I sat on a three-lawyer panel last month to judge the contestants for America’s greatest e-discovery cases of 2010. Yes, we’ve turned the tables and are judging the judges and their opinions. (Actually, this was a FIOS interview devoted to current case-law, but I’ve been watching too many TV talent shows.) Joining me on the panel was one of my best Jackson Lewis partners in e-discovery, Brett Anders. The third judge was FIOS‘ own tech-law guru, Mary Mack, author of the Sound Evidence blog. We had such a good time judging e-discovery talent this year that we only got half-way through the list of contestants. FIOS was forced to bring us back for another show to finish the judging. This blog represents the shortened, edited version of Americas Got e-Discovery Talent, Part One. Go here for the full Webinar with all its audio glory. It’s free, but you have to register.
Here is the tail end of the introduction of the three-judge panel:
Both Ralph and Brett are working in the employment area. That’s where the rubber meets the road for many of these 2010 cases. It’s where we see the emerging e-discovery trends that we are trying to get our legal-arms around, in the social networking space and those types of things. So what we’re gonna start out with is the first case that came down from the Supreme Court, Quon.
The presentation begins with Brett Anders, and from here on it’s all transcript of webinar highlights (except for my occasional added comments in parenthesis).
Brett Anders on City of Ontario, Calif. v. Quon,
Brett:
Thank you Mary. The Quon case is a much awaited decision from the Supreme Court on the issue of the privacy of text messages using an employer-provided text messaging system. The decision came down less than a month ago on June 17, 2010. In short, this case involved Jeffrey Quon, a Police Sergeant whose employer had provided him with a text messaging system. He sued his employer after he was disciplined when it was found out that he was sending hundreds of personal text messages of a personal nature to both his spouse and girlfriend. (Yikes. Sexting his wife and girl friend at the same time? That defies gravity, which in turn reminds me of this great America’s Got Talent Act by a bunch of frat boys.)
The City had a written electronic communications policy that restricted an employee’s use of the City owned computers, technology, and resources, such as e-mail. The policy said that employees had no expectation of privacy in their network activity and that the City reserved the right to monitor employees’ on-line activity. It also prohibited using the City’s systems for inappropriate, obscene, or any type of harassing communication. Although the policy itself didn’t specifically apply to the text messaging systems, the City had verbally advised its employees that it would, and later followed that up with a memo.
The City had a contract with Arch Wireless. Arch was the company that actually provided the text messaging service and the City was billed on a character-count basis. They had a monthly plan that provided a certain character limit. If the limit was exceeded, the City incurred some additional charges. The employees were generally told if you go over your limit, we’ll tell you how much you owe us and we’re not going to audit or review your messages.
Not surprisingly, Quon went over his limit and he went over his limit repeatedly. He paid each time for that overage. Ultimately his supervisor got tired of basically being a bill collector and decided to audit the messages get a sense of whether the overages were a result of the company buying too small a plan for what the people needed for their work, or whether it was a result of excessive personal usage. The audit was done for just a few month period and it was limited to those text messages that were sent during work hours. So, they had redacted out messages that were sent off work hours. They found that Quon was sending an excessive amount of communications, not only excessive on a personal nature, but inappropriate in the content. You know, there was special content. (Speaking of special content, I can’t help but think of another of the acts that made it to the top 48 of America’s Got Talent, those crazy talented belly dancers.)
(Back to Brett.) Now, after being disciplined, Quon filed an action in the Central District of California. He essentially alleged that his constitutional rights were violated, the right under the Fourth Amendment of privacy. He also brought a claim under the Stored Communications Act, which essentially protects electronically stored communications.
The District Court, the lower court, found in favor of Arch, the wireless provider, granted its Motion for Summary Judgment. But it denied the City’s motion on the Fourth Amendment claim and a trial was conducted. The jury returned a verdict for the City finding that it acted without violating any of Quon’s constitutional rights.
On appeal the Ninth Circuit reversed. It found that the search of Quon’s pager was an unreasonable search. It suggested that there were numerous other ways the City could have done the search without violating Quon’s privacy. This included giving Quon a warning or asking Quon himself to review his messages and redact out those which were personal.
The court also held, the Ninth Circuit, that Arch Wireless violated the Stored Communications Act by disclosing those messages to the City. Both the City and Arch filed Petitions for the Supreme Court to review. The City’s Petition was granted but Arch Wireless’s Petition was denied. So at least as of now, the Ninth Circuit’s finding as against Arch still stands.
As it relates to the City, the Supreme Court found that the City’s search of Quon’s text messages did not violate the Fourth Amendment. It found that the search was reasonable and that it had a legitimate work purpose to determine whether the plan that the City bought for its employees was of the right size; to determine if it was large enough for them to do their jobs. Second, it found that the search was not excessive in its scope. The court found it important that the review was limited to a two month period and that it was also limited to those messages that were sent during work hours.
What is interesting about the case is one of the issues that I think a lot of people were waiting to hear about – the expectation of privacy. We’re gonna talk about a New Jersey case, Stengart, later that deals with the expectation of privacy and communications using the work systems. Here the court assumed that there was a reasonable expectation of privacy, privacy in these communications.
The take away for employers in Quon is that there was a lot of cautionary language in the court’s decision about the scope. The court held that it must proceed with care when considering the whole concept of privacy expectations made out of electronic equipment, that we’re going to have to wait and see how this technology evolves.
I think that what can be taken away from this case is that it’s very important for employers to have policies in place that are as broad as possible and give employees as much notice as possible as to what level of monitoring will take place. The purpose of the policy is really to diminish the expectation of privacy in these types of devices. But I think even more important than that, as we’ve seen in this case, the managers have to enforce the policy. Here the issue was the fact that although the City had the policy, the manager is telling employees: well as long as you, you pay for the overage, we’re not going to review them.
It’s really important for there to be consistency between what the policy says the company will do and what actually happens. I think it’s important for the City or companies to actually audit and make sure that their policies are being complied with.
So, I know Ralph, I think you had said you wanted to comment on the dissent in this case and also the failure of the court or the decision by the court not to accept Arch’s Petition.
Quon, Arch Wireless, and How To Get Social Media
Ralph:
Yes, I did. Thanks Brett.
I think it’s important to underscore the fact that Arch Wireless also petitioned the Supreme Court for certiorari and the petition was denied. They had asked for review of the decision against them enforcing the Stored Communications Act. They asked the Supreme Court to at least take a look at that. I think it’s important to note that the Supreme Court refused. So, that stands as the law in the Ninth Circuit, and I think this is now a couple of Circuits have looked at this, and found the same way that the subscriber has to be the one to consent to the release of that on-line stored communication or on-line information.
Even though the employer here got cert and basically got a reversal and got off, if you will, the poor little wireless company did not. The judgment stands against them. So as a practical matter, the employer isn’t gonna be able to do this again. They’re not gonna be able to say, hey come on, send us the text messages. The wireless company in the future is gonna say, heck no, we can’t. That’s a violation. You’re gonna have to get it from the employee.
And that’s an important practice pointer to come up with and I know we’re going go into this later on, but just the whole fact that you can’t just be subpoenaing Facebook and expect that they’re gonna say Oh sure, here’s all their information. So that’s an important thing that comes out what the Supreme Court did not say.
Mary:
Ralph and Brett, do you think this applies as well to things like G-mail and Yahoo mail, the third-party e-mail? Do you subpoena to get those records.
