You Don’t Want Discovery Overdraft Charges

Discovery deadlines matter. Wells Fargo learned that the hard way with producing a relevant email 8 months after the close of discovery. Given the nature of the relevancy to the lawsuit, limited additional discovery was reopened.

Opps_iStock_Here is the short overview of the case: Plaintiff’s asked Wells Fargo if the other Defendants (now dismissed) were a legitimate business engaged in securities sales. The bank said yes and the Plaintiff transferred $80,000 to the Defendant’s bank account in order to purchase securities that would yield a return of $280,000.

The second transaction involved reinvesting $250,000 of the promised $280,000 to fund a $500,000 loan to renovate an office building, plus an additional $50,000 transaction fee. Gazian v. Wells Fargo Bank Na, 2015 U.S. Dist. LEXIS 69701, *2-3.

The Plaintiffs attempted to withdraw $30,000 and transfer the $250,000 to the Defendants. Wells Fargo informed the Plaintiffs that the dismissed Defendants accounts had been emptied and no money would be transferred to the Plaintiffs. Id.

The Plaintiff’s sued Wells Fargo on the theory the bank “knowingly or negligently made false representations to Plaintiffs” about the dismissed Defendants. Gazian, at *3.

Enter the late-produced email message:

From: BROWN, Patrick [Wells Fargo]

Sent: Tue 8/2/2011 5:36:42 PM

Re: HSBC Bank Guarantee Registration Number BH5843[.]

I have conducted a review on the signor, Craig Cason, for this account, [redacted]7443 — Increase Capital Investments LLC and found several items of concern . . .

This individual has been investigated by the SEC for securities violations and accusations of fraud.

The address on the account is a virtual office that can be rented for $50/month, used frequently by shell companies to give the appearance of legitimacy even though no actual business is conducted there.

The client has filed multiple bankruptcies and has several outstanding judgments (some in excess of $100K), which is not consistent with someone purporting to have $250mil in assets.

Please do not process the receipt of this security. We will be restricting the account and referring the matter to our Security Fraud group. Additionally, please DO NOT disclose this information to the client or the outcome of our review. Please advise the client that we cannot assist him with his request.

Gazian, at *4.

The Defendants claimed this messaged pertained to another securities deal and was not relevant. Gazian, at *5. The Plaintiff and the Court did not agree.

The Court reopened discovery so the Plaintiffs could conduct 5 additional depositions of no more than 20 hours of depo time; 10 additional requests for production; and 10 additional interrogatories. The Court went further to say that the additional depositions and written discovery could inquire into the preservation of emails sent to and from one of the Wells Fargo custodians. Gazian, at *7-8.

Bow Tie Thoughts

A lawsuit can hinge on one smoking gun email that was produced late. This sort of situation is one that needs to be avoided by litigants. The problem when this happens is often one of not having an effective information governance solution, or not issuing a litigation hold correctly, or not collecting ESI, or not knowing how to leverage early case assessment tools to find potentially relevant information. To put it mildly, disaster can happen for many reasons.

How can parties avoid these situations? Use sound technologies to manage data that can issue a litigation hold and preserve relevant ESI. This does require determining what is relevant, but these are problems that can be solved by knowing what actions to take and the tools to properly litigate a case.

How eDiscovery Experts Can Help Fight the Blues

Magistrate Judge Jonathon Goodman knows the value of an expert deposition in complex litigation and B.B. King.

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Everyday I Have the Blues

Here is the basic dispute in Procaps S.A. v. Patheon Inc.: The Plaintiff, based in Columbia, did not put a litigation hold in place until ordered by the Court. There are issues with inadequate searches and the Plaintiff’s attorney did not travel to Columbia to meet with the Plaintiff’s IT team. Custodians conducted searches themselves for collection without reviewing the discovery requests. The Plaintiff is accused of spoliation of electronically stored information. A spoliation motion is expected. Procaps S.A. v. Patheon Inc., 2015 U.S. Dist. LEXIS 53997, 2-4 (S.D. Fla. Apr. 24, 2015).

