Document Custodians

Proportionality Applies to International Trade Disputes As Well

In Timken Co. v. U.S., the plaintiff ("Timken" or "Plaintiff") challenged the decision of the Department of Commerce, International Trade Administration ("Commerce"), denying Plaintiff access to computer tapes submitted by defendant-intervenors (the "Defendant") in a complex trade case.  Timken sought the tapes notwithstanding that it had received the very same information in paper form. Plaintiff advocated its position by discussing the hardship that would be imposed if Plaintiff had to reproduce the tapes itself.  Plaintiff demonstrated that it would require 7,500 man-hours and a legion of "keypunchers," at a total cost of approximately $200,000 to duplicate what Commerce already had in its possession.  With respect to the need for the tapes, Plaintiff indicated that without the tapes it would not be able to identify factual errors in the data and other mathematical or methodological errors. Commerce countered the above points by arguing that if it had to supply the tapes, it would have to expend significant energy insuring that customer names had been deleted and assisting Plaintiff with mechanical problems that may arise.  Commerce also asserted that if it was compelled the tapes companies would be less likely to store information on tapes moving forward, to prevent disclosure. In reviewing the merits, the Court of International Review applied the standard expounded in the applicable legislative history; that is, "whether the need of the party requesting the information outweighs the need of the party submitting the information for continued confidential treatment."  The court first concluded that the cost factored weighed in favor of Plaintiffs. Not only were Plaintiff’s costs to reproduce high, but also Plaintiff was willing to offset any costs to Commerce.  This process also minimized the involvement, and therefore the burden, of Commerce.  With respect to the argument that the tapes were required by Plaintiff to independently analyze the data, the court found that access to the tapes was essential for effective advocacy, and that such work by Plaintiff would not constitute a "duplication of administrative functions."  Finally, the Court dismissed Commerce's argument that companies would no longer maintain data on tape: "[I]t is unlikely that the mere possibility of trade litigation in the United States would prompt foreign exporters to return to archaic business procedures." Although not articulated as such, the court engaged in a proportionality analysis typically applied to discovery disputes in federal courts.  Plaintiff's willingness to offset the costs to Commerce seemed to sway the court, just as it would in a typical discovery dispute.  Another principle to be extracted from this case is the value inherent in having data in a particular form.  This may be an area where practitioners miss the boat. A savvy e-disco attorney will know the ins and outs of how different forms of data can be manipulated, and the form most ideal for recovering (or inhibiting recovery) of particular information.  So practitioners should remember at their next meet and confer, just getting the information may not be enough—form may be critical. Adam L. Peterson is a graduate of Seton Hall University School of Law.  Adam was a member of the Seton Hall Law Review and, prior to law school, Adam was an Environmental Analyst with the New York State Department of Environmental Conservation. 

Who Should Pay the Cost of Producing eDiscovery?

This case involves a contractual dispute worth $41 million between Juster and North Hudson Sewerage Authority (NHSA). Juster issued a request for production of documents that included 49 requests for documents and a list of 67 proposed search terms. Some of these terms included words such as “fee,” “debt,” “tax,” and “SEC.” NHSA argues that the court should grant a protective order because it already produced 8,000 pages of documents and felt these search terms were too vague. Additionally, NHSA stated that if the court did not grant its protective order, the cost for producing these documents and running the searches should be shifted to Juster. The court did not agree with NHSA’s claims. Not only was there a lack of evidence that the data requested here was inaccessible, the court also applied the seven-factor test set forth in Zubulake v. UBS Warburg. This case has been adopted by the Third Circuit in cases that involve fee shifting. The Zubulake factors include: The extent to which the request is specifically tailored to discover relevant information; The availability of such information from other sources; The total cost of production, compared to the amount in controversy; The total cost of production; The relative ability of each party to control costs and its incentive to do so; The importance of the issues at stake in the litigation; and The relative benefits to the parties of obtaining the information In applying the Zubulake factors to this case, the court held that fee shifting is not warranted. The requests for electronically stored information (ESI) were tailored, as the searches were restricted to a specific time period (2011-2012). Second, it is unknown if this information is available from other sources. The third, fourth, and fifth factors are concerned with the costs associated with the request for ESI. Here, the court found that given the amount of damages at stake, NHSA’s ability to absorb the costs of the ESI requests, and the projected costs are not substantial enough to justify fee shifting. The fact that the litigation had $41 million at issue and the cost of running the keyword searches was approximately between $6,000 and $16,000, the court felt fee shifting would be inappropriate. The final factors are not relevant to this litigation as this is a private contractual dispute between two parties and no public policy is implicated. Overall, these factors weigh heavily in favor of Juster. As a result, this case illustrates that courts are reluctant to sway from the idea that it is the responding party that bears the costs in complying with discovery requests. Only when there is an undue burden on the responding party, or inaccessibility of information, will the court consider fee shifting. Yet, given today’s society, most information is accessible. Additionally, when both parties have comparable discovery requests and both agree to pay their own costs in producing discovery, fee shifting is even less likely to occur. Jennifer Whritenour received her B.S. in Political Science and History in 2011 from the University of Scranton. In May 2014, she received her J.D. from Seton Hall University School of Law.

