America’s Got e-Discovery Talent – Part 3

Mary Mack:

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 certainly I would fight to try 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 (and/or a Request For Production) that asks for any Facebook, Myspace, or other social media accounts that they have, just to identify where it is (and/or demand production). 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.