Ex-Juror Who "Friended" Defendant Faces Jail for Bragging on Facebook About Dismissal From Jury Duty

Thu, 22 Mar 2012 14:02:13 GMT

By now, attorneys should know to advise their clients to watch out for Friend requests from jurors during a trial. The latest debacle concerning jurors use of social media involves a juror “friending” a party and then bragging about his resulting dismissal from the panel. For that juror, his Facebook antics landed him a three-day jail sentence. Click here and here for additional coverage regarding this incident.

Back in December, a Florida man serving jury duty sent a Friend request to the defendant. The defendant told her attorney about the request, and Circuit Judge Nancy Donnellan dismissed the juror and admonished him for his actions. But, the story doesn’t end there.

After his dismissal, the ex-juror took to his Facebook page again. This time, he posted a comment: “Score . . . I got dismissed!! [A]pparently they frown upon sending a friend request to the defendant . . . haha.” Unfortunately for the ex-juror, court officials became aware of the post, leading Judge Donnellan to call the ex-juror back into Court to face criminal contempt charges. At the end of a two-hour hearing, Judge Donnellan commented, “I cannot think of a more insidious threat to the erosion of democracy than citizens who do not care.” She sentenced the ex-juror to three days in jail, and he was led from the courtroom in handcuffs.

This is just another example of social media impacting judicial proceedings. (For recent blog posts on this issue, click here.) As the attorney for the plaintiff in this case commented, “it was a very big deal” to his client “who had $48,000 in medical bills on the line,” and if the female defendant had, for example, responded to the Friend request and went on a date with the juror, perhaps the juror would have found in her favor.

In light of these missteps, attorneys must be keen to clients’ Facebook page and activity and should consider monitoring the Facebook pages of the defendant and any jurors -- especially any juror who has been dismissed for the improper use of social media.

Jennifer Marino Thibodaux is an Associate on the Gibbons E-Discovery Task Force.

Utah Appellate Court Holds That "Confidential" Price List Is Not A Trade Secret But A Contract Bid Could Be, And Uniform Trade Secrets Act Preempts Common Law Claims Based On Misusing Confidential Information Not A "Trade Secret"

pfreehling@seyfarth.com (Paul Freehling) — Wed, 21 Mar 2012 22:40:22 GMT

In a recent, lengthy decision involving allegations of deceitful acts and unfair competition, the Utah Court of Appeals largely affirmed the lower court’s grant of summary judgment to the defendants with respect to a complaint alleging misappropriation of proprietary data and related conduct. Particularly noteworthy, the appellate court held that the Utah Uniform Trade Secrets Act (UTSA) preempts many common law claims relating to allegations of misuse of confidential information not qualifying as a trade secret. CDC Restoration & Constr., LC, v. Tradesmen Contractors, LLC, 2012 UT App. 60 (Feb. 24, 2012).

Paul Carsey was a long-time employee of CDC, a company that repairs concrete and installs protective and decorative coatings. CDC and its customer Kennecott entered into a preferred provider agreement containing CDC’s confidential labor and material costs. In January 2006, while Carsey was assisting CDC in the preparation of a Kennecott contract bid, he resigned from CDC and was elected vice president and project developer for Tradesmen Contractors, a CDC competitor.

At the same time, Kenneth Allen worked for an independent project manager hired by Kennecott to supervise projects such as the bidding. Previously, Allen had been a long-time Kennecott employee. Like Carsey, Allen had intimate knowledge of CDC’s bid. Shortly before Carsey joined Tradesmen, Allen formalized his ownership interest in that company. According to CDC, both Carsey and Allen went to great lengths prior to CDC’s bid submission to conceal their involvement with Tradesmen.

CDC, Tradesmen and a third company all bid on the Kennecott contract. Tradesmen’s bid was lower than CDC’s, a fact CDC attributed to Tradesmen’s knowledge of CDC’s prospective bid. Although Tradesmen’s bid was higher than the third company’s, Tradesmen was awarded the contract. CDC sued Tradesmen, Carsey and Allen, alleging (among other wrongs) misappropriation of trade secrets -- CDC’s labor and equipment rates, and its bid -- as well as the defendants’ intentional interference with CDC’s economic advantage. CDC also accused Carsey of breach of fiduciary duty.

The trial court granted the defendants’ motion for summary judgment. The appellate court agreed that CDC had failed to demonstrate that there was a genuine issue of material fact in dispute with respect to most of the counts of its complaint but reversed and remanded for trial the trade secret misappropriation claim relating to CDC’s bid. There was no evidence that the pricing information was unobtainable by proper means, or that it required a substantial amount of time and money to develop. Making an argument similar to the basis for a number of court rulings in favor of trade secret claims, CDC maintained that “if Defendants could have easily developed pricing for their [bid] without using CDC’s confidential information, why did they not do so?” The Court of Appeals was not persuaded and held that “mere use” of confidential information is neither “sufficient to maintain a finding of trade secret status, [nor] even a factor relevant to that inquiry.” Moreover, because Carsey himself had provided input into development of CDC’s pricing information, and Allen “lived and worked” this type of data, the court concluded that their general knowledge and experience defeated CDC’s trade secret claim. Finally, the equipment rates, at least, were readily ascertainable simply by making an inquiry to equipment rental companies.

Both courts held that CDC’s bid was a trade secret, but the trial court reasoned that there was no evidence that the bid was used by the defendants, or that they even knew the amount. CDC persuaded the appellate court that there was sufficient circumstantial evidence of the defendants’ use and knowledge of CDC’s bid to defeat a motion for summary judgment.

CDC struck out completely on its common law claims relating to misappropriation “of confidential, proprietary, or otherwise secret information falling short of trade-secret status (e.g., idea misappropriation, information piracy, theft of commercial information, etc.” This was an issue of first impression in Utah appellate courts and one which has divided that state’s federal district courts. Agreeing with a majority of decisions from other states and from Utah district courts, as well as a concern about a ruling that could “undermine the uniformity that motivated the creation and passage of the” uniform trade secrets statutes, the Court of Appeals held that CDC’s common law causes of action were preempted by the UTSA because they “are dependent on the same facts as” CDC’s trade secrets misappropriation claim. Well aware that this holding produces the harsh result that CDC’s common law claims are “preempted by a statute that grants [CDC] no cause of action,” the court observed that the UTSA expressly permits protection of “valuable commercial information contractually, regardless of whether such information meets the statutory definition” of a trade secret.