Facebook Fails: Can I Delete my Facebook while a Lawsuit is Pending?

The defendant in personal injury litigation commonly requests discovery concerning a plaintiff’s Facebook account.  The reason such requests are made is that pictures on Facebook may reveal the “injured” plaintiff dancing on top of a bar table, skiing, traveling, etc.  These damaging photos may prove that the plaintiff’s injury is not as severe as he or she claims and could result in dismissal of the case.  Therefore, it is not uncommon for a plaintiff to delete his or her Facebook account in order to conceal any damaging pictures.  The deletion of a Facebook account, however, may result in sanctions such as an adverse inference jury instruction.[1] In Gato v. United Airlines, Inc., the plaintiff was injured while working for the defendant.  During the litigation, the plaintiff permanently deleted his Facebook account.  The defendant motioned for an adverse inference jury instruction claiming that the deletion of the Facebook account destroyed relevant evidence, thereby prejudicing the defendant. In granting the sanction, the district of New Jersey adopted a very low standard as to what a litigant must show in order to obtain an adverse inference jury instruction.  The court held that “so long as evidence is relevant, the offending party’s culpability is largely irrelevant, as it cannot be denied that the opposing party has been prejudiced.”  This seemingly simple sentence has enormous implications for litigants in the district of New Jersey for two reasons. First, it means that as long as the destroyed evidence was relevant, a litigant need not prove that the adversary intentionally (or even negligently) destroyed evidence.  The lack of state of mind requirement eliminates what is often the most difficult element to prove when seeking spoliation sanctions.  Without the need to prove a litigant’s culpability in destroying the evidence, the court seems to impose a form of strict liability upon the destroying party.  The only requirement imposed by the court is that the party seeking sanctions prove that the destroyed evidence was relevant.  This is a significant deviation from the traditional method employed by courts which requires proof that a party was at least negligent in destroying the evidence. Second, the court indicates that as long as the evidence is relevant, it will presume that the destruction of the evidence was prejudicial to the opposing party.  This eliminates the need for the party seeking sanctions to prove that it was prejudiced by the missing evidence.  Instead, the party only needs to prove that the evidence was relevant. Notably, the court explained that the defendants in Gato were “prejudiced because they have lost access to evidence that is potentially relevant to Plaintiff’s damages and credibility.”  In other words, the defendant in Gato did not have to even prove that the destroyed evidence was undoubtedly relevant—the defendant only had to prove that the evidence was potentially relevant. In sum, the District of New Jersey imposed an adverse inference jury instruction simply because the destroyed evidence was potentially relevant to the litigation.  The court did not require the defendant to show that it was prejudiced by the destruction, nor did the court require any showing as to the Plaintiff’s state of mind in destroying the evidence.  Moving forward, litigants must be extra careful in their efforts to preserve evidence relevant to litigation. E-DiscoParty, a Seton Hall University School of Law graduate (Class of 2014), served on the executive board of the Seton Hall Law Review and is a member of the Interscholastic Moot Court Board.  Currently, E-DiscoParty clerks for a Justice on the Supreme Court of New Jersey.  [1] An adverse inference jury instruction is a powerful sanction where the court advises the jury to presume that any destroyed or missing evidence contained detrimental information about the party that destroyed or lost the evidence.