Ralph:
I think they’ve all taken the position, and I don’t fault them for this, that they want the consent of the individual subscribers. They will not honor a subpoena which is just a lawyer signing his name under a clerk issued process. They say that is not good enough and never mind whatever case law you may have in your state that says a subpoena is equivalent to a court order, they’re not buying that in California. They’ve got the case law to support this. They want an actual court order. Basically they want consent. because they don’t want to be sued like Arch Wireless was. So unless you’re the government, and you’ve got some sort of terrorist investigation or something else, you’re gonna have to go through the court and get a proper oder. You’re not gonna be able to just sign your name to a subpoena and expect Facebook to say, oh yea, here’s all their private messages that you can’t see that they’ve hidden. Facebook and all the others are uniformly taking that position now.
Brett:
Yea, I agree with Ralph and I think the two approaches that you’re gonna see at least in litigation, is either directly getting an order from the court authorizing the release or filing a motion to compel the Plaintiff to sign an authorization.
Mary:
So do you two see a distinction between e-mail hosted at the employer’s site, on the employer’s equipment by, run by the employers IT department and then third party e-mail, perhaps in the cloud or hosted elsewhere? By the employer?
Ralph:
Oh yes. I mean there’s a huge distinction. Definitely the Stored Communications Act applies and nobody’s interpreting that to include an employer’s own equipment. So that’s just frivolous, So there’s no question about the distinction there. Although I guess there’s no such thing as a frivolous tech argument when you have our Supreme Court saying whoa, this is too complicated for us. We don’t want to really grapple with this, which is the other point I wanted to make about Quon. I found myself agreeing with Judge Scalia, who chastised the majority for this in his dissenting opinion. He said the majority opinion really doesn’t say much. It doesn’t give us much guidance and puts a lot of burden back on the employers, back on the district court judges, state court judges, the magistrates.
We’re all gonna be having to figure this out on a case by case basis. We’re not gonna be getting any kind of broad policy guideline from our head court, from the Supreme Court, even though that’s their job basically . That is what Judge Scalia chided them for with that famous line, where he quotes Bob Dylan and says: “The times they are a changing. It’s a feeble excuse for disregard of duty.” So he was chastising the majority for not really grappling with the privacy issues here because the majority said, gee, this is such a rapidly changing area. Obviously from the oral argument, there apparently isn’t a single Supreme Court Justice that really understands technology today and, for some reason, they’re not being properly briefed. The attorneys that argued it before them in oral argument were also shockingly remiss in their ability to provide cogent answers. (To our supreme court all technology and social media talk seems to be just so much poppycock, which of course reminds me of Prince Poppycock on America’s Got Talent).
So the bottom line is, it’s gonna be a long time a coming before we have advice and guidance from the Appellate Courts. It’s up to us individual practitioners to figure it out. It is up to us to try and make sense to the District Court Judges that are going to be working on this for a long time.
So that’s all I had on that. Do you want to move on?
Pension Committee: Losey’s Favorite
Mary:
Pension Committee? Well, Ralph I want to give you kudos because you broke the news on the amended opinion.
Ralph:
Yes. And I’m a person that can’t stand it when the t.v. show says breaking news. Apparently I was the first person to publically announce her second amendment to the opinion. Let’s just say I have my ways, and people send me things. This opinion amendment was published May 28, 2010, and I released it that day. I actually got the signed opinion. That’s an actual photograph of Judge Scheindlin’s signature below. It’s not a long opinion. It’s only a couple of sentences. Here it is in its entirety:
The Amended Opinion and Order filed January 15, 2010 is hereby corrected as follows:
At page 10, lines 7-10 replace <By contrast, the failure to obtain records from all employees (some of whom may have had only a passing encounter with the issues in the litigation), as opposed to key players, likely constitutes negligence as opposed to a higher degree of culpability.> with <By contrast, the failure to obtain records from all those employees who had any involvement with the issues raised in the litigation or anticipated litigation, as opposed to key players, could constitute negligence.>.
Judge Shira Scheindlin did something which, to my knowledge, has never been done before. Weeks after an opinion was issued, she sua sponte made a correction to it in response to being asked a question at a CLE event. Now who’s ever heard of a judge doing that? I put this question to my students and all of the students were uniformly impressed by her willingness to do that, showing that she really seems to care about keeping the law straight. She has her ego under control and she’s willing to say, okay, I made a mistake here and correct it.
Insofar as to the mistake she was correcting, there were two things really. First of all, in her initial opinion, she talked about all employees, that the failure to obtain records from all employees, as opposed to key players, likely constitutes negligence. But she changed that, got rid of all employees, and said all those employees who have any involvement with the issues raised in the litigation. That was in direct response to a question asked at a CLE event where a person asked why did you say all employees. This is causing us problems. I think she never intended it to mean all employees.
I believe she always intended it to mean her correction, it’s the only way to make sense of it. She must have always intended it to mean all employees that have information, because obviously it can’t go around collecting everyone’s records even if they don’t have anything to do with the case. You know, that’s kind of absurd. So she corrected that.
The other thing is she corrected, which really wasn’t asked of her at this same CLE event, she changed the negligence reference and she made it read could constitute negligence. And so she changed that word to could, instead of the way it was, likely constitutes negligence. I think that was a little bit of back peddling when she reread the sentence. She said, well I don’t really mean could because it depends on all of the circumstances.
So she’s clarified the opinion a little bit and she’s made history here in this Pension Committee opinion now by changing it for the second time. She also made history in this opinion because I think it’s the first opinion that’s ever had written on the top of it that it’s a sequel to a another opinion, Zubulake. I mean this is one for the textbooks literally.
I have all of my students studying it and if there’s anybody that hasn’t already read at least the first thirty pages of Pension Committee, you definitely should do it. It’s going to be cited at you time and time again, and, the funny thing is, it’s gonna be cited by both sides on any issue.
Mary:
That’s a good point. I too thought it was extraordinary Ralph that Judge Scheindlin would amend her opinion. The first amendment she did was because it was being interpreted that you had to keep all the backup tapes. So she changed that to read you only have to save backup tapes when they are the only source of evidence. So that reduces costs. Then then this is another amendment that is sensitive to the costs issue. I don’t thing we’ve seen the judges be sensitive to cost issues.
Ralph:
That’s right. I was glad to see this amendment. I don’t think we’ll likely see a third amendment, but she’s already made history and I for one am grateful about that.
Wilson v. Thorn Energy LLC
Mary:
Well she certainly sets the bar high because if we move to Wilson v. Thorn, 2010 WL 1712236 (S.D.N.Y., March 15, 2010) involving a flash drive that was set aside. The flash drive went bad and using Pension Committee the judge imposed sanctions for failure to preserve. I want to know what you guys think about this, given the state of current practice in most companies, just taking something and putting it on the shelf and preserving it and not making a copy of it, holding that that violated the duty to preserve. Do you think that standard is too high for current practice or do you think it’s the right standard?
Ralph:
No, I think that standard and that interpretation of Thorn is a mistake. I think you should be allowed to take something and put it aside and call that reasonable preservation. I don’t think you should have to make two copies, which in effect is what you’re saying, if you impose that standard.
Mary:
And I think it’s important to note that this particular decision was written before the amended opinion, which kind of backs off the negligence standard as well.
Ralph:
No, I mean if for instance you have 100 computers, lets say that you need to preserve the hard drive, I think it should be fine just to take those 100 hard drives and put them aside. I don’t think you have to also make a forensic copy of those 100 hard drives. I mean, then you have two copies. I don’t think you have to go to that extreme in view of the cost factor involved and just, what are the odds, that a drive is going to go bad just sitting on a shelf.