Although for different reasons, the Utah trial and appellate courts rejected CDC’s claim that Carsey breached a fiduciary duty to the company arising because he was an employee. Without addressing preemption, the trial court held that there was no evidence of a fiduciary duty. The Court of Appeals observed that Utah law is unclear as to whether an employee owes a fiduciary duty to the employer. However, since the supposed breach of fiduciary duty was based on an alleged obligation not to disclose or use confidential business information, the claim was dependent on “misappropriation-of-trade-secret facts” and, therefore, preempted because those are precisely the facts with which the UTSA deals.

Lastly, neither court found a basis for a trial regarding CDC’s averments of tortious interference. While “the evidence supports the allegation that Carsey and Allen did engage in deceptive and deceitful acts,” those acts “all were done to facilitate Tradesmen’s preparation of the winning bid using CDC’s pricing information.” Since CDC’s claim for intentional interference with economic relations relies “on the misuse of confidential information,” that claim also is preempted by the UTSA.

Not all courts would have reached the same result, or would have based the result on the same arguments, as the Utah court did. Other jurisdictions have stronger protections for confidential information that may not rise to the level of a trade secret. One lesson learned is that protecting confidential information by contract may be preferable to reliance solely on a trade secrets statute, at least in Utah.

Minnesota District Court Dismisses Computer Fraud and Abuse Act Claim Brought Against Former Employee Based Upon Narrow Interpretation Of Act

Wed, 21 Mar 2012 18:56:15 GMT

By Robert Milligan, Joshua Salinas, and Jeffrey Oh

In another decision that underscores the circuit split regarding the interpretation of the Computer Fraud and Abuse Act’s (CFAA) language on authorized access, the Honorable Judge David Doty of the United States District Court for the District of Minnesota has dismissed an employer’s claim that its former employees violated the Act. The case, Walsh Bishop Associates, Inc. v. O’Brien, CIV. 11-2673 DSD/AJB, 2012 WL 669069 (D. Minn. Feb. 28, 2012), concerns three former officers of the Minneapolis based architectural firm Walsh Bishop. The court held that since the defendants had authorized access to all of the electronic files they purportedly took, they could not be liable under the CFAA for their use or misuse of the files.

According to the court’s decision, Keith O’Brien, Ian Scott, and David Serrano sat on Walsh Bishop’s executive committee and had “access to the highest level of confidential and proprietary information of [Walsh Bishop].” In June 2011, the three incorporated a separate entity, also a named defendant, WBA Partners, Inc. The three allegedly used WBA Partners, Inc. name on a $7 million proposal while still working at Walsh Bishop. Additionally, in August 2011 Scott allegedly sent a Walsh Bishop customer list to his personal email and Serrano allegedly sent a drawing he had prepared for Walsh Bishop to his personal email.

All three purportedly met with competing firms during this time about switching firms and bringing their clients with them. Thereafter, defendants’ employment with Walsh Bishop terminated at an unknown date. Walsh Bishop subsequently sued defendants claiming a violation of the CFAA and a variety of other state and federal statutes, in addition to common law claims.

Walsh Bishop’s CFAA claim specifically referenced Section 1030(a)(2) of the Act, which holds a person who “intentionally accesses a computer without authorization or exceeds authorized access, and thereby obtains…information from a protected computer” liable for imprisonment and a fine. Although the CFAA is largely a criminal statute, an amendment to the Act passed in 1994 allows its application in civil suits.

Walsh Bishop contended that Scott and Serrano violated the CFAA when they emailed company documents to themselves “in a manner contrary to [Walsh Bishop’s] interests and use policies.” Walsh Bishop derived its argument from the Ninth Circuit case United States v. Nosal, which expanded the interpretation of “exceeds authorized access” to include violations of a company’s “computer access restrictions - including use restrictions.” (United States v. Nosal, 642 F.3d 788 (9th Cir. 2011), reh'g en banc granted, No. 10–10038, 2011 WL 5109831 (9th Cir. Oct. 27, 2011)). Nosal departed from the Ninth Circuit authority determined “authorization” based on the actions taken by the employer. (See e.g., LVRC Holdings LLC v. Brekka, 581 F.3d 1127 (9th Cir. 2009). In Brekka, the Ninth Circuit narrowly interpreted the CFAA and placed the onus on the employer to explicitly rescind the employee’s right to use or access a computer.

The defendants moved to dismiss Walsh Bishop’s CFAA claim on grounds that Walsh Bishop authorized their computer access “at the highest levels,” and, thus they could not exceed authorized access.

In his decision to grant Defendant’s motion to dismiss, the court noted that the Eight Circuit has yet to determine whether the CFAA imposes civil liability on employees who access information with permission but for an improper purpose. The court cited several Minnesota District Court cases that adopted a more narrow view of the CFAA that focused on the scope of access rather than misuse or misappropriation of information. The court found that this narrow interpretation correctly applied the language and purpose of the statute more than Nosal.

First, the court highlighted the plain language of the section 1030(a)(2), which concerns access and not the use of information. He stated that had Congress intended to target use of information, it would have included the appropriate language. (See e.g. § 1030(a)(1)).

Second, the court stated that the legislative purpose and history supports the plain meaning of statute because Congress enacted the CFAA to apply to persons who abused computer technology without access. The court emphasized that Congress never intended to provide a federal cause of action for state-law breach of contract, trade secret, or other business-tort claims.

Finally, the court addressed Walsh Bishop’s argument that the defendants’ acts were unlawful because they violated Walsh Bishop’s computer-use policies. The court first explained that he could not consider the computer-use policy because Walsh Bishop failed to attach the policy in its complaint. The court stated that even if he considered the computer-use policy, the policy only proscribed certain uses of information, not defendants’ scope of access. The court highlighted the fact that Walsh Bishop granted defendants broad access to its computer systems and expressly granted access to the areas of the systems it alleged defendants used with an improper purpose. Therefore, since the defendants had access to all of the files they purportedly took, the court ruled that they cannot be held liable under the CFAA for their use or misuse of said files.