Should One IT Person Hold the Keys to the Kingdom? How the “Philippine Love Bug” Case Highlights the Vulnerability of Such a Policy

Background Omega Engineering Corporation, an international company based in New Jersey, was once the employer of Timothy Lloyd. To put Omega’s importance into perspective, the U.S. Navy and NASA were two of their clients for highly specialized and sophisticated industrial process measurement devices. According to testimony during the trial, Lloyd worked at Omega as its sole system administrator from 1985 through 1996. In 1995, Lloyd had undergone Novell network training and installed Novell software on Omega’s computer system. Additionally, Lloyd was the only person who maintained and had top-level access to the Omega network. Between 1994 and 1995, Lloyd became belligerent and increasingly truculent. Due to his poor interpersonal skills, he was demoted in May 1995 from manufacturing to  support engineer. A woman who had once been Lloyd’s subordinate and had engaged in a romantic relationship with Lloyd, was the individual responsible for replacing Lloyd as manufacturing supervisor. In June 1996, Lloyd instituted a policy to “clean up” all of the individual computers in Omega’s manufacturing department. It was unclear as to why Lloyd was implementing company policies after his demotion. Nonetheless, the policy required employees to save their files to the company’s file server and prohibited them from making their own backups. Lloyd’s manager became suspicious of this policy and requested from Lloyd access to the file server. Lloyd never complied. By the end of June, upper management had enough of Lloyd’s behavior and terminated him in early July 1996. On July 31, Omega’s file server would not boot up. All of Omega’s manufacturing programs on the server, which contained instructions for operating the machines, were gone. Multiple computer experts were brought in to recover the files, but to no avail. The files had not only been deleted, but also had been “purged,” meaning that they were rendered unrecoverable.  A leading expert on Novell networking testified at trial that this could only have been done intentionally and by someone with supervisory-level access. The government’s theory included that on July 30, anyone who would log on to the server at any time after that date would “detonate” a program installed by Lloyd that would destroy the information on the Omega file server. The government’s theory was bolstered by the fact that the Secret Service recovered missing Omega backup tapes that had been reformatted as well as a master hard drive from the file server. This had the same string of commands that had functioned as the time bomb program found on the Omega file server. The Decision Ultimately, Lloyd was found guilty of computer sabotage. The jury had deliberated for over twelve hours over the span of three days and had requested testimony in the jury room before they reached their verdict. However, three days after the verdict, one juror said that she had seen on the news, during the trial, about a computer virus called the Philippine “love bug” which allowed the perpetrator to cause great harm by flooding the victim computers and causing them to crash. Whether this affected her decision is unclear; however, the defendant claimed that his 6th Amendment rights had been violated. The district court agreed, granting a new trial. On review, the Court of Appeals reversed the district court’s holding. After a lengthy discussion, the court said that there were significant dissimilarities between the “love bug” and the “time bomb” and most jurors would not confuse the two. Therefore, the appellate court found, the defendant was not prejudiced. Lloyd’s managers should never have allowed a single employee hold as much power as they did. This case highlights the vulnerabilities the company subjects itself to if that is allowed to happen. For example, Omega lost over 1,200 programs and many current and potential clients as well. Akiva Shepard received his J.D. from Seton Hall University School of Law in 2014. Akiva has worked for a New York State Supreme Court Judge in Kings County, and for a NJ real estate firm. 