Mary:
But maybe after five or ten years, certainly. I know, I’m asking you guys as specialists in the employment area, one of our community’s big concerns is what do you do with departing employees when you’re under legal hold. Many companies do have that standard where they will put the machine or the hard drive aside for a period of time. Would you based on just this one opinion say lets revisit that protocol?
Ralph:
It’s all so fact based Mary. We can’t give a blanket answer on that. You need to understand the facts of your particular case and always remember the golden principle of federal-civil procedure which is Rule 26(b)(2)(c) in proportionality. That’s the king. Rimkus made that point and that focus on proportionality.
Mt. Hawley Ins. Co. v. Felman Production, Inc.
Mary:
Let’s go then and move to Mt. Hawley Ins. Co. v. Felman Production, Inc., 2010 WL 1990555 (S.D. W. Va. May 18, 2010).
Ralph:
I wrote a blog on this, where I used the theme of that great Italian western, The Good, the Bad and the Ugly. I think first of all, a remarkable thing is, it’s an e-discovery case with some sophistication coming out of the State of West Virginia. I didn’t even know that they had e-discovery there and so that just goes to show, I don’t care where you are in the country, you could get hit with a dangerous e-discovery opinion or case. There is no safe jurisdiction anywhere, except maybe San Diego, but that’s another story. (Mary chuckles knowingly at my reference to Qualcomm. Speaking of ugly, I can’t help but think of another act that never should have made it to the top 48.)
Anyway, you have Mt. Hawley, and the good thing is, it does cite and give proper recognition to Victor Stanley v. Creative Pipe and it cites to Judge Grimm, who is a terrific Magistrate. But, aside from that, most of the case is more like in the Bad and the Ugly parts. I assume this will probably get reversed by the District Court Judge reviewing the Magistrate’s order because there’s some things with this case that give me, and a lot of other commentators, many reasons to be concerned.
This is a situation where the judge found waiver of the attorney-client privilege based upon a negligent review. And, okay that’s Victor Stanley v. Creative Pipe, we all know that. On the other hand, this is post Evidence Rule 502, and we thought this was going to be corrected under the Evidence Rule. Here it was not and the court looked at what a law firm did representing the Plaintiff.
This was a very sophisticated national law firm whose attorneys certainly know what they are doing. It is astonishing to me that a judge could say their efforts were not reasonable. There’s a long list of things they did to review and try to do e-discovery right. But one mistake happened and the mistake wasn’t even an attorney mistake, it was a mistake in software, in the indexing of a database, one of several used. There were millions of files reviewed here. One of the review databases got corrupted.
Now, Mary, you’ve been in the computer biz as long as anybody. You know that sometimes mistakes happen, right? (Speaking of mistakes, I cannot believe that America did not vote these incredibly talented dancers into the semi-finals? What is wrong with you America?)
Mary:
Exactly.
Ralph:
Well, so a mistake happened. And they were able to show it was a computer error. They gave testimony. The software company gave an affidavit. They said, okay, there’s a mistake here. We’re not sure why exactly, but they didn’t do anything wrong. It’s just that the search didn’t catch this e-mail because the indexing was corrupted. So the search should have caught it, but it didn’t.
The judge basically did not accept that. Instead what I think happened, and I think most people agree, is that it was a case of bad facts making bad law. In that one e-mail that they didn’t uncover, that they should have found and screened out, had the index not been corrupted, that one e-mail was a heck of a smoking gun.
The first thing I want to mention about the bad law here is ABA Model Rule 4.4(b), which most states in the country have adopted some version of, but apparently not the good state of West Virginia. (This Rules of ethics says: “A lawyer who receives a document relating to the representation of the lawyer’s client and knows or reasonably should know that the document was inadvertently sent shall promptly notify the sender.”)
The Magistrate in Mt. Hawley Insurance Company v. Felman Production looked at the argument that this rule was broken, and said nope, that won’t apply here, because West Virginia didn’t adopt this ethics rule. So what the Defendant insurance company did here is when they saw this e-mail, it was so hot, that they did not notify the producing party, Felman Production. The insurance company didn’t tell the Plaintiff. Instead, what they did is they attached it to a motion and they filed i. They made it a public record by filing it with the court, not under seal. Do you know why did they did that? They claimed the crime-fraud exception applied and boy they had a pretty strong argument on that too.
That’s why they were bold enough to do that. The basic defense the Plaintiff had to that argument is, well, okay, this e-mail shows we were considering a fraud on the court, but it doesn’t show that we actually did the fraud. We were just seeking advice about whether it would be okay to manufacture this kind of evidence or not. It was the power of these bad facts that made this bad law.
Even though the judge here did not decide that the crime-fraud exception applied, she did allow the heat of this e-mail to impact the her legal analysis. She wanted to look at the other 250 e-mails that this attorney apparently had with the Plaintiff, all pre-suit, apparently talking about fabrication of evidence.
That’s how the ABA Model Rule went out the window and caused the Plaintiff’s firm to learn for the first time that they screwed up their review in reading a motion. They learned they had produced not only a privileged e-mail, but they had produced what they must have known was a horrible and potentially damaging e-mail. And then later they discovered it happened because of a failure of software. (Wonder what kind of mea culpas that software vendor offered. Indemnity anyone?)
The bad law that really gets me in this is that the judge doesn’t do her metrics right. She finds that there were several hundred privileged e-mails produced and then she compares that to the Victor Stanley v. Creative Pipe case. She says there’s more e-mails that were produced accidentally here in Felman than there were in Victor Stanley. Therefore, since Judge Grimm found that there was negligence in Victor Stanley, I should find it’s negligence too in Felman. Well, what’s wrong with that logic? The mistake is that it is not the number that’s produced accidentally that counts, it’s the percentage. The actual percentage out of the total production here, when you’re talking millions of e-mails, the production mistake of a couple hundred was far lower proportion. It was a very, very small fraction, you can get the details in my blog. I think it’s something like .0004%. I mean it’s a very small mistake.
You shouldn’t be looking at the total number, you should be looking at the percentage to determine how good your review was. Because the reality is, no matter how good you are, or how hard you try, if there is a complicated large production, mistakes will be made and that’s just not me saying it, that’s Judge Scheindlin saying the exact same thing in Pension Committee. Anybody that has experience in e-discovery in large-scale production knows that perfection is impossible. Yet this unfortunate law firm that represented the Plaintiff here, they were held to a standard of perfection. Then based upon the fact that the numbers were bad, they were found to have been negligent in their review. As a penalty, they lost the attorney-client privilege and other sanctions are going to be entered for their allegedly negligent action here.
Mary:
So, Ralph, how important do you think it is for providers like us to give assurances of quality control and like, full life cycle development of software quality assurance and things like that, that level of diligence on the tools that are being used?
Ralph:
It is very important. (But will any vendor offer indemnity?) I mean, this was a major vendor too. It wasn’t just some small local West Virginia outfit. It was a national operation.
The thing that the judge focused on that they didn’t do, really the one thing that she found they didn’t do that Victor Stanley talked about you should do, and in fact of course, I agree with Victor Stanley and Judge Grimm on that, is you should have some random sampling. That’s the main thing they didn’t do here is random sampling. I’ve long been arguing that every vendor should have a random sample button in their software. So she focused in on that, the Magistrate, but as I point out in my critique, in this particular case, the error was so so small that a statistically random sample probably would not have caught it. It would have taken good luck to catch.