Walsh Bishop is unfortunately at the mercy of court’s decision to use the more narrow interpretation of the CFAA, similar to the Ninth’s Circuit interpretation in Brekka, over the more employer friendly precedent established by the Seventh Circuit in International Airport Centers, LLC v. Citrin, 440 F.3d 418 (7th Cir. 2006) and the Ninth Circuit in Nosal.

Although Walsh Bishop implemented explicit computer and data use restrictions, its policies restricted only employees’ use of information and not access to information. This alleged deficiency subjected Walsh Bishop’s claim to the court’s interpretation of the statutory language of the CFAA and corresponding circuit split.

Lastly, the court declined to exercise supplemental jurisdiction over Walsh Bishop’s remaining state-law claims, but dismissed the claims without prejudice so that Walsh Bishop could bring an action in Minnesota state court.

This case is important because it reminds companies to be vigilant in advancing their own computer use and access restriction policies at every opportunity. Employers should implement policies that explicitly define both the employee’s access to information and the appropriate use of information. In addition to a comprehensive and clear computer use and access policies, companies should consistently remind employees of their duty to adhere to such policies. For example, this can be done through a prompt that appears whenever the employee logs on to a protected computer system. This constant reminder can go a long way in discouraging any behavior not in the best interests of a company and provide evidentiary support should the employer need later to sue the employee for violation of the CFAA or similar state laws.

Da Silva Moore Plaintiffs File Reply Brief In Support of Objections to Discovery Rulings

Wed, 21 Mar 2012 17:34:19 GMT

Da Silva Moore v. Publicis Groupe SA, No. 11 Civ. 1279 (ALC) (AJP) (S.D.N.Y.)

As expected, on March 19, 2012, plaintiffs in this case filed their Reply in Support of Rule 72(a) Objection to Magistrate Judge Peck’s February 8, 2012 Discovery Rulings. In it, plaintiffs summarize their arguments as follows:

Extrajudicial activities aside, what should matter is whether MSL’s Method will ensure that MSL fulfills its obligations under Rule 26 to produce reasonable discovery. Here, the answer is a resounding no. Judge Peck’s adoption of MSL’s Method was contrary to law and/or clearly erroneous for two main reasons. First, Judge Peck adopted MSL’s Method on an insufficient record; Judge Peck failed to hold an evidentiary hearing or obtain expert testimony as to its reliability and accuracy. Second, MSL’s Method fails to meet basic standards for reliability; the protocol risks failing to capture up to 65% of the documents material to Plaintiffs’ case. Accordingly, Plaintiffs respectfully request that the Court reverse Judge Peck’s ESI rulings.

In support of their position, plaintiffs also filed declarations from their attorney, Siham Nurhussein, and their expert in this case, Paul J. Neale. All that remains now is for District Court Judge Andrew Carter, Jr. to issue his ruling, which will be reported on this blog when it becomes available.

For a copy of Plaintiffs' Reply, click here.
For a copy of the Declaration of Siham Nurhussein, click here.
For a copy of the Declaration of Paul J. Neale, click here.

Tweeting Jurors Causing Judicial Headaches

Wed, 21 Mar 2012 01:05:35 GMT

Courts are struggling with rising social media misconduct by jurors, posing a threat to the fundamental guarantee of a fair trial. Last November, the Federal Judicial Center published a report on Jurors' Use of Social Media During Trials and Deliberations, which concluded that despite various prevention efforts, jurors continue to use social media. The Hon. Amy J. St. Eve, U.S. District Court Judge for the Northern District of Illinois recently conducted her own informal poll on this topic which was published just last week in the Duke Law & Technology Review called Ensuring An Impartial Jury In The Age Of Social Media. Her conclusion was that jury instructions on social media use does work. Some courthouses think the best approach is to take draconian steps like technology bans in the courthouse, threatening contempt, and requiring jurors to sign written pledges not to communicate about the case through social media. Lawyers have also gotten into the act and decided that the best way to ensure compliance is to do their own investigations and actually monitor jurors for misconduct using products like X1 Social Discovery, reports John Patzakis, president and CEO of X1 Discovery. Considering the growing level of social media addiction, it is probably going to take all three — strong jury instructions, draconian measures, and monitoring to stop social media from encroaching into the judicial process. Image by jez'

Courts are struggling with rising social media misconduct by jurors, posing a threat to the fundamental guarantee of a fair trial.

Last November, the Federal Judicial Center published a report on Jurors' Use of Social Media During Trials and Deliberations, which concluded that despite various prevention efforts, jurors continue to use social media.

The Hon. Amy J. St. Eve, U.S. District Court Judge for the Northern District of Illinois recently conducted her own informal poll on this topic which was published just last week in the Duke Law & Technology Review called Ensuring An Impartial Jury In The Age Of Social Media. Her conclusion was that jury instructions on social media use does work.

Some courthouses think the best approach is to take draconian steps like technology bans in the courthouse, threatening contempt, and requiring jurors to sign written pledges not to communicate about the case through social media.

Lawyers have also gotten into the act and decided that the best way to ensure compliance is to do their own investigations and actually monitor jurors for misconduct using products like X1 Social Discovery, reports John Patzakis, president and CEO of X1 Discovery.

Considering the growing level of social media addiction, it is probably going to take all three — strong jury instructions, draconian measures, and monitoring to stop social media from encroaching into the judicial process.

Image by jez'

Third Circuit Addresses Taxable Costs: Vacates Award of the District Court, Remands with Instructions to Re-Tax Costs in Accordance with Opinion

Tue, 20 Mar 2012 19:07:20 GMT

Race Tires Amer., Inc. v. Hoosier Racing Tire, Corp., --- F.3d ---, 2012 WL 887593 (3d Cir. Mar. 16, 2012)

On appeal, the Third Circuit vacated the District Court’s approval of taxable costs related to electronic discovery and remanded with instruction to re-tax in accordance with this opinion. Specifically, the court concluded that the relevant vendors’ charges “would not qualify as fees for ‘exemplification’” and that “of the numerous services the vendors performed, only the scanning of hard copy documents, the conversion of native files to TIFF, and the transfer of VHS tapes to DVD involved ‘copying’” and were thus recoverable.