A Special Master was appointed to examine the eDiscovery and forensic issues in the case. Additionally, a neutral third-party computer forensic expert examined the Plaintiff’s computers. A Report was prepared that showed “that nearly 200,000 emails, PDFs, and Microsoft Word, Excel, and PowerPoint files were apparently deleted. It appears that approximately 5,700 of these files contain an ESI search term in their title, which indicates that they could have been subject to production in the forensic analysis if they had not been deleted. Procaps, at *7.

The Report also stated duplicate files could exist and that “there is no evidence that any ESI or other documents have been deleted or purged with no chance of being recovered.” Procaps, at *7-8.

To Know You is to Love You

The Defendants sought to conduct the deposition of the neutral third-party expert to explain the report. After a protracted discussion of whether the Court could order such a deposition procedurally, the Court stated Federal Rule Evidence 706(b)(2) expressly provided for such depositions. Procaps, at *15.

The Court explained that deposing the expert would benefit the parties and the Court in understanding the ESI issues in the case. As the Judged explained, “the Undersigned has no hesitation about disclosing my appreciation for help on complex ESI issues from court-appointed, neutral forensic experts (and from special masters with considerable experience in E-discovery).” Procaps, at *14-15.

The Court ordered the deposition of the third-party computer forensic expert to be conducted in part by the Special Master. Procaps, at *2-3. The goal of the deposition was to assist the Court in deciding the issues from the deleted files and assist the Defendant in determining whether or not to file a sanctions motion. Id.

Bow Tie Thoughts

First things first, I hope B.B. King is comfortable.

The “e” in “eDiscovery” is not because it is “easy.” Determining whether ESI was lost, whether it exists in another location, whether it is not reasonably accessible, requires expert analysis. This expert analysis needs to be communicated to the Court, usually in the form of a Report or Affidavit, but sometimes in a deposition.

The battles in this case focused on procedural issues with having the expert deposition. The Court rightly allowed the deposition and was wise to leverage the Special Master, who is very knowledgeable in eDiscovery, to conduct the deposition. Many cases have complex issues with how to collect data and strategies for reviewing ESI. Employing an expert is a smart way to focus on the merits and not get lost in eDiscovery issues.

 

Can You Sue for Invasion of Privacy if Someone Reposts an Instagram Photo?

basketball-31353_1280If a basketball player posts a public photo to Instagram, and then another basketball player reposts the photo, can the first basketball player sue for Invasion of Privacy, Intentional Infliction of Emotional Distress, Defamation, and General Negligence?

The answer is yes, you can sue, but you will not survive a motion to dismiss. That is the lesson from Binion v. O’Neal, 2015 U.S. Dist. LEXIS 43456, 1 (E.D. Mich. Apr. 2, 2015).

US District Judge Avern Cohn started this opinion in the most logical place: Instagram’s terms of service. The Court quote Instagram’s FAQ’s and privacy statement as follows:

Instagram is a social media website that describes itself as a “fun and quirky way to share your life with friends through a series of pictures.” (FAQ, Instagram.com, https://instagram.com/about/faq/ (last visited Mar. 5, 2015)) Every Instagram user is advised that “[a]ll photos are public by default which means they are visible to anyone using Instagram or on the instagram.com website.” (Id.) However, Instagram allows users to “make [their] account private” such that “only people who follow [the user] on Instagram will be able to see [their] photos.” (Id.) If the Instagram user fails to make his/her account private, “anyone can subscribe to follow [their] photos.” (Id.)

Instagram‘s privacy policy states that “[b]y using our Service you understand and agree that we are providing a platform for you to post content, including photos, comments and other materials (“User Content”), to the Service and to share User Content publicly. This means that other Users may search for, see, use, or share any of your User Content that you make publicly available through the Service.” (Privacy Policy, Instagram.com, https://instagram.com/about/legal/privacy/ (last visited Mar. 5, 2015)) The privacy policy further states, “[a]ny information or content that you voluntarily disclose for posting to the Service, such as User Content, becomes available to the public, as controlled by any applicable privacy settings that you set. . . . Once you have shared User Content or made it public, that User Content may be re-shared by others.” (Id.)