Employers—Got Resumes? Don’t Toss Them Just Yet

Plaintiff Erick Zayas joined with the Equal Employment Opportunity Commission (EEOC) to sue Ventura Corp. for employment discrimination on the basis of sex in 2007. In essence, Zavas complained that Ventura’s long-standing tradition of hiring women for the position he applied to was discriminatory. Furthermore, Zavas alleged that Ventura destroyed relevant evidence. In its answer, Ventura stated that the fact that no men have filed applications or have not met the position requirements did not support the plaintiffs’ assertion of discrimination. However, during limited discovery a list revealed that qualified men did in fact apply and accounted for 34.5 percent of qualified applicants. The central issue involved application materials received by Ventura. These included materials submitted by e-mail and hard copy resumes. The court first notes that spoliation is “the failure to preserve evidence that is relevant to pending or potential litigation.”  The duty to preserve relevant evidence arises once litigation is reasonably anticipated. The court noted that since Ventura was notified in 2007 that it was being charged with sexual discrimination, at that point Ventura should have reasonably anticipated litigation and was thus under the duty to preserve. Ventura attempted to make a statutory argument that resumes did not need to be preserved. The relevant statute, 29 CFR 1602.14 (see http://www.law.cornell.edu/cfr/text/29/1602.14), makes reference to “application forms” and “test papers.” Ventura argued that it required neither application forms nor test papers and that resumes were not mentioned. However, the court rejected this argument. The court noted that the statute also includes the language, “other records having to do with hiring.” The court ultimately held that resumes therefore clearly applied. Ventura’s Human Resource Analyst testified that certain documents were shredded or taken to a warehouse as a result of an office restructuring in 2009. Furthermore, the HR Analyst wasn’t able to find the said documents. The plaintiffs were therefore able to establish that Ventura either lost or destroyed the resumes between 2007 and 2010. Because Ventura was on notice since 2007, the disappearance of these documents constituted a violation of its duty to preserve relevant evidence. Soft copies of resumes delivered by e-mail were also lost in the same time period. In fact, th plaintiffs were able to produce a relevant e-mail to and from Ventura, while Ventura was not able to produce the very same e-mail. This e-mail alone and the fact that other relevant e-mails likely existed in the 2007-2010 period but were nowhere to be found, was sufficient to infer that Ventura likely destroyed them. The court held that sanctions were in order for Ventura’s violation of its duty to preserve. As a result of Ventura’s failure to preserve relevant evidence, the court imposed a “spoliation instruction” or adverse inference instruction. Such an instruction allows the trier of fact to infer that the content of the destroyed relevant evidence was damaging to Ventura’s case. Lesson learned? If you intentionally or unintentionally destroy relevant evidence while under a duty to preserve, an adverse inference instruction will likely bring swift defeat and sway the trier of fact against you. It’s best to preserve evidence and maintain your credibility with the court and trier of fact even with bad facts. Rocco Seminerio is a Seton Hall University School of Law graduate (Class of 2014). Mr. Seminerio focuses in the areas of Estate Planning, Elder Law, and Health Law. He graduated from Seton Hall University in 2011 with a degree in Philosophy. He also has an interest in the life sciences.

Independent Contractors Beware, You’re Not Protected

Richard Fraser was an independent contractor working for Nationwide Mutual Insurance Company when he was fired in 1998. Although Fraser argued that he was fired for reporting illegal policies that Nationwide had implemented, Nationwide stated he was fired because he was disloyal to the company. Nationwide found that plaintiff had drafted (but not sent) two letters to two Nationwide competitors, Erie Insurance Company and Zurich American Insurance, expressing Contractors Association members' dissatisfaction with Nationwide and seeking to determine whether Erie and Zurich would be interested in acquiring the policyholders of the agents in the Contractors Association. After discovering the letters, Nationwide also searched its mail file server and found e-mails revealing company trade secrets. Fraser filed a wrongful termination suit against Nationwide, arguing that Nationwide’s accessing Fraser’s e-mail account without permission violated the Electronic Communication Privacy Act and a parallel Pennsylvania statute. The trial court granted Nationwide’s motion for summary judgment and Fraser appealed. The Third Circuit Court of Appeals affirmed the trial court’s ruling that Nationwide had access to the independent contractor’s emails. Nationwide was found to not have violated the ECPA because Nationwide had provided the independent contractor with the e-mail account, the e-mail was hosted on Nationwide’s servers, and the e-mails were acquired after transmission of the e-mails. Therefore, the court held that the e-mails were not intercepted by Nationwide. Title 1 of the ECPA prohibits the interception of e-mails, but Nationwide argued that since the e-mails were reviewed after the transmission of the e-mail, that no interception had occurred. The court agreed and found that for one to intercept e-mail, he must occur contemporaneously, at the time of the transmission. Therefore, as long as the seizure of e-mail occurs after the e-mail is transmitted, a company does not need permission to access the independent contractor’s e-mails. Salim received his B.A. in Applied Communications, with a minor in Legal Studies, from Monmouth University. He received his J.D. from Seton Hall University School of Law in 2014. Salim’s past experiences include interning for a personal injury law firm prior to attending law school, as well as judicial internships in the Civil and Family Divisions.