Following the District Court’s grant of the defense summary judgment motions, the Clerk for the District Court considered the Bills of Costs submitted by the defendants and ultimately concluded that “electronic discovery costs would be consider[ed] … taxable, as opposed to just … the cost of litigating.” In response, Plaintiff filed a Motion to Appoint a Special Master Regarding E-Discovery Issues and a Motion to Review Taxation of Costs. “[O]n May 6, 2011, the District Court declined to appoint a Special Master and affirmed the Clerk’s taxation of the electronic discovery vendor charges.” In so deciding, the court “essentially found that ‘the steps the third-party vendor(s) performed appeared to be the electronic equivalent of exemplification and copying.’” Plaintiff timely appealed.

The question presented on appeal was whether 28 U.S.C. § 1920(4) "authorizes the taxation of an electronic discovery consultant’s charges for data collection, preservation, searching, culling, conversion, and production as either ‘exemplification [or] the . . . making [of] copies of any materials where the copies are necessarily obtained for use in this case.’” "[W]hether a particular expense falls within the purview of section 1920, and thus may be taxed in the first place, is an issue of statutory construction, subject to de novo review."

In short, the court held that none of the work performed by the vendors would qualify as “exemplification” and that only “the scanning of hard copy documents, the conversion of native files to TIFF, and the transfer of VHS tapes to DVD, involved ‘copying.’” Briefly summarizing its underlying analysis, the court stated:

Neither the language of § 1920(4), nor its history, suggests that Congress intended to shift all the expenses of a particular form of discovery— production of ESI—to the losing party. Nor can such a result find support in Supreme Court precedent, which has accorded a narrow reading of the cost statute in other contexts. See, e.g., Crawford Fitting Co., 482 U.S. at 442. Although there may be strong policy reasons in general, or compelling equitable circumstances in a particular case, to award the full cost of electronic discovery to the prevailing party, the federal courts lack the authority to do so, either generally or in particular cases, under the cost statute. FN12

FN12. Cost-shifting may be effected during the course of litigation, either by agreement or pursuant to court order issued under the authority of Fed.R.Civ.P. 26. After litigation, cost-shifting may be ordered as a sanction for vexatious conduct that reflects bad faith, as opposed to “misunderstanding, bad judgment, or well-intentioned zeal.” LaSalle Nat'l Bank v. First Conn. Holding Grp., LLC, 287 F.3d 279, 289 (3d Cir.2002) (citations omitted).

Accordingly, the court determined that “none of the charges imposed by [defendant] DMS’s vendor are taxable” and also reduced the award in favor of defendant Hoosier from $125,580.55 to $30,370.42, a difference of $95,210.13.

A copy of the court’s opinion is available here.

Play Nice or Pay the Price: Failing to Cooperate in Creating Preservation Protocols Can Result in Significant Consequences

Tue, 20 Mar 2012 14:05:22 GMT

The dual issues of over-preservation and proportionality took center stage in a recent Southern District of New York class and collective action litigation, leading to a Magistrate’s opinion in Pippins v. KPMG, No. 11-377 (S.D.N.Y. Oct. 7, 2011), and a District Court’s affirmance in Pippins v. KPMG, Civ. No. 11-377 (S.D.N.Y. Feb. 3, 2012), which are sending shock waves through the e-discovery community. The effect of those shock waves here is particularly acute for FLSA and other employment-related class action defendants where the targeted company often possesses and controls ESI pertaining to sometimes thousands of potential plaintiffs.

Pippins arose out of allegations under the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. and the New York State Labor Law, Article 19, § 201 et seq.(and corresponding regulations). In the October opinion, United States Magistrate Judge Cott rejected Defendant KPMG’s application for a protective order to limit its preservation efforts to a random sample of 100 hard drives from the computers used by the several thousand potential putative class members. The Magistrate Judge ordered KPMG to preserve all hard drives at issue because he was, as the District Judge perceived it, impeded by the lack of any information from KPMG that would enable the court to “balance the value of any data contained on the hard drives against the cost of preserving it.” Judge Cott’s opinion sent panic throughout the legal community because it expanded the preservation obligation to potential class action plaintiffs without a balancing or proportionality analysis under F.R.C.P. 26(c).

On February 3, 2012, in a frank and somewhat scathing opinion, United States District Judge McMahon affirmed the Magistrate holding that his opinion was correct in every respect, save for perhaps the Magistrate’s reluctance to involve Judge McMahon earlier in the process. By way of background, Judge McMahon had stayed discovery while resolving the Motion to Conditionally Certify the Class, which she ultimately granted after Pippins I on January 3, 2012. While the motion was pending, KPMG filed its motion for a protective order. KPMG’s primary objection was cost-related, arguing that at the price of $600 per hard drive, the financial burden of preserving hard drives of 7,500 potential opt in plaintiffs in the FLSA matter and 1,500 putative state class members would “swallow the amount at stake.” In fact, KPMG noted that they had already incurred more than $1.5 million in its preservation of about 2,500 former employees’ laptops. As an alternative, KPMG requested that Plaintiffs be obligated to bear the costs of preserving hard drives beyond the initial 100 offered.

In response, Plaintiffs sought a more meaningful sample and ultimately requested an order (1) requiring KPMG to preserve all hard drives of departed employees and (2) directing KPMG to provide Plaintiffs with five hard drives for inspection to “determine whether this issue is even worth fighting about.” As noted by Plaintiffs, “it would be difficult, if not impossible to generate search terms without the opportunity to first determine what the hard drives contain.” Nonetheless, in Judge McMahon’s view, KPMG was not advancing the ball because of its decision not to provide any hard drives for inspection. Ultimately, while the Motion to Certify was pending, Judge Cott ordered preservation of all existing hard drives of former employees until otherwise ordered by him or the parties had reached an agreement regarding methodology to obtain the appropriate sample.