Binion v. O’Neal, 2015 U.S. Dist. LEXIS 43456, 2-3 (E.D. Mich. Apr. 2, 2015).

The Court reviewed each claim against Defendant Burke. The analysis focused heavily on Instagram’s privacy policies and Michigan law, as case was based in diversity.

The Invasion of Privacy cause of action was based on all four traditional claims: (1) “[i]ntrusion upon the plaintiff’s seclusion or solitude, or into his private affairs”; (2) “[p]ublic disclosure of embarrassing private facts about the plaintiff”; (3) “[p]ublicity which places the plaintiff in a false light in the public eye”; (4) “[a]ppropriation, for the defendant’s advantage, of the plaintiff’s name or likeness.” Binion, at *6.

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All of these claims failed. First, the Court found that a publicly posted photo to Instagram by a Plaintiff could not form a claim for “Intrusion upon Seclusion.” Binion, at *7. The Court agreed with the Defendant “that no reasonable person, particularly in the social media age, would find it objectionable to obtain and repost a photograph that someone had already posted publicly.” Id.

The Court also found there was no public disclosure of embarrassing private facts or “false light” claims from reposting a photo that originated from the Plaintiff. Binion, at *7-9. There was also no appropriation, as there was no evidence that reposting the photo of the Plaintiff gave the Defendant any pecuniary benefit. Binion, at *10.

The intentional infliction of emotional distress (IIED) requires a Plaintiff prove “(1) extreme and outrageous conduct; (2) intent or recklessness; (3) causation; and (4) severe emotional distress.” Binion, at *11. Reposting a publicly available photo from social media does not go “beyond all possible bounds of decency” to sustain a claim for IIED. Id.

The Court’s analysis of defamation was interesting. Defamation requires (1) “a false and defamatory statement concerning the plaintiff”; (2) “an unprivileged publication to a third party”; (3) “fault amounting to at least negligence on the part of the publisher”; and (4) “either actionability of the statement irrespective of special harm or the existence of special harm caused by the publication.” Binion, at *12.

The Court focused on the fact there were no statements attributed to the Defendant. The Plaintiff argued that the Defendant’s posting of the photo implied the Plaintiff was mentally handicapped or his appearance made him “worthy of ridicule.” Binion, at *13.

The Court rejected these arguments. There was no evidence that the Defendant had any statements that implied the Plaintiff was mentally handicapped. Moreover, Michigan Courts have held that online statements are “statements of pure opinion, rather than statement or implications of actual, provable fact.” Binion, at *13-14, citing Ghanam v Does, 303 Mich. App. 522, 547 (2014).

The Plaintiff’s general negligence claim also failed, because there was not a legal duty between both basketball players, other than “the general duty to conform to the legal standard of reasonable conduct in the light of the apparent risk.” Binion, at *14. Moreover, the Defendant argued that his relationship with the “Plaintiff is no different than with the millions of other Instagram users who post photographs that can be shared, reposted, and commented on.” Id.

The Court agreed. There is no case law precedent that supports the legal theory that there is a “social media duty” on reposting photos with foreseeable consequences of emotional harm. Id.

Bow Tie Thoughts

The collection of Instagram photos in cases involving online torts is an interesting one. The subject photos can exist in the Instagram App, on a party’s Instagram photo online, and in the Camera Roll of the phone. The “right” image to capture for litigation can turn on the type of case. Many times simply printing the image as a PDF from Instagram.com could be all that is required. Other cases might just require a screen capture of the app on the smartphone. There are situations where collecting the photo from the smartphone is required, such as when GPS metadata is relevant. Whatever the situation, attorneys should consider what is the relevant source of information to preserve.

Are “Read Receipt” Emails Hearsay?

How do you authenticate “Read Receipt” auto-generated emails? Are the messages hearsay?

social-349528_1280This issue was raised by a Defendant who challenged “Read Receipt” emails generated by one of the Defendants after reading an email from the Plaintiff.