A good friend of both of ours, Craig Ball, critiques the plaintiff’s law firm and says they should have re-searched it. They should have searched it again and not just relied upon that one search. I don’t want to go that far. That creates a heck of a burden. On the other hand, if you know that there’s this one terrible smoking gun e-mail, why don’t you take some additional steps to make sure that don’t produce it?
Maybe there should be a final scan of the DVDs or the portable hard drives that you are about to make production on? That’s something I like to do, that apparently was not done here. That might have caught it. But it comes back to what I call the guiding principle again, proportionality. Do the numbers involved really justify doing a second search, or does the importance of the documents involved justify it? I imagine now with 20/20 hindsight where everybody’s perfect, they would say yea, we should have searched the production CDs one last time before they went out. Would I do that in a zillion dollar case where I knew there was one terrible e-mail? I think now I sure would. That’s kind of the lesson here: we’re all going to have to continue to be paranoid.
Stengart v. Loving Care Agency, Inc.
Mary:
Well good. Lets move into Stengart because we promised we would talk about that. Brett, that’s you I believe.
Brett:
Yep, that’s mine. This decision by the New Jersey Supreme Court is causing a lot of consternation among attorneys. The upshot here was that the attorneys involved were found to have violated the Rules of Professional Conduct.
Stengart was an employee who worked for the Loving Care Agency. She was given a computer to do her job. The company had an electronic communications policy where the company specifically reserved the right to review electronic communications and advised employees that anything on the company’s computer would be the company’s property. Now this employee resigned and filed a lawsuit alleging constructive discharge and a host of other claims. As part of the defense, the company, their counsel, imaged the computer and an associate started reviewing the computer to see if there was anything of value to the case on there. In going through the temporary internet files folder, the associate found screen shots of e-mails that the employee sent to her attorney.
She used this computer to access the Internet, but it was unclear whether she accessed the Internet through the work Internet connection or her home or somewhere else. But she used her password protected Yahoo account to communicate with her attorney. A copy of those emails resided on her computer.
The defense firm, which is a very well-respected, well-regarded firm in New Jersey, they reviewed the messages and came to the conclusion that the messages were not privileged. The analysis was that because the company had a policy that told employees they would monitor, and because the policy said anything on the system or on the computer is the company’s property, that either one: the privilege never attached in the first place because, the policy was if the employer was looking over the employee’s shoulder every time they did anything with the computer; or two, the privileged had been waved.
Once these e-mails were eventually turned over in discovery, which was a few months after they were located, the Plaintiff’s counsel filed an Order to Show Cause seeking the return of the e-mails. The trial court denied the motion and the appellate division reversed. The appellate division found that the employee did have a reasonable expectation of privacy. The one line that kept reappearing in the appellate division decision was that a unilateral employer policy is not sufficient to override the attorney-client privilege.
The New Jersey Supreme Court issued its decision a few months ago and the upshot of the decision was that the e-mails were privileged and that the privilege did attach and was not waived. The bulk of the opinion focused on the policy itself. There was an issue over whether or not the policy: one, was disseminated to this employee, there were multiple versions of the policy; or, two, whether it even applied to her. The court said look, assuming that the most expansive policy that’s been produced in discovery applied to this employee and that she it applied to her, still that policy was silent as to other e-mail accounts. The policy never referenced personal accounts. Another important issue was that the policy provided for limited personal use, and the policy never said whether during those times that an employee is using a computer for personal use, whether there would be monitoring.
What was interesting was that the court then said that a zero tolerant policy related to personal usage could be unwelcome and unworkable in today’s dynamic and mobile workforce. Now that line to me was very important because the court did not specifically prohibit it. There are some attorneys in New Jersey, particularly those who primarily do Plaintiff’s side work, who will argue that the intent of that type of language was to signal that a no personal use policy would not be permissible under New Jersey law.
The court seemed to be saying during most of the opinion that this is a policy driven issue, that if the company had a better policy, then possibly the result would have been different. This could be corrected through a more clearly written policy. But the court debunked that theory later in the opinion. It wrote that even a clearly written policy that banned all personal use, and provided unambiguous notice that all communications, even personal password protected e-mails with counsel could be reviewed, the court would not permit the employer to delve into these personal e-mail messages with the attorney on a personal account.
The court found that in this situation the employee took reasonable steps to protect her e-mail. She used a private e-mail account that was password protected. The court also made note of the fact that her password was not saved anywhere on the computer. The court also focused on the fact that the e-mails in question did not relate to any illegal or inappropriate conduct. I think if it had. then the court might have said that would have fallen within the employer’s purview to search to make sure that it’s systems weren’t being used for an illegal purpose. (Speaking of reasonable steps and falling, here is the video of Ascendance, also pictured above.)
To me, though, as a practicing attorney, the bigger issue was the fact that the court upheld the finding that the attorneys violated the Rules of Professional Conduct by reviewing those messages. I can see why the attorneys made the decision that they did. There was a policy and they believed that under this policy there was no expectation or privacy, therefore no privilege. Well, now it turns out that their decision was wrong and incorrect, and now there’s going to be a rehearing over what level of sanctions are appropriate.
One question that I received a lot after the New Jersey Supreme Court decision came down was, should employers modify their electronic communication policies. Because after the Appellate division decision many employers started beefing up their electronic communication policies to make them broader, to make it clearer that the right to monitor would encompass anything that’s done on the computer, whether it’s on the Internet, on a personal e-mail account. The answer in my view is that the policies should not be dialed back in any way.
Although a broad policy, at least under Stengart, will not give you access to an employee’s attorney-client communications on their personal account, it still is helpful and beneficial to protect against invasion of privacy claim. I think the big question in New Jersey is what if this employee had used her company provided account. Would the decision be any different? One comment or line from the case was, the court did say that, you know, employers are still free to control the use of its equipment and property. In a situation like this, an employer could certainly discipline an employee for violating a company policy by using it for excessive personal use, but that they had no right and no business reviewing the privileged e-mails.
If the communications were with the company provided e-mail account, it’s a much stronger argument for the employer to say that there’s no reasonable expectation of privacy. That’s where I think the next line of cases is going to come up where somebody uses the e-mail, the company provided e-mail account to communicate with their attorney. How is the court going to view the reasonable expectation of privacy in those circumstances?
There are several other cases in other jurisdictions which address this and the case law is really split. (Speaking of splits, have you seen the winners of this year’s Britains Got Talent?)
The cases go both ways as to whether or not a policy can negate an expectation of privacy. But certainly Stengart is really changing how attorneys act, causing them to look a lot more closely on how they practice when they come across arguably or possible privileged documents and communications.
Ralph:
I just want to make one brief comment on Stengart, and that is that’s only the New Jersey Supreme Court speaking. In other courts we may get different results. As New Jersey goes, maybe the rest of the country will go too, but for most of us, we have no guidance or contra guidance. I know of many contra cases where the courts have upheld allowing attorney-client privileged employee emails to be looked at by the employer when they are located in the Internet cache. The same facts, different results.
Mary:
I want to thank Ralph and Brett and it’s no surprise that we weren’t able to get through all this many cases and I look forward to part II and III.
Mary Mack:
Thanks Rebecca and I want to thank Ralph and Brett for an encore discussion. Usually when we do case law updates we fit them all into one session. But so much has been happening and our listeners gave us some wonderful feedback about the last time we were with you two gentlemen. So we’re going to dive right in and Ralph, would you be so kind as to explain the picture of the guy with the cell phone.