In affirming this decision, Judge McMahon did not let anyone off the hook. She took particular umbrage that no one sought clarification of whether the stay precluded negotiation of the appropriate inspection and sampling procedure so that discovery could “proceed in a meaningful way” while the Motion to Certify was pending. In some terse dicta, she explained that “I cannot begin my discussion of this dispute without recognizing that a complete misinterpretation by everyone of the discovery stay I imposed seems to have contributed to the parties’ inability to agree on a sampling methodology.”

Although Judge McMahon acknowledged that other courts have been hesitant to apply a proportionality test to preservation duties, she made clear that Judge Cott was backed into a corner when he cast a very wide preservation net because the party seeking relief had thwarted his ability to conduct a proportionality analysis. The Court agreed that Judge Cott had no choice but to order preservation of the hard drives of all former employees who she had little trouble holding were “key players” under Zubulake v. UBS Warburg LLC IV, 220 F.R.D. 212, 217-18 (S.D.N.Y. 2003) (“Zubulake IV”), meaning that they were “likely to have relevant information.” As stated by Judge McMahon, if a party withholds information that might help streamline discovery in this type of case, that party should “reasonably anticipate” that each employee or audit associate who would be receiving an opt-in notice should be deemed a potential plaintiff in the matter.

Although this case may cause defendants in class actions to cower at the prospect of potential pre-certification preservation obligations, the Pippins decisions must be read in the context of the parties’, in particular defendants’, failure to cooperate in the early stages of the e-discovery process. Parties resisting wholesale or perceived overextensive preservation and production demands must take care when making proportionality arguments to preface those arguments with clear indicia of cooperation in the early stages of discovery. Objecting parties must, in short, provide the court with the tools necessary to clearly assess the extent of the purported burden, the costs involved and in some cases the lack of relevant information relating to the objected demands. While it is undoubtedly true that this level of cooperation may require disclosing more than a party may initially want, and entail risk in the sense that the sampling may result in evidence that weighs in favor of broader preservation or disclosure, Pippins clearly demonstrates the downside risk to taking the alterative approach.

Sandro G. Ocasio is an Associate on the Gibbons E-Discovery Task Force. Mara E. Zazzali-Hogan, a Director on the Gibbons E-Discovery Task Force, co-authored this post.

Copyright Infringement for the Sale of Publicly Filed Documents?

pvogel@gardere.com (Peter Vogel) — Tue, 20 Mar 2012 13:01:48 GMT

Two lawyers filed a class action suit against West and LexisNexis for violating the copyrights of court filings around the country. The lawsuit filed in Federal Court in New York City on February 22, 2012 by Edward White (of Oklahoma City) and Kenneth Elan (of New York) starts with a description of the case:

This is a copyright infringement action against West and LexisNexis based upon their unabashed wholesale copying of thousands of copyright-protected works, created by, and owned by, the attorneys and law firms who authored them.

The first step in this lawsuit will be for the Federal Court to establish whether is White and Elan properly claimed a proper class of plaintiffs for this case. White and Elan claim that the class in this lawsuit is:

…all attorneys and law firms…that authored works…that are contained in the Defendants searchable databases.

Then only if the US District Court certifies the class will this lawsuit proceed.

Since filings in courthouses are public documents, the documents are available to the public and the basis of While and Elan’s claims relies on the fact that under the Copyright Act the author has a monopoly on making copies. West and LexisNexis are clearly making and selling copies of court filings, and it will be interesting to see how this dispute is resolved.

3rd Circuit Issues Race Tires Decision on Taxing EDD Costs

Mon, 19 Mar 2012 20:29:41 GMT

The 3rd U.S. Circuit Court of Appeals issued its long-awaited decision in Race Tires America, Inc. v. Hoosier Racing Tire Corp on March 16, 2011. The court took a narrow view of whether all the charges imposed by electronic discovery vendors to produce ESI can be taxed against the losing party per the cost-taxation statute, 28 U.S.C. 1920(4). In short, the court held that only costs of making copies were taxable and that many costs associated with other tasks performed by the e-discovery vendor were not recoverable under the statute. The court acknowledges that there may be good reasons to award e-discovery costs to a prevailing party; however, the courts lack authority to do so under the cost-taxation statute. Instead, the court suggests that the appropriate approach is cost-shifting pursuant to Federal Rule of Civil Procedure 26 and as a potential post-trial sanction for vexatious litigation. If you are interested in the events leading up to the 3rd Circuit's decision, read Philip Yannella's November 1, 2011, LTN article "Could E-Discovery Taxation Alter Discovery Paradigm?" and my post "3rd Circuit Hears Oral Arguments in Race Tires," EDD Update, December 14, 2011. Image by Clipart.com

The 3rd U.S. Circuit Court of Appeals issued its long-awaited decision in Race Tires America, Inc. v. Hoosier Racing Tire Corp on March 16, 2011. The court took a narrow view of whether all the charges imposed by electronic discovery vendors to produce ESI can be taxed against the losing party per the cost-taxation statute, 28 U.S.C. 1920(4).

In short, the court held that only costs of making copies were taxable and that many costs associated with other tasks performed by the e-discovery vendor were not recoverable under the statute.

The court acknowledges that there may be good reasons to award e-discovery costs to a prevailing party; however, the courts lack authority to do so under the cost-taxation statute.

Instead, the court suggests that the appropriate approach is cost-shifting pursuant to Federal Rule of Civil Procedure 26 and as a potential post-trial sanction for vexatious litigation.

If you are interested in the events leading up to the 3rd Circuit's decision, read Philip Yannella's November 1, 2011, LTN article "Could E-Discovery Taxation Alter Discovery Paradigm?" and my post "3rd Circuit Hears Oral Arguments in Race Tires," EDD Update, December 14, 2011.

Image by Clipart.com

Court Document Translation and Court Interpretation- Compensation Issues in Light of Taniguchi v. Kan Pacific Saipan, LTD

translate@languagealliance.com (All Language Alliance, Inc.) — Mon, 19 Mar 2012 14:33:23 GMT

We've blogged about litigation translation and interpreting services and address the issue of which party pays for the foreign document disclosure. On February 21, 2012, the US Supreme Court heard oral arguments on the case Taniguchi v. Kan Pacific Saipan, LTD (on appeal from the US Court of Appeals for the Ninth Circuit). This case is of interest because it deals directly with the issue of compensation for foreign language interpreters and foreign language document translations.