The Court rejected the argument that the “Read Receipt” email was unauthenticated hearsay. Fox v. Leland Volunteer Fire/Rescue Dep’t Inc., 2015 U.S. Dist. LEXIS 30583, 31-32 (E.D.N.C. Mar. 10, 2015).

The Court outright questioned whether a “Read Receipt” email was even a statement, which requires that an assertion is intended under Federal Rules of Evidence 801(a). The Court considered that even if an auto-generated “Read Receipt” email was a statement, it would be admissible against the Defendant because the email was created by the Defendant reading (or at least opening) the Plaintiff’s email message. This is an unique way of saying “Read Receipt” emails are party admissions under Federal Rule of Evidence Rule 801(d)(2)(A) and (D), because the message came from the Defendant’s work email for a matter he was supposed to investigate as part of his job function. Fox, at *30-31.

The Defendant argued the “Read Receipt” was not properly authenticated, because the Plaintiff failed to have a technical affidavit explaining how “read receipt” emails are generated for reliability. Fox, at *31.

The Court rejected the argument the Plaintiff needed to explain how Defendant’s auto-generated email was created. While there are times for technical affidavits, this was not one of them according to the Court. The Court explained that since the email was being admitted as a statement of a party opponent, the Court did not require a technical report to ensure the reliability of the email. Fox, at *31, citing Fed. R. Evid. 801(d)(2).

Bow Tie Thoughts

Authentication and hearsay are issues Courts deal with daily over electronically stored information. I am confident this was not the first Court to deal with the issue of “read receipt” emails, but it was the first I have seen.

I would argue the auto-generated message is not hearsay, because there is no statement from a human being. However, one could argue with a straight face such messages are statements, because the data generated from the time it was read and the sending of the message is an assertion of fact. That being said, finding the “read receipt” message was a party admission was a very clever argument.

If You Also Love Evidence 

I have loved Evidence since law school. I am very happy to be doing a webinar with Guidance Software on the Admissibility of Electronically Stored Information on April 8, 2015, with Judge Matthew A. Sciarrino, Jr. of the Kings County Supreme Court, Kathleen F. McConnell, Esq., of Seyfarth Shaw LLP, and Chad McManamy, Esq., Vice President of E-Discovery and Assistant General Counsel for Guidance Software. If you would like to learn more and attend, you can register at here. I am really looking forward to the webinar.

 

Return to the TAR-Pit

Take note all, there is a new predictive coding case by Judge Andrew Peck. The good Judge waded into the TAR-pit of transparency, which in my opinion has caused much unnecessary problems with judges and parties who believe “transparency” is required when predictive coding is used, mandating the disclosure of seed sets. I do not think the Federal Rules of Civil Procedure place such a burden on producing parties by attacking the work-product doctrine or compelling the production of irrelevant information.

Judge Peck summarized that “where the parties do not agree to transparency, the decisions are split and the debate in the discovery literature is robust.” Rio Tinto Plc v. Vale S.A., 2015 U.S. Dist. LEXIS 24996, 8 (S.D.N.Y. Mar. 2, 2015).

Judge Peck’s new opinion did not rule on the issue of seed transparency, because the parties had agreed to an ESI protocol that “disclosed all non-privilege documents in the control sets.” Rio Tinto Plc., at *10. However, Judge Peck provided his thoughts on what I would call a bias against technology-assisted review:

One point must be stressed -it is inappropriate to hold TAR to a higher standard than keywords or manual review. Doing so discourages parties from using TAR for fear of spending more in motion practice than the savings from using TAR for review.

Rio Tinto Plc, at *10, emphasis added.

Business team enjoying victory

That statement is extremely important. There is no valid reason to treat “predictive coding,” or any other form of analytics such as conceptual searching, email threading, or clustering, to higher discovery standards because “technology” is used.

The issue is whether or not the production is adequate. A producing party should not have to disclose attorney work product in analyzing their case or proving the technology functions. Courts do not hold competency hearings on whether an attorney properly knows how to conduct online legal research to ensure attorneys are maintaining their ethical duty of candor to the court. The same logic applies to technology-assisted review and productions.