New Age Technology: Brazilian and U.S. Courts “Scraping” the Surface of Legal Boundaries of Internet Use

This Article was originally published with Bloomberg Law Reports on November 9, 2011. The Internet has afforded anyone, anywhere, a wealth of information at one's fingertips. Within the current and ever­expanding age of technology, Brazilian- and U.S.-based courts continue to draw legal boundaries within a seemingly boundless cyberspace. The boundlessness of the Internet, and its related technologies, transcends geographical limits and poses worldwide issues of regulation. One such technology, which has caught the attention of businesses and resulted in significant legal battles, is "scraping" - a computer software technique that extracts publicly available information from websites. While in and of itself, "scraping" may not be unlawful, courts in Brazil and the U.S. have begun to carve out permissible and impermissible uses of this technology. Brazilian Scraping Lawsuit A recent court opinion of first impression in Sao Paulo, Brazil, gives newfound meaning to ownership rights of information available on the Internet. The Brazilian court's opinion in Curriculum Tecnologia Ltda. v. Catho Online S/C Ltda., et al, examines claims of unfair competition and violation of copyright rules, as applicable to the Internet. The plaintiff, Curriculum Tecnologia Ltda. ("Curriculum"), and defendant, Catho Online S/C Ltda. ("Catho"), are employment recruitment companies, operating solely through the Internet. Thousands of individuals seeking employment use the services of these companies by posting their resumes on the respective websites. In turn, employers seeking to hire review thousands of potential candidates to fill their open positions. In fact, Curriculum is the largest employment website in Brazil, providing a meeting place for over 6 million registered applicants and 100 thousand user companies. These services allow for a faster and easier connection to the open job market. In February 2002, developers at Curriculum noticed an unusual increase in activity on their company's website. While, generally, Curriculum's customers search approximately 500 resumes per day on its website, developers became suspicious when one particular user registered over 63,000 searches in one day. Upon further investigation, Curriculum technicians blocked the particular account and tracked its origin back to a computer at Catho, the defendant competitor. As a result of its investigation and findings, Curriculum filed suit against Catho alleging various business-related claims. As the lawsuit proceeded in the normal course, fact gathering efforts revealed flagrant and deceptive practices by Catho to illegally, in violation of Brazilian law, acquire information from Curriculum's website. In short, Catho developed a program that enabled it to copy ell mass Curriculum's website information database through which it could access resumes from Curriculum's website. Once Catho gained access to the resume information, it used it for its own commercial purposes. The purpose behind Catho's efforts was to increase its own potential employee base in order to offer a wider range to online employment recruiters. Catho acquired hundreds of thousands of resumes from its competitors through the use of these and related methods. Indeed, Curriculum was not the only competitor to bring suit against Catho for these practices, as several other victims of this Internet hacking scheme brought separate actions against Catho. To appreciate the breach of security and the value of the acquired information, one must understand the function of the employment recruitment market in Brazil within which these parties operate. Both parties operate primarily as online employment search engines. Individuals who seek employment and employers who seek skilled individuals, use the services of these recruitment companies by paying fees which permit the posting of resumes and job advertisements, allowing for searches of both to be performed. These web-based services offer various levels of fee-based access to these postings and search capabilities, which in turn generate revenue for these companies. Curriculum's website provides its users with instructions and several menus that allow them to browse its webpage efficiently and effectively. Curriculum does not provide every user with access to its resume bank. Instead, the website uses filters that permit only certain clientele with particular fee-based account settings to access this information. Catho used hacking programs to breach these security devices, allowing unauthorized access to resumes on Curriculum's website, spurring the lawsuit. Specifically, the programs developed by Catho allowed it to take advantage of security flaws in Curriculum's website, and gain access to the entire proprietary database - thereby transferring tens of thousands of resumes in a single clandestine night of debauchery. After plaintiff filed suit, the parties set forth arguments before the Brazilian court in support of their respective positions. Curriculum argued it had a property ownership interest in the data, and therefore Catho engaged in unfair competition and unauthorized copying of Curriculum's information. Catho argued that the information was public, access to the website was open and unrestricted, and therefore the information was not afforded legal protection. In sustaining a lower court's previous finding of damages.judge Luiz Mario Galbetti of 33 Civil Court of Sao Paulo found that Catho engaged in unfair competition by breaching Curriculum's internal computer systems and illegally acquiring thousands of resumes posted therein. The court held that the transmission and expansion of Catho's own database through this illegal acquisition served to increase its market visibility with direct effects on the profits obtained by Catho. Relying on notions of unfair enrichment, abuse of rights, and unpredictability, the court awarded damages in the amount of R$21,828,250.00 (in Brazilian Real). In calculating damages, the court considered the amount charged by Catho per month for posting a resume on its website, R$50.00, multiplied by the 436,595 resumes it illegally acquired. With interest and additional penalties this R$21,828,250.00 resulted in an award of R$63 million in damages, or approximately $42 Million USD. U.S. Scraping Lawsuits Similarly, U.S.