Background: After falling through a deck on a property owned by Kan Pacific Saipan, LTD, Petitioner filed suit for negligence. The district court granted summary judgment in respondent's favor, awarding the company costs under 28 USC section 1920(6), which included the costs of translating various documents from Japanese to English. The Ninth Circuit upheld the decision, holding that the phrase 'compensation of interpreters' in section 1920(6) applies to both written translations and verbal interpretations. Plaintiff appealed, arguing that the statute's plain meaning, structure and legislative history indicate that the term 'interpreters' should be limited to oral translators of spoken language.
After hearing oral arguments, the Supreme Court will now rule on whether or not litigants, under Section 1920 of 28 USC, can recover for non-oral (written) document translation costs. The outcome of this decision could have far reaching effects, including increasing recoverable court costs and deterring meritorious litigation.

Contact our specialized legal translating service to retain competent deposition translators and deposition interpreter and for professional legal document translations.

The cost of HIPAA non-compliance – $17 million

cjlarose@mintz.com (Cynthia Larose) — Mon, 19 Mar 2012 12:05:02 GMT

Written by Kevin McGinty If it wasn’t clear before, a recent settlement of HIPAA claims brought by the Department of Health and Human Services against BlueCross BlueShield of Tennessee (“BCBST”) underscores the high regulatory cost of non-compliance with privacy requirements. HHS announced on March 13, 2012 that BCBST has agreed to pay $1.5 million... Continue Reading

Written by Kevin McGinty

If it wasn’t clear before, a recent settlement of HIPAA claims brought by the Department of Health and Human Services against BlueCross BlueShield of Tennessee (“BCBST”) underscores the high regulatory cost of non-compliance with privacy requirements. HHS announced on March 13, 2012 that BCBST has agreed to pay $1.5 million to settle claims that BCBST violated HIPAA in connection with the theft in 2009 of 57 unencrypted hard drives containing protected health information of over 1 million individuals. The payment to HHS, however, is the tip of the iceberg. According to the Nashville Business Journal, BCBST reported that it has spent nearly $17 million in investigation, notification and protection efforts. Thus, even though privacy class actions typically falter for inability to prove recoverable damages, the BCBST case demonstrates that data breaches can still result in substantial administrative fines and remediation costs.

The clear takeaway: Businesses should be mindful of the potential cost of non-compliance when evaluating the sufficiency of their privacy-related policies, procedures and infrastructure.

New Methods for Legal Search and Review

Mon, 19 Mar 2012 00:14:16 GMT

New systems of e-discovery are emerging that are designed for today’s digital world. Unlike most existing e-discovery systems, they are not mere adaptations of old paper discovery ways. The new methods use an entirely new collaborative approach and technologies, exemplified by predictive coding software. Although this paradigm shift in discovery is just starting, many of [...]

European Commission Proposes Reform to Data Protection Rules

Fri, 16 Mar 2012 22:20:08 GMT

Posted by Erica Gann Kitaev

Earlier this year, the European Commission proposed a comprehensive reform to the EU's 1995 data protection rules, with the stated purposes of strengthening online privacy rights and boosting Europe's “digital economy.”

Still rooted in the European concept that privacy in one’s personal data is a human right, the updated EU directive is intended to modernize the principles enshrined in the 1995 Directive to ensure privacy rights in the future. The suggested reforms include legislative proposals, including a regulation setting out a general EU framework for data protection.

According to the press release announcing the reforms, key changes include:

A single set of rules on data protection, valid across the EU, with unnecessary administrative requirements, such as notification requirements for companies, removed;
A strengthening of independent national data protection authorities, including granting them the power to issue fines to companies that violate EU data protection rules, in order to improve enforcement of the EU rules;
Increased responsibility and accountability for those processing personal data, including almost immediate breach notification requirements to supervisory authorities for “serious” breaches;
Organizations will be required to deal with a single national data protection authority in the EU country where they have their main establishment;
Clarification that wherever consent is required for data to be processed, it must be explicit rather than assumed;
A right of data portability to make it easier to transfer personal data from one service provider to another;
A “right to be forgotten” that will allow people to delete their data if there are no legitimate grounds for retaining it; and
EU rules must apply if personal data is handled abroad by companies that are active in the EU market and offer their services to EU citizens.

While the Commission's proposals will not have an immediate impact – they must be passed on to the European Parliament and EU Member States for discussion and will take effect two years after they have been adopted – there can be little doubt that privacy and online security will be a hot topic in 2012 and beyond. The full proposed Directive may be seen here.

District Court Judge to Have Last Word on Computer-Assisted Review, Grants Plaintiffs' Motion to Allow Additional Briefing

Fri, 16 Mar 2012 21:41:50 GMT

Da Silva Moore v. Publicis Groupe SA, No. 11 Civ. 1279 (ALC) (AJP) (S.D.N.Y.)

On March 13, 2012, approximately 2 ½ weeks after Magistrate Judge Andrew Peck issued his much-talked about opinion approving “computer-assisted review,” District Court Judge Andrew L. Carter, Jr. has granted plaintiffs’ request to submit additional briefing on their objections to the ruling.

Briefly summarizing the procedural posture of this case, the parties attended a hearing on February 8, 2012 to discuss their discovery protocol, and in particular the use of computer-assisted review (“predictive coding”). At that hearing, Magistrate Judge Andrew Peck issued an oral ruling which approved the use of computer-assisted review and required the parties to submit a draft protocol for court approval. On February 22, 2012, over plaintiffs’ objection (indicated in the last paragraph of the proposal: “Plaintiffs object to this ESI protocol in its entirety”), Magistrate Judge Peck approved the proposed protocol that had been submitted. On that same day, plaintiffs filed their lengthy objections to the February 8th discovery rulings, asserting that the “Magistrate’s decision to adopt [defendant] MSL’s predictive coding protocol is clearly erroneous and contrary to law.” Specifically, plaintiffs argued that the use of “predictive coding” in the present case (employment discrimination) violates Federal Rule of Civil Procedure 26 and criticized the court’s adoption of a “novel discovery methodology” without “supporting evidence” or “standards for assessing reliability,” among other things. On February 24, 2012, Magistrate Judge Peck issued his written opinion memorializing his rulings from the February 8th hearing. Thereafter, on March 7, 2012, defendant filed its opposition to plaintiffs’ objections.