Judge Peck did state while he generally believed in cooperation, “requesting parties can insure that training and review was done appropriately by other means, such as statistical estimation of recall at the conclusion of the review as well as by whether there are gaps in the production, and quality control review of samples from the documents categorized as now responsive.” Rio Tinto Plc., at *9-10, referencing Grossman & Cormack, Comments, supra, 7 Fed. Cts. L. Rev. at 301-12.

The focus of discovery should be whether or not a production is adequate. Are there production gaps? Is the parent-child relationship maintained between email messages and attachments? Is the producing party conducting quality assurance testing? Is the producing party documenting their efforts?

Judge Peck’s latest opinion will not be the final word on the issue of “transparency.” However, Judge Peck is a well-respected jurist who understands technology-assisted review. His statement that “it is inappropriate to hold TAR to a higher standard than keywords or manual review” is a very welcome one.

WHOA! A Prevailing Party Recovered $57,873.61 in eDiscovery Costs!

thumb-456698_1280My God, is it true? Did a Prevailing Party recover virtually all of its eDiscovery costs?

The answer is yes, thanks to a case in Colorado.

United States District Judge Christine M. Arguello opened her order denying the Plaintiff’s motion to review the clerk’s taxation of costs with the following:

Because Defendants’ costs related to the electronically stored information (“ESI”) are expenses enumerated in 28 U.S.C. § 1920(4), and Plaintiffs were aware that Defendants would have to retain an outside consultant to retrieve and convert the ESI into a retrievable format, Plaintiffs’ Motion is denied.

Comprehensive Addiction Treatment Ctr. v. Leslea, 2015 U.S. Dist. LEXIS 17878, 1.

Rock on. Let’s review the Court’s reasoning.

The Plaintiff took the position that the Defendants’ eDiscovery cost award be reduced from $57,873.61 to $2,387.03, striking the work of a third-party eDiscovery service provider who performed the “retrieving, restoring, and converting data,” on the grounds the work did not constitute “copying.” Leslea, at *2.

The Court explained the Defendants hired their eDiscovery service provider to retrieve and restore ESI in order to respond to the Plaintiff’s Interrogatories and Requests for Productions. The requested discovery included “correspondence, summaries, emails, reports, and memos” relating to specific subject matter. Leslea, at *4-5. The Court noted that the work was complex and time-intensive, requiring three consecutive tolling agreements. Id.

The Defendants communicated with the Plaintiffs three times on the challenges over ESI, including providing detailed information on the scope of the data, archiving, and retention periods on multiple sources of data (hard drives, back-up tapes, etc). Leslea, at *5. In the second communication, the Defendants explained how the service provider restored 83 back-up tapes; and in the third the service provider’s forensic investigator detailed the difficulties in restoring the subject ESI. Id

The Court noted that the Plaintiffs were aware of the ESI challenges, did not recommend any changes to the scope of discovery, and even filed a new complaint with additional allegations. Leslea, at *5-6.

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The Court held that the ESI expenses were “reasonably necessary for use in the case” and not done for the mere convenience of the parties. Leslea, at *6. The Court concluded the order as follows:

Indeed, Plaintiffs were aware of the monumental effort to retrieve and convert the data into a retrievable format in response to their Interrogatories and Requests for Production. The costs incurred by Defendants, the prevailing party, in responding to Plaintiffs’ requests are expenses that are shifted to Plaintiffs, the losing party. Indeed, Plaintiffs own litigation choices and aggressive course of discovery necessarily resulted in “heightened” defense costs. Plaintiffs have not demonstrated that these costs are improper. Accordingly, Defendants are entitled to recover their costs in full measure as determined by the Clerk, which it has identified as $57,873.61.

Leslea, at *6-7, citing In re Williams Sec. Litig-WCG Subclass, 558 F.3d at 1150.