-based courts have addressed the legal boundaries of extracting information from public websites. In EF Cultural Travel v. Zefer Corp., 318 F.3d 58 (1st Cir.2003), the U.S. Court of Appeals for the First Circuit issued a preliminary injunction pursuant to the Computer Fraud and Abuse Act (“CFAA”), 18 U.S.C. 1030, to prohibit the use of a “scraper” software program that defendants used to collect pricing information from the plaintiff/competitor’s website. Zefer Corp. (“Zefer”) sought review of the injunction, implemented in a prior hearing with co-defendant Explorica, Inc. (“Explorica”). See EF Cultural Travel BV v. Explorica, Inc., 274 F.3d 577 (1st Cir. 2001). EF and Explorica are competitors in the student travel business, operating websites that permit their respective visitors to explore various vacation packages. To gain a competitive edge, Explorica hired Zefer to build a program that would allow Explorica to “scrape” the prices from EF’s website and download them into an Excel spreadsheet. After accessing EF’s vacation package pricing, Explorica tailored its own costs, purposefully undercutting EF on an average of 5%. EF stumbled upon the “scraping” scheme as a result of discovery in an unrelated, state court lawsuit involving Explorica. As a result, EF filed suit in federal court, seeking an injunction on the grounds that the “scraping” violated both federal copyright laws and various provisions of the CFAA. The underlying issue in the case was whether the use of the scraper program exceeded “authorized access,” in violation of federal law. The relevant CFAA provision examined by the court provides: Whoever. . . knowingly and with intent to defraud, accesses a protected computer without authorization, or exceeds authorized access, and by means of such conduct furthers the intended fraud and obtains anything of value, unless the object of the fraud and the thing obtained consists only of the use of the computer and the value of such useisnotmorethan$5,000inany1-yearperiod. . .shall be punished as provided in subsection (c) of this section. While the CFAA defines “exceeds authorized access” as “to access a computer without authorization and to use such access to obtain or alter information in the computer that the accesseer is not entitled so to obtain or alter,” the court in EF Cultural Travel provided analysis of the term “authorization.” The trial court held that authorization could be determined both explicitly, for example through a direct statement restricting access, or implicitly. In defining the implicit prong, the trial court relied upon a “reasonable expectations” test. Even though the appeals court agreed that authorization can be both explicit and implicit, it rejected application of the reasonable expectations test used by the trial court. Instead, the appeals court determined that “public website provider[s] can easily spell out explicitly what is forbidden and consonantly, that nothing justifies putting users at the mercy of a highly imprecise, litigation-spawning standard like ‘reasonable expectations.’” As a result, the appeals court determined that a clear manifestation of the company’s intent that no information be collected from its website was necessary in order to show “lack of authorization,” such as an explicit statement on the webpage restricting access. Or, to put it more bluntly, “[i]f EF wants to ban scrapers, let it say so on the webpage or a link clearly marked as containing restrictions.” Nonetheless, this federal appeals court decision did not eliminate the concept of implicit authorization, as it may suffice in other circumstances. However, the decision highlighted that a plaintiff must demonstrate unambiguously that authorization was prohibited. The EF Cultural Travel decision promulgates the theory that the right to control access implicates a right to prevent or obtain legal remedies for any unauthorized access. As demonstrated in EF Cultural Travel, authorization may be established both implicitly and explicitly. Another method of disclosing a lack of authorization may be through the creation of technological barriers, such as encryption of particular information. Under this regime, after the initial encounter, a third party must either obtain permission or take unusual steps to circumvent the technological barrier. Lastly, database owners may also establish use authorization conditions through contractual terms. Whatever the means of establishing authorization, or the lack thereof, it is apparent that a reasonable effort to protect is a precondition to maintaining this legal right.