On March 9, 2012, plaintiffs submitted a letter to District Court Judge Andrew L. Carter, Jr. asking for leave to file a reply to defendant’s response. In that letter, plaintiffs argued that Magistrate Judge Peck’s written ruling, issued two days after their objections were filed, “expanded on the reasoning for the rulings he had made from the bench,” including relying on “a number of articles that were not addressed in the parties’ submissions” and making observations about plaintiffs’ objections. Accordingly, plaintiffs sought the opportunity to “squarely address Magistrate Judge Peck’s complete rulings.” Plaintiffs also argued that allowing their reply would not result in prejudice where the defendant had “the benefit” of filing its opposition to plaintiffs’ objections after the written ruling was issued and thus had the opportunity to consider Magistrate Judge Peck’s analysis when crafting their response.

On March 13, 2012, Judge Carter granted plaintiffs’ request and ordered their reply be submitted by March 19, 2012.

A copy of plaintiffs’ objections is available here.
A copy of Magistrate Judge Peck’s written ruling is available here.
A copy of defendant’s response is available here.
A copy of plaintiffs’ March 9, 2012 letter to Judge Carter is available here.

District Judge Will Hear Objections to Peck's Decision

Fri, 16 Mar 2012 19:32:05 GMT

As discussed in a previous EDD Update — Ramifications of Judge Peck's New Opinion — U.S. District Judge Andrew L. Carter will have the final say on Peck's e-discovery ruling in the Da Silva Moore case. Carter just granted plaintiffs' request to file a brief documenting their Rule 72(a) objections based on Peck using outside sources not in evidence for his ruling on predictive coding. Image by Clipart.com

As discussed in a previous EDD Update — Ramifications of Judge Peck's New Opinion — U.S. District Judge Andrew L. Carter will have the final say on Peck's e-discovery ruling in the Da Silva Moore case.

Carter just granted plaintiffs' request to file a brief documenting their Rule 72(a) objections based on Peck using outside sources not in evidence for his ruling on predictive coding.

Image by Clipart.com

Keep Your Pot of Gold Hidden, Ohio Court Rules Information Posted Online Not Trade Secret

Fri, 16 Mar 2012 16:47:56 GMT

St. Patrick’s Day calls to mind the traditional Irish folklore of leprechauns and their hidden pots of gold. These hidden pots of gold illustrate the fundamental and straightforward rule for protecting prized trade secret information – keep it secret. A recent Ohio District Court, the Honorable Judge Michael R. Barrett presiding, denied a Plaintiff’s motion for Temporary Restraining Order because the Plaintiff had publicly posted his alleged trade secret information online. (Allure Jewelers, Inc. v. Ulu, No. 1:12cv91, 2012 WL 367719 (S.D. Ohio Feb. 3, 2012).

Plaintiff Allure Jewelers, Inc. sells gold jewelry online through eBay, Amazon, and its own website. Allure’s competitor, Defendants Mustafa Ulu and Goldia.com, similarly sells gold jewelry online through eBay, Amazon, and its own website. Since both sellers acquire their products from the same manufacturer and distributor, Quality Gold, they often sell the same products.

A dispute arose when Ulu and Goldia.com allegedly “scraped” or copied information about products from Allure’s website for their own advertisements and product listings on Goldia.com, eBay, and Amazon. Allure claimed that it spent a considerable amount of time and expense developing its trade secrets, i.e. the details and descriptions of its marketed products.

Ulu andGoldia.com also allegedly used a computer program to automatically list and sell corresponding products calculated at 98% of Allure’s advertised prices. Allure claimed that Ulu and Goldia.com were unfairly pricing products to compete with Allure.

Allure brought claims against Ulu and Goldia.com for, inter alia, misappropriation of trade secrets under the Ohio Trade Secrets Act (“OTSA”) and unfair competition. Allure also moved for a Temporary Restraining Order to enjoin Ulu and Goldia.com from advertising or selling any products in which they had illegally acquired data from Allure.

The court denied Allure’s Motion because Allure demonstrated “little to no likelihood of success on the merits of its claims.” The court highlighted the fact that Allure’s Complaint failed to provide any allegation that Allure took any efforts to guard the secrecy of the information about its products: “Instead … [Allure] has published this information on the Internet.”

The court also found Allure’s unfair competition claim for Defendants’ alleged unfair pricing was preempted by the OTSA to the extent it was based upon the misappropriation of trade secrets claim. The court noted again that Allure’s Complaint failed to show any reasonable efforts of secrecy regarding pricing information, which was also publicly available on Allure’s website.

This case reiterates the essential secrecy element for maintaining information’s trade secret status. Simply put, knowingly and intentionally posting information on the Internet is contrary to preserving or maintaining secrecy. While this decision appears clear-cut and not groundbreaking, the case involves underlying gold and secrecy themes that provide a nice St. Patrick’s Day treat. Finally, if you happen to find a hidden pot of gold on St. Patrick’s Day, make sure you keep its location a secret and do not post its whereabouts on the Internet.

Fios Webcast: Special Masters & e-Discovery with Craig Ball

Fri, 16 Mar 2012 16:08:21 GMT

Date: Wednesday April 25, 2012
Time: 1:00 PM ET / 10:00 AM PT (60 minutes)

Craig will discuss the growing trend of using special masters in e-discovery, the circumstances that lend themselves to the appointment of a master and the advantages of using a special master. He will also share tips on working with special masters, including a discussion of what questions litigants should be prepared to answer.