Bow Tie Thoughts

Thank you Judge Arguello for understanding a simple truth: eDiscovery requires technology to retrieve information and translate it into reasonable useable forms that are necessary for the case. This technology and expertise costs money. Yes, this case had an expert who explained what was being done during the litigation. Not every case has such powerful facts explaining the why and how of restoring ESI to make it reasonably useable, but this is an epic victory for taxation of eDiscovery costs.

Thank You Judge John Facciola

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Thanksgiving time is one for reflection. I have been thinking about Judge John Facciola’s impact on the world of eDiscovery with his upcoming retirement. I am very thankful we had such a dedicated judge who has been such a leader in electronic discovery.

Judge Facciola had his share big cases, but the important ones are the cases that give a nuts and bolts framework on how to actually litigate issues surrounding electronically stored information.

Judge Facciola excelled at these cases and showed a profound willingness to be hands on in solving issues, from search term efficiency to hosted repositories. The Judge’s commanding use of language is second to none, with many memorable quotes.

The good Judge is a profoundly thoughtful individual, whose interests include sailing, baseball, history, and a strong dedication to our justice system. I wanted to share a couple of stories I had with the Judge over the years.

First Time I Met the Judge

I met Judge Facciola on Super Tuesday 2008 in Washington, DC. I was in DC for a conference and had a webinar planned with him later in the month. I wanted to take the opportunity to meet him in person since I was in town.

After going through security at the Federal Courthouse, I eventually found the waiting room for his department’s chambers. Observing large format photos of boats on the wall (one was a dory) and magazine on the America’s Cup, I thought, “Cool, we can talk about sailing.”

The Judge greeted me in one of his signature bow ties. Ironically, I did not know he wore bow ties at that time. My react was simply, “Awesome.”

We had lunch in the judges’ dining room that overlooks the US Capital Building. It is still surreal to remember, seeing other judges eating lunch and discussing matters of importance. To this date it is still one of the most memorable events in my career so far.

Judge Facciola and I discussed search terms and discovery requests. I shared with him my concern that “text speak” such as “LOL” type acronyms should be included when conducting searches of text messages and instant messages. He actually sat-up and said, “I had not thought of that.”

After leaving the Courthouse, I met up with some attorney friends. We watched the Super Tuesday results at different campaign parties at some of DC’s more entertaining pubs, but that adventure is another story.

An Evening at the Cosmos Club

I visited DC in 2013 for a business trip. I contacted the Judge if he had time to meet for lunch or coffee while I was in town. He offered to meet for dinner at the Cosmos Club.

I am normally well versed in history, but I had to look up the Cosmos Club. The Club was founded in 1878 dedicated to the advancement of art, science, and literature. Its members included Alexander Graham Bell, Woodrow Wilson, and virtually every Secretary of State.

There is no question the Cosmos Club was the most regal institution I have ever entered. For me, it represented those dedicated to knowledge with a true sense of class. The library was simply majestic, where one could be lost for hours in study.

The Judge and I enjoyed a good meal, discussing the law, film, boats, and of course US History. At a prior dinner before Legal Tech 2009, we discussed the sinking of the USS Indianapolis and the unfair court martial of Captain Charles McVay III, leaving the others looking at us in respectful confusion.

While we were discussing topics from eDiscovery to President Garfield, another dinner party walked by our table. The person in the lead looked familiar, but I could not identify the dinner guest.

Once the other party was seated, the Judge said, “That’s General Petraeus.”

A True Statesman

Jessica Mederson and I invited Judge Facciola to record an Independence Day podcast for our blog The Legal Geeks. Judge Facciola truly loves the United States. The Judge shared his thoughts on the 4th of July, the meaning of Independence, and the role of the Judiciary in upholding the promise of the Declaration of Independence. Jess and I were clearly in awe of what the Judge had to say about our country and freedom.

Legacy on the Court

Judge Facciola leaves a powerful legacy of civic duty, honor, and a strong work ethic. I wish him well in his future adventures, whether they are out sailing or well-earned time with family. Thank you for your service, Your Honor.

Moreover, thank you for the tip about Beau Ties Ltd of Vermont. Wonderful collection of bow ties.