[1] It is recognized, however, that the mere posting of information on a public domain, such as the Internet, does not in and of itself extinguish a protectable right to that information. This presumption is also echoed in case law analyzing the misappropriation of trade secrets. For example, in Barnett, Inc. v. Shidler, 338 F.3d 1125 (10th Cir. 2003), the court examined whether former employees misappropriated a trade secret by implementing the Infant Swimming Research program (“ISR”), which was designed by plaintiff as a scientific, behavioral approach to pediatric drowning prevention. In finding the ISR program was not a trade secret, the trial court noted “[plaintiff ] allowed its program to become part of the public domain before seeking protection...,” referring to various published books explaining the ISR method. In reversing this finding, the appeals court highlighted the decision in Rivendell Forest Prods., Ltd. v. Georgia-Pacific Corp., 28 F.3d 1042, 1045 (10th Cir.1994) in which the court found that “a trade secret can exist in combination of characteristics, each of which, considered separately, is in the public domain, but, taken together, may yield a competitive advantage that results in a protectable trade secret,” solidifying the argument that information may be a trade secret notwithstanding the fact that some of its components are well known. See also Syncsort v. Innovative Routines, No. 04-CV-03623, 2011 BL 213594 (D.N.J. Aug. 18, 2011) (federal district court of New Jersey examining the existence of a trade secret in light of its brief publishing on the internet). While case law involving scraping requires some form of notification as to non-authorization, this line of reasoning quashes any argument that information posted on the Internet should not enjoy legal protection simply because of its public nature. A court must determine the underlying intent of the scraper because the legality of extracting data from a website often centers on the underlying intent in copying.[2] The copying of information for any purpose deemed a “fair use” may therefore not be actionable. As evidenced by both EF Cultural Travel and Curriculum, this key element is what often implicates legal remedies. Lessons Learned Easy access to information afforded by the Internet has created a global culture that often accepts the free use (and abuse) of information. This often results in blurred lines between public and private property, especially for those who conduct business through the Internet. Therefore, unless a database is composed of content independently entitled to protection, for example through copyright or trade secret law, database owners must rely upon a patchwork of available legal remedies. Database owners may seek protection under unfair trade statutes or under common law theories such as misappropriation. Contractual restrictions also offer protection, but such a remedy requires privity of contract. Moreover, while a claim for trespass may also be a feasible option, most courts require a showing of actual injury. Lastly, and certainly not exclusively, protection under the CFAA may be warranted. While each option has its own nuances, courts are setting down the foundation of protection in response to the legalities of the Internet age. Therefore, while the potential remedies available to database owners under U.S. law tend to be narrow, it is no doubt only the beginning. Regardless of the underlying legal principal asserted against an illegal scraper, liability attaches on a case by case basis depending upon the type of access obtained by the scraper, the amount of information accessed and copied, the degree to which the access adversely affects the Web site owner’s system and the types and manner of prohibitions on such conduct. The significant monetary award issued by the São Paulo court underscores the value that information has to a company and its survival. The decision also serves as a warning to billions of Internet users globally, as the calculation of damages serves not only to punish the wrongdoer but also to deter the illegal activity in and of itself. These decisions evidence a fairly new attempt by courts to address the legal issues posed by the Internet. While the approach is not yet uniform, there are obvious efforts by courts to protect proprietary information on the Internet from uses that are detrimental to the owners of such sites. Fernando M. Pinguelo, a Partner at Norris, McLaughlin & Marcus, P.A. and co-Chair of the Response to Electronic Discovery & Information Group at the firm, is a U.S.-based trial lawyer who devotes his practice to complex business lawsuits with an emphasis on how technology impacts lawsuits. Mr. Pinguelo founded and contributes to the ABA Journal award-winning blog, eLessons Learned – Where Law, Technology, & Human Error Collide (www. eLLblog.com). To learn more about Mr. Pinguelo, visit www. NYLocalLaw.com or email him at info@NYLocalLaw.com. Renato Opice Blum, CEO of Opice Blum Advogados Associados in São Paulo, Brazil, is a Brazil-based attorney and economist, who established one of the first leading technology-based law firms. Mr. Blum is the Coordinator of the MBA course in Information Technology Law at São Paulo State Law School and a distinguished professor at Fundação Getúlio Vargas, among other universities. Mr. Blum is co-author of the book, Internet and Electronic Law. To learn more about Mr. Blum, visit http://www.opiceblum.com.br/ lang-en/01_profissionais_dadosRes.php?ID_CUREQUIPE=138578 or email him at renato@opiceblum.com.br. Kristen M. Welsh is a U.S.-based litigation Associate at Schiffman, Abraham, Kaufman & Ritter, P.C. and focuses her practice on business and employment law matters. Ms. Welsh may be reached at KWelsh@sakr-law.com.  [1]. This rule of thumb is also applied in cases analyzing the misappropriation of trade secrets. See Barnett, Inc. v. Shidler, 338 F.3d 1125 (10th Cir. 2003). [2]. Various fair uses have been identified by the court. See Nautical Solutions Mktg., Inc