During this webcast, you will have an opportunity to:

Explore the role of the special master
Learn where to find a special master and how much it will cost
Consider the pros and cons of using a special master
Understand the

continue…

Ramifications of Judge Peck's New Opinion

Fri, 16 Mar 2012 15:32:15 GMT

We must remember that decisions of federal magistrate judges carry no weight beyond the U.S. district judge who assigned the matter to them. Under Rule 72 (a) of the Federal Rules of Civil Procedure, decisions of a magistrate judge are subject to review and either approval, modification or reversal by a district judge of that court, except in civil cases where the parties consent in advance to allow the magistrate judge to exercise the jurisdiction of the district judge. The last word in the Da Silva Moore case will rest with US district Judge Andrew L. Carter who is assigned the case. Magistrate decisions by Judges like the Honorable John M Facciola, Honorable Paul Grimm, and Honorable Andrew J. Peck have become the linchpin in the evolution of e-discovery case law. However, it's time to see more U.S. district judges like Shira A. Scheindlin taking the lead in this area. Image by Clipart.com

We must remember that decisions of federal magistrate judges carry no weight beyond the U.S. district judge who assigned the matter to them.

Under Rule 72 (a) of the Federal Rules of Civil Procedure, decisions of a magistrate judge are subject to review and either approval, modification or reversal by a district judge of that court, except in civil cases where the parties consent in advance to allow the magistrate judge to exercise the jurisdiction of the district judge. The last word in the Da Silva Moore case will rest with US district Judge Andrew L. Carter who is assigned the case.

Magistrate decisions by Judges like the Honorable John M Facciola, Honorable Paul Grimm, and Honorable Andrew J. Peck have become the linchpin in the evolution of e-discovery case law. However, it's time to see more U.S. district judges like Shira A. Scheindlin taking the lead in this area.

Image by Clipart.com

Clearwell Integration in Sight for Data Insight 3.0

Fri, 16 Mar 2012 04:42:30 GMT

Data Insight 3.0, the latest version of Symantec's information governance software, allows the data's custodians to manage it, and also "lays the groundwork" for integration with Clearwell's e-discovery offerings, reports Evan Koblentz. "Where Data Insight is really focused is on who owns the data, where the data is being used, and how do we protect that data," says Don Angspatt, Symantec's VP of product management. As Angspatt explains, "In Data Insight 3.0 we don't do integration with Clearwell yet, but that's the very next thing on the road map." Image courtesy of Symantec

Data Insight 3.0, the latest version of Symantec's information governance software, allows the data's custodians to manage it, and also "lays the groundwork" for integration with Clearwell's e-discovery offerings, reports Evan Koblentz.

"Where Data Insight is really focused is on who owns the data, where the data is being used, and how do we protect that data," says Don Angspatt, Symantec's VP of product management.

As Angspatt explains, "In Data Insight 3.0 we don't do integration with Clearwell yet, but that's the very next thing on the road map."

Image courtesy of Symantec

LexisNexis Updates Law PreDiscovery, Early Data Analyzer

Fri, 16 Mar 2012 04:41:17 GMT

LexisNexis announced updates to Law PreDiscovery 6.1 and Early Data Analyzer 1.1, its e-discovery processing and early case assessment software, reports Evan Koblentz. Among PreDiscovery's new features are de-duplication from multiple cases simultaneously and the ability to "import/export load files based on the EDRM-XML 2.0 specification." Early Data Analyzer adds the use of optical character recognition to convert document images into editable, searchable text and metadata searches that use multiple data ranges, Koblentz writes. Next up for Lexis is a hybrid "to essentially take a lot of the batch-processed features from Law, put those into Early Data Analyzer, and then web-enable it," according to Joshua Rosenberg, the company's senior director of strategy for litigation tools in Austin. Image courtesy of LexisNexis

LexisNexis announced updates to Law PreDiscovery 6.1 and Early Data Analyzer 1.1, its e-discovery processing and early case assessment software, reports Evan Koblentz.

Among PreDiscovery's new features are de-duplication from multiple cases simultaneously and the ability to "import/export load files based on the EDRM-XML 2.0 specification." Early Data Analyzer adds the use of optical character recognition to convert document images into editable, searchable text and metadata searches that use multiple data ranges, Koblentz writes.

Next up for Lexis is a hybrid "to essentially take a lot of the batch-processed features from Law, put those into Early Data Analyzer, and then web-enable it," according to Joshua Rosenberg, the company's senior director of strategy for litigation tools in Austin.

Image courtesy of LexisNexis

Recent Articles in Electronic Discovery from LexMonitor

Ex-Juror Who "Friended" Defendant Faces Jail for Bragging on Facebook About Dismissal From Jury Duty

Utah Appellate Court Holds That "Confidential" Price List Is Not A Trade Secret But A Contract Bid Could Be, And Uniform Trade Secrets Act Preempts Common Law Claims Based On Misusing Confidential Information Not A "Trade Secret"

Minnesota District Court Dismisses Computer Fraud and Abuse Act Claim Brought Against Former Employee Based Upon Narrow Interpretation Of Act

Da Silva Moore Plaintiffs File Reply Brief In Support of Objections to Discovery Rulings

Tweeting Jurors Causing Judicial Headaches

Third Circuit Addresses Taxable Costs: Vacates Award of the District Court, Remands with Instructions to Re-Tax Costs in Accordance with Opinion

Play Nice or Pay the Price: Failing to Cooperate in Creating Preservation Protocols Can Result in Significant Consequences

Copyright Infringement for the Sale of Publicly Filed Documents?

3rd Circuit Issues Race Tires Decision on Taxing EDD Costs

Court Document Translation and Court Interpretation- Compensation Issues in Light of Taniguchi v. Kan Pacific Saipan, LTD

The cost of HIPAA non-compliance – $17 million

New Methods for Legal Search and Review

European Commission Proposes Reform to Data Protection Rules

District Court Judge to Have Last Word on Computer-Assisted Review, Grants Plaintiffs' Motion to Allow Additional Briefing

District Judge Will Hear Objections to Peck's Decision

Keep Your Pot of Gold Hidden, Ohio Court Rules Information Posted Online Not Trade Secret

Fios Webcast: Special Masters & e-Discovery with Craig Ball

Ramifications of Judge Peck's New Opinion

Clearwell Integration in Sight for Data Insight 3.0

LexisNexis Updates Law PreDiscovery, Early Data Analyzer