighs any privacy rights of employees, except in very limited situations like protecting attorney client privilege.

With data leakage, fraud, and cybersecurity threats increasing, companies need to be able to proactively audit and investigate all activity on their networks and remediate violations quickly. Clearly written policies about data stored on company computers can help ensure the success of these digital investigations.