Ralph Losey:
Why thank you Mary. I would like to invite the listeners today, who obviously don’t have enough to do as they’re listening to us now, but welcome, and we appreciate it, to please tell me who is the gentleman pictured below?
I’ll tell you, he’s a lawyer. But who is the lawyer pictured here? Send us an email if you can identify this character from the past. This is all a prelude to our talking about cases in 2010.
Bray & Gillespie I
The Bray & Gillespie III case was published in January 2010, so it just makes it. But you notice it’s actually number three. It’s the third opinion that’s issued in this case that pertains to e-Discovery. (Bray & Gillespie Mgmt. LLC v. Lexington Ins. Co., 2009 WL 546429 (M.D. Fla. Mar. 4, 2009) (Bray I); 2009 WL 2407754 (M.D.Fla. August 3, 2009) (Bray II); 2010 WL 55595 (M.D. Fla. Jan. 5, 2010) (Bray III).) Before I go into the facts and the meaning of Bray & Gillespie III, I wanted to tell you quickly about Bray & Gillespie I and II. That provides the necessary background to understand just how incredible this third decision is. (It’s almost as incredible as that ten year old girl on America’s Got Talent, Jackie Evancho,who sings like an adult opera star. That is spooky! See for yourself.)
I wrote about Bray & Gillespie I in my latest book, it’s Chapter 8. An interesting thing about Chapter 8 is it’s entitled “My Grilling by Mary Mack.” It is a modified transcript of an interview I did before with Mary Mack, where I didn’t have Brett Anders with me for protection. I got even with her grilling interview by later adding what my secret thoughts were at the time. So if you’re wondering what the duel was like between Mary Mack and I, and what I was think, you can check out the book. Anyway, in this prior interview Mary asked me about the Bray & Gillespie case, and I explained it, and included that in the book.
The first Bray & Gillespie opinion was very interesting for a couple of reasons. Number one, the magistrate judge was here in Orlando, right in my home turf, Judge Karla Spaulding. She was told by plaintiff lawyers and defense lawyers two different things as to what went on in their 26(f) meet and greet conference. She had the plaintiff’s counsel say that the defendant – Lexington Insurance Company – that they agreed that they could have a production without metadata. The insurance company lawyers, whom I happen to know, said: no, no, no – that’s not true. We told them we wanted all of the metadata and we were going to want native file production.
So this judge hearing two different versions of what went on, she did something that a lot of judges I would suggest wouldn’t take the time to do, she basically called them on it. She said, okay gentlemen, I’m going to schedule an evidentiary hearing, and we’re going to get to the bottom of what really went on here. That led to an evidentiary hearing where testimony was given by lawyers. Basically the lawyers for the plaintiff pointed their finger at prior lawyers whom they had replaced for the plaintiff and sort of blamed them. Judge Spaulding reacted to that by saying, you know what, let’s have another evidentiary hearing. And guess what? The prior lawyers voluntarily flew down, I think they were from Philadelphia, and they appeared at that evidentiary hearing. So there was a second hearing about what went on in at the 26(f).
The bottom line to all of that is, the judge believed the defendants, the attorneys for the insurance company, and did not believe the attorneys for the plaintiff. She held that there was going to be a requirement that metadata be produced. In the process she went through an analysis of the rules on production. Because she said that even if there wasn’t an agreement, the Rules require production in the original form, which means native, all metadata; or, they require production in a reasonably usable form.
Then she did an interesting, helpful analysis on reasonable usability if you are a requesting party, or responding. She said that clearly the form that was produced by the plaintiff here to the defendant was not reasonably usable. So what was that form that was not reasonably usable? Get this, here’s what they did. They produced 100,000 emails to them in .TIFF form and they produced 100,000 attachments that went with those emails in .TIFF form. But what they didn’t produce was a full load file. They had a full load file, but they stripped it down before production to a very minimal metadata load file. One of the metadata fields that they stripped was the metadata field that tells you which attachment went with which email. So, here you are, you’ve got 100,000 emails and 100,000 attachments, and you’re just supposed to figure out for yourself which went with what? That’s just plain mean!
That’s what the defendant said, and the court agreed, and here’s where the case gets even more interesting. Not only did the court sanction the plaintiff’s attorneys that appeared of record. The court also sanctioned the plaintiff’s attorneys’ law firm, citing case law which is kind of interesting to know about, as to how a law firm has a responsibility and can be sanctioned for the actions of its partners. And, so, that case kind of made history, it got a lot of people’s attention. (Kind of reminds me of the way the Illusionist, Dan Sperry, got Howie Mandel’s attention, with his dental floss through the neck trick shown here. Sharon Osbourne’s reaction to the stunt is probably close the the reaction of defense counsel in reading the orders in this case sanctioning one plaintiff’s counsel after another.)
I know many firms after that instituted rules that required reporting by lit support of activity like that. So if a partner tells the litigation support department in a law firm, go ahead and make the production, but I’ll tell you what, let’s just strip the metadata that will allow them to know what email goes with what attachment. They have made a rule saying that if you’re asked to do this, the lit support person, then you are to go around this partner and go to a top person. Report this, and don’t do it, until you get approval from higher up in management.
Why did firms do that? Because they wanted to protect themselves from the loose cannon partners out there that think it’s all fun and games, that you could just do that and that’s just part of normal hardball discovery. They don’t understand that this is changing evidence, and is against the Rules. They don’t understand that it can result in you’re being sanctioned.
Mary:
So, Ralph, this is new, that I’ve heard that lit support is empowered to go around a partner that has a ridiculous request.
Ralph:
Well, this isn’t all firms, but I know that this was implemented in some firms and frankly it’s a protection for the law firm. I would recommend that all law firms consider doing that. This is a wake-up call for all law firm management – you better get your lawyers under control and impose some discipline out there. Otherwise you may have a lot of explaining to do when the law firm itself gets sanctioned.
Mary:
This is also what happened with the associate on the Qualcomm case, and that’s somebody who has a license to protect. So this is fantastic for the lit support community because I know a lot of them are worried about exactly these issues – partners who don’t understand technology making potentially bad decisions.
Ralph:
I agree. People talk to me and they say, you can’t put this in your blog, so I don’t, but we all know very well that there are lit support people receiving specific instructions like that. They know it’s not right, but they’ve gotta do it. So, yes, if you’re a law firm, you ought to think about it.
By the way, I see we’ve got an email from someone who correctly identified the handsome looking fellow above as Caveman Lawyer from Saturday Night Live. This show aired in the 80’s and you can see he had then state of the art iPhone technology, that’s what cell phones looked like back then. He used to say, “I’m nothing but a simple caveman lawyer,” and I’ll tell you why that’s appropriate when I finally get to Bray & Gillespie III, but I did want to share Bray & Gillespie I first. That is the impact – it did have an impact, as kind of the shot heard round the world, because the law firm that was sanctioned, I’ll tell you this, it’s one of the world’s largest law firms. It was a big time law firm that got sanctioned.
Bray & Gillespie II
Okay, that was Bray & Gillespie I, and believe it or not, that wasn’t the end of it. So the big time law firm gets out of the picture, and some local lawyers in Central Florida take over. You would think that they would clean up the act, but no. Bray & Gillespie II ensued next, which I also wrote about in my book in Chapter 32. Chapter 32 has kind of an interesting title, it’s one of my favorite essays I’ve ever written. It’s called Plato’s Cave – why most lawyers love paper and hate E-Discovery and what this means to the future of legal education. In this chapter I try to get in the heads of my brothers and sister lawyers who are my age that basically grew up on paper. I try to explain to the rest of the world, particularly the younger generation, why it is that senior partners hate e-Discovery and love paper, love their bates stamp, don’t try to take it away from them. I found out. That’s what Bray & Gillespie II is kind of about.
In my chapter Plato’s Cave I explain how the new attorneys that were taking over – they were co-counsel all along – they actually said that the hotel system that kept track of guests when they would check into the hotel could only be found and seen in paper. The plaintiff was a hotel – they were suing for damages caused by three hurricanes that hit Florida one terrible summer. They said, you know what, we keep all of the records of how many guests we have and I know your expert would like to see these records to analyze damages. But the truth is these SQL databases, they really only can be produced in paper.
Plaintiff’s counsel insisted on that, stuck to that party line, said here’s our warehouse full of paper, go look at it. They basically played all kinds of games like that. It really upset Magistrate Spaulding and I think rightfully so. In view of this she recommended that the entire case be thrown out because the defendant, the insurance company, had been prejudiced. It couldn’t get access to the information it needed to defend the case. That was Bray & Gillespie II.
Bray & Gillespie III
Now the stage is finally set for Bray & Gillespie III, the 2010 case, which is the appeal of the Magistrate’s order recommending that all three counts, one count for each hurricane, be dismissed with prejudice as a discovery sanction. By the way, in Bray & Gillespie II, the lawyers and the client are again sanctioned, along with dismissal of the case. In Bray & Gillespie III, the district court Judge Scriven, who used to be a magistrate judge and really has a good grasp on discovery – she heard representations from the replacement counsel. No surprise that at this point the last lawyers got fired. New counsel comes in. These new guys, I know them, they are really- they’re pretty good. I hope they’ll excuse me for my caveman lawyer reference because caveman lawyer was one of my comic heroes as a young man. Obviously things in the modern world like a SQL database did not “frighten and confuse ” them like their predecessor attorneys. (Remember these famous lines from SNL?)
Anyway, the replacement counsel basically thought to call the software vendor. I mean genius, right? They called the software vendor of the software program with SQL database that the hotel used. He did it, by the way, with a tech at his side – that’s a good tip right there everybody. Use the team approach. If you’re a lawyer and you don’t know that much about SQL databases, and only Mary Mack here knows a lot about SQL databases, I know enough to know that I don’t like them, have an expert on the phone with you.
It only took one phone call to find out that, duh, of course you can get the electronic records from out of the SQL database. Duh, of course you can make a native production as they wanted, so the damage experts could deal with it. So, new plaintiff’s counsel says, okay, look, we’ve corrected the problem. We’re ready to make a production now. I’m a hero, one phone call, I saved the day. You know, no harm, we’re ready to produce.
At this point, the judge says, well, it’s a little late now. Your client should have made that call long ago. Basically they were hung by their own petard at this point. The judge said, look, it was so easy, one phone call, why didn’t the plaintiff do this three years ago? Why didn’t they do it after the last motion to compel? The judge said no, don’t bother producing it, it’s too late now. We’re going forward with the trial. We aren’t going to strike all three counts, but we are going to strike one of the counts and plus plaintiff, you’re going to pay a $70,000 fee sanction.
I hold up the Bray & Gillespie saga of three cases as the poster child for what happens when you don’t cooperate. This is what happens. You get part of your case thrown out. You get yourself sanctioned. In the end, you haven’t done your client any good at all. This is what happens when you think that you should be fighting about e-Discovery and dumb things like metadata attachments. This is what happens when you only pretend like you understand and don’t bring in a team and an expert to help you figure out stuff that you don’t understand like SQL databases. (Speaking of poster childs, check out the YouTube video that got Jackie Evancho onto the show. She is the favorite to win this year’s America’s Got Talent, just like Bray & Gillespie is to win America’s Got e-Discovery Talent.)
Mary:
Yeah, and to underscore what you say about databases, Ralph, I would say that anytime you’ve got database information, you need an IT person. Because the nature of a database is that it’s so flexible, that you really have to get into it to see how things are rolled up, what things relate to other things, how things get deleted, all of that. So, point well taken on those databases.
Ralph:
Okay, I think we’re done with Bray & Gillespie. Let’s move on.
Crispen and Social Media As Evidence
Mary:
Now we’re moving into the Crispin case. Crispin v. Christian Audigier Inc., 2010 U.S. Dist. LEXIS 52832 (C.D. Cal. May 26, 2010). This is a case where it’s about a license and Crispin was said to have given an oral license. What the other side wanted to do was to look at his Facebook and emails to create a contract. So, this is a case very much in the news, at least in terms of subject matter around Facebook and MySpace and other social media as to what is public, what is private, what can be subpoenaed, and what cannot. At the end, Brett will be talking a little bit more about Quon and the difference between what is stored and what’s transmitted. It certainly makes a big difference, and then the other thing pertains to user privacy settings. (For comment on the interesting Crispin case see a short Harvard Law student article.)
There’s a lot of talk about attorneys using these social media sites to look for witnesses, impeachment, and that type of thing. Ralph and Brett, you’re in the employment area of law, how do you think that these Facebook cases and social media cases are going to affect your practice and the practical things that you advise your client’s to do?
Brett Anders:
I have a few real life examples. One thing I can say is that the social media sites, at least from a litigation perspective, they’re pure gold in terms of what you find. I’ve used them frequently in cases, especially harassment cases – sex harassment cases, where the information you see on the Facebook page is completely different than the allegation. For example, somebody – we had a case where somebody complained that as a result of the harassing conduct they were very depressed and they couldn’t go on vacations. Yet they had all of their vacation photos – photos up on their Facebook page. Actually in that situation it was a Myspace page that was completely public.
You mentioned witnesses before. It’s also a great way to find potential witnesses to corroborate testimony. They usually have a lot of their friends there. Their friends will know personal information about them so, it’s a good tool there. (Speaking of using FaceBook to find friends, did you see how America’s Got Talent has begun using YouTube contests to find talent? I’m thinking maybe the next new talent show to grace the airways just might be YouTube itself. Who needs these middlemen judges anyway?)
I also get a lot of calls from clients, because in addition to litigation, I also do a lot of day to day HR counseling. You’d be amazed at the number of termination decisions that are made based on information found on Facebook. One reoccurring question I get asked now – especially now that it’s summer and the weather is a little bit nicer – is somebody calls in sick and they maybe forget that they friended a few people at work on Facebook. Then their post or their status update for the day is going to the beach. So we’ve had a few calls about whether an employer who saw this on their Facebook page, or one of their friends saw it and reported it, can we take action based on it. We’re just seeing more and more of how what a person puts on their Facebook or their Myspace page has huge implications, either in work or in a lawsuit.
From a practical standpoint, certainly in litigation, the user can change their privacy settings. There’s going to be some stumbling over shoelaces around what the settings were at the time the information was pulled off of Facebook. Was it public or was it private?
I know of a situation where the plaintiff had a public FaceBook page with good information, relevant information to the lawsuit. Those pages were printed up and produced for discovery. The defendant then received a motion to amend the complaint to add a claim for violation of the Stored Communications Act. The defense responded that there wasn’t any type of unlawful interception or accessing of a stored communication or stored data – it was public. At a hearing the defense asked the court, ask the judge’s clerk to open up the page and view for themselves the public nature. As it turned out, the plaintiff had cancelled their Facebook account three days before the hearing and it no longer existed. The defense then argued that the plaintiff had spoliated evidence, they destroyed evidence. The plaintiff tried to argue that he had to take it down to protect his privacy. The court allowed the claim to go forward and didn’t address this spoliation issue at that time, but said it would be considered later.
The defense then subpoenaed Facebook to find out what the privacy settings were for that account at the time and when various changes may have been made. Facebook responded by saying they do not log changes to privacy settings – that’s just not something that they keep track of. So one problem is you’re going to have people who after the fact change their settings and you will have to prove that something was public or private at a given point in time. We’re really going to need the courts to start giving some rules or guidance as to what is private and what’s not and what the tests are.
Ralph:
I think an exciting area in e-Discovery is employment law. It’s one of the reasons I went to Jackson Lewis. I could have more fun cases like you get in employment law. It’s a hot issue and I spend a lot of time thinking about ways to take advantage of online information. We are developing protocols – I don’t want to get into all of that, a little bit of trade secret stuff there – but let me just tell you, if there’s any law students listening out there or people looking for a job, become a better Googler, it will help. That is a good skill to find all of this information.
Mary:
No kidding, and I think that one of the areas that’s just ripe, and I hope this isn’t one of your trade secrets, Ralph, but the litigation hold notices that I’ve seen don’t really mention social media and things like canceling an account or changing privacy settings and things of that nature. So that’s certainly an area for folks to consider.
I wanted to throw this out to you, Ralph and Brett, about waivers of privilege or trade secret by making things readily available on social medias. How is social media affecting those two areas?
Waiver By Unauthorized Disclosures in Social Media
Ralph Losey:
You threw that question at me privately a week ago by email. I guess it has come up for you as an issue. I don’t think that an employee’s unauthorized disclosure of something that maybe in-house counsel told them, that he then, on his own discloses online, without authority from the corporation, will be a waiver. Even though it is posted someplace that can be read by others. It is not a knowing, intentional waiver by the company. (Of course, once its out there it is probably too late to do anything more about it (you can’t un-ring a bell (or buzzer) for those who have heard it), but at least it should not justify further waivers and total loss.)
I hope that it is not so easy for a company’s attorney-client privilege to be waived. That is, after all, entitled to a higher level of protection than things like what you had for breakfast yesterday. (Speaking of a higher level, did you see Connor Doran’s kite flying act on AGT below? What an inspiration.) So, I hope that we’re not there yet. These battles haven’t been fought yet, but I certainly – I for one would fight to try to to protect it. Now it’s another thing entirely if someone with authorization makes an intentional disclosure, but it’s hard to imagine people being that foolish.
Bret Anders:
I can say, at least in New Jersey on the attorney-client privilege issue, that no, we’re not there yet. There was recently a case, Stengart v. Loving Care, where an employee using her work computer accessed her Yahoo email account. It was a password protected account. She emailed her attorney about a potential lawsuit with the company and later on down the road, when the company imaged and examined her computer, they found the email in the temporary Internet files folder. They found copies of these email communications and the attorneys there held on to them for a period of time. Eventually they produced them in discovery and the plaintiff’s counsel argued that they were still privileged. Plaintiff argued that even though the company had a policy that stated the company reserves the right to monitor, and anything on the company’s computer was the company’s property.
The court held that the policy was unclear as to whether it applied to personal email accounts, as opposed to the corporate account. The court later on went so far as to say that even if the company had a very clearly written electronic communications policy, that unquestionably went to communications on personal email accounts, and that it would apply to communications with your attorney, that that would not be enough to waive the privilege. So at least New Jersey is going very far in protecting that privilege.
I think the open question still remains as to what would happen if the communication was sent using the corporate email account and assuming that there was a very clear policy that the company would monitor. But at least as of you now, the New Jersey court still remains very protective of the privilege.
I would say one other practice point to consider is basically the privacy issue, especially with regard to international witnesses, or data coming from overseas, even though it’s on Facebook. Be cognizant of the differences in culture and law, where we, in essence, don’t think too much about privacy. It is exactly the opposite internationally.
Mary:
Ralph and Brett, you mentioned subpoenaing MySpace to get information, do you routinely subpoena first or do you contact and make requests more informally or formally of the witnesses that you’d like that social media information from?
Bret:
What I normally do is at least a two prong approach in the beginning. First we do our own Google search. We use our own means to see what is publicly available. Then I’ll typically have an interrogatory question that asks for any Facebook, Myspace, or other social media accounts that they have, just to identify where it is. Then we usually go from there, but at least in the first instance I’ll try to find it myself through publicly available information and then ask an interrogatory for which social media sites they frequent.
Mary:
Well, great. We’re going to have another webcast on social medias just exploring that at the beginning of September. You are all welcome for that. I want to turn it over to Ralph now for his trash talk on Florida A&M.
In re A & M Florida Properties II, LLC
Ralph:
Well, yes, I wrote an article about this, which I called, What Can Happen When Lawyers Delegate Their e-Discovery Duties to a Client. I invoked a cultural icon from the 1950s in this article, “Let George Do It.” Those of you who don’t remember the 50’s personally, I will tell you, Let George Do It was a popular radio show in the forties and fifties. It was about a detective named George Valentine where all of his clients came from reading a newspaper ad saying: (Click on the link if you don’t know what a newspaper is? You may recall your parents reading them in the morning when you were a child.)
Personal notice: Danger’s my stock in trade. If the job’s too tough for you to handle, you’ve got a job for me. George Valentine.
This popular show led to the catch phrase, let George do it, meaning to let another person perform an odious task for you; kind of a slacker’s credo. That’s what appears to have happened in In re A & M Florida Properties II, LLC, 2010 WL 1418861 (Bankr. S.D.N.Y. Apr. 7, 2010).
Unfortunately, most trial lawyers today who are not e-Discovery specialists tend to take the attitude that when it comes to e-Discovery, that is something that they’d rather have George do. (I guess this is the trash talk part Mary was hoping for. But for some much funnier trash talk check out check out Doogie Horner below. Reminds me of Dilbert with a beard. I can’t believe he didn’t make the finals.)
Most law firms don’t have a full-time E-Discovery Georges like me who love to do that sort of stuff. So they either give it to a vendor, which is probably better than the alternative, because the alternative is, they give it to their client to do. They say to the client, here’s what the case is about, would you go out and find the relevant files that would have that information. They have the client and the client’s IT department do it. The client’s IT department does exactly what they’re told, and maybe they will run some key words, and they’ll go collect it, and then turn it in.
This Florida A&M Properties case stands for the proposition here quoted by Judge Gonzalez who, by the way, is very much a heavyweight judge that really knows a lot about the law. He’s the chief bankruptcy judge in Manhattan, Judge Arthur J. Gonzalez. When he saw what counsel had done here, he was very clear that this – this is not something that you can delegate. An attorney has to go out and personally do the search. I will tell you other judges are picking up on this. (See this good blog by Guidance on what a state judge did in Delaware.) Some of them are, maybe, going too far.
The tendency now is not to allow lawyers to just have their clients collect it, and for good reasons. One of the reasons is kind of perfectly obvious, and that is, do you really want the fox to guard the henhouse? I mean, do you really want an employee who is accused of some sort of wrongdoing to be the one to decide what’s relevant and what isn’t, and to collect it or not? Judge’s don’t think that’s such a good idea. But there are other reasons as well. In this case, this wasn’t the situation at all. There was no allegation here of any wrongdoing on the part of an employee self collecting. It was more of an IT error.
The law firm that did this by the way– I won’t name them, but they’re a big firm out of Florida and not my old firm, not Akerman, but another big firm – I know very well that they have very competent e-Discovery counsel. They have specialists that work on e-Discovery. It is quite obvious, however, that their e-Discovery specialists were not consulted. What ended up happening is they gave so little direction to the client and the client’s IT department – they told them, just go out and collect email, and that’s what the client’s IT department did. They collected from the active Exchange server only and because they weren’t specifically asked to look for .Pst files, they didn’t do it. Soo when they made a production, they only found a couple of dozen emails. Then the requesting party said, a couple of dozen emails, that’s ridiculous. We’ve got more than that from you ourselves. That’s always a good proof to show that the other side is not doing it right, when you’ve got emails that they should have produced and they didn’t.
So they filed a motion for sanctions, saying the responding party must have destroyed them, shame on you. Then after the motion for sanctions, and an order, where it looks like Judge Gonzalez is getting ready to do a lot of dastardly things to their case, then suddenly the responding party put renewed effort into it. Obviously they finally brought in somebody who really understands something about e-Discovery, and I don’t mean advanced e-Discovery either – I’d like to think all of my second year law students who have taken e-Discovery introduction know about .Pst files. The lawyer now comes back to the court and says he didn’t know about, never heard of .Pst files. So he didn’t know to tell the IT department to look for them. When on the verge of having their case dismissed, they finally figured it out, at that point that, oops, yeah, maybe there could be .Pst files where there’s more emails. At that point they found about 10,000 responsive emails, some of which were very hot.
So the producing party comes back and says, no harm done, here we are, we produced them, no big deal, right? But at this point, they requesting party changed their motion for sanctions based upon spoliation into a motion for sanctions based upon “intentionally obstructing the discovery process.” That then brought on extensive briefing and discovery about discovery – always a very expensive proposition. The Florida A&M Properties case, by the way, started in Florida, regular old state court, concerning a $41 million real estate purchase gone bad because of the recession. Then one of the parties filed for bankruptcy, so it got yanked out of Florida state court into bankruptcy court in Manhattan. That becomes an interesting fact later on, as I’ll explain.
So this case got moved to Manhattan, and there the judge looked at what happened, what the plaintiff’s attorneys had done – both the plaintiff’s attorneys in Florida and the plaintiff’s attorneys in New York after it got moved, and he did not find any intentional obstruction with the discovery process and he did not find bad faith. He just basically found negligence. He found that it was negligent not to know and not to search for .Pst files. It was negligent just to turn it over to the client and let George do it. For that reason he did then not enter an adverse inference instruction as the defendant had requested. Everyone seems to agree that adverse inference instruction is the kiss of death – might as well dismiss it – but instead, he said that the sanctions would simply be monetary.
I’ll get to that in a minute, but he did, by the way, reserve a final ruling on the adverse inference motion. He said that he would schedule a separate hearing to evaluate the degree of negligence. I mean, they made a mistake, but how bad a mistake was it? Did it cross over into gross negligence as Judge Scheindlen found in Pension Committee. If it’s gross negligence, well, in that circuit, that alone might be enough for an adverse inference. So there’s still a sword hanging over their head there.
But, all he did at this point is – is he imposed a monetary sanction. This sanction was not only against the client but also personally against the attorney. This was one of these cute things where the judge said we’ll have a later hearing to apportion how much of the sanction amount should fall on the client and how much should fall upon the attorney. Talk about a conflict of interest there for that hearing. I mean it’s an interesting thing to have happen, which I hope never happens to you.
But the one thing that the party moving for sanctions didn’t get, is they wanted to get sanctions against the Florida lawyers who did the same thing. They just delegated to the client’s IT department, didn’t know what a .PST file was, and just allowed a production to happen of a few emails without digging deeper and doing it right. The Manhattan judge, although he had jurisdiction over the Florida lawyers, they appeared in the bankruptcy case too, he decided he was only going to sanction the New York lawyers. He wasn’t going to sanction the lawyers whose conduct occurred while the case was in Florida. The reason is – this is kind of interesting if any of our listeners are in Florida, a little bit of a sigh of relief – he found out the rules were different in Florida, in that you weren’t held clearly by case law to such a high burden of not being able to delegate it. Since there was not any clear case-law in Florida, like there was in New York – with Zubulake and a dozen other cases like it that talk about a lawyers personal responsibility, he didn’t sanction the Miami lawyers. He only sanctioned the New York lawyers and that’s the reason why.
So, bottom line to Florida A&M Properties, you can’t just turn it over to the client. They might screw it up as happened here. Even when you have a very competent client that really knows what they’re doing, you have to have some involvement. You have to be prepared to tell the court that you have satisfied your duties. You’re the one whose feet are being held to the fire. You’re the attorney of record. You’re the one responsible for discovery, not the client whose not an attorney, not even the client’s in-house attorney, who probably doesn’t want to appear of record and be subject to sanctions. So you have to have some involvement in the collection, you can’t just turn it over, even if it is to a saint.
I think I’ve left some time for Brett on the very interesting Quon case again.
More On City of Ontario, Calif. v. Quon
Bret:
Thanks a lot, Ralph. We’re going to talk about a few additional issues with Quon. … To me, what I was hoping that the court would do, is issue some type of decision on the reasonable expectation of privacy and what impact a company policy would have on the expectation. Like I mentioned before, we had this Stengart case in New Jersey, where the New Jersey Supreme Court said that at least as it relates to attorney-client privileged communication emails on a personal account, no policy could defeat that privilege. Here the Supreme Court said that the court must proceed with care when considering the whole concept of privacy expectations made on electronic equipment owned by a government employer. So, at present, it is uncertain how workplace norms and treatment of them will evolve. The the court has essentially said that we’re not going to decide. It’s either too early for us to make a decision or we’re just not going to decide to what extent employees have this privacy expectation as it relates to electronic communication systems.
I think though the take away for employers, and anybody really, in light of this case, is to make sure that you do have adequate electronic communication policies that do their best to diminish somebody’s expectation of privacy. The electronic communication policies should make it very clear that the company will reserve the right to monitor the use of its systems. I would make it clear that this includes use of the system to access the Internet.
I also think employers should have a policy that would prohibit employees from emailing work home. I think a lot of people, if they’re working on a project, they will email a document to their home email address or a personal email address. They’ll pick it up at home, they’ll work on it, email it back. The issue then becomes, at least in terms of preservation and later production, you have potentially relevant documents sitting on an employee’s personal email account. This makes preservation very difficult. You also should tell them that the harassment policies would apply to anything that goes across the electronic communication system.
But ultimately, just make very clear the company’s right and ability to monitor. You want to make it as broad as possible. That may not permit you to get access to privileged communications with counsel – at least in New Jersey, but your goal is to at least diminish any potential invasion of privacy type claims. Ralph, did you – I know last time you had a few comments on the Quon case, is there anything that you wanted to add?
Ralph:
No, I think we’re running out of time. Good job, Brett.
Mary:
Yeah, and I want to – I want to thank both of you for this encore for case-law in the summer. These are cases that everybody is interested in and talking about. It’s just been a delight sharing the platform with you two. Thanks Ralph and thanks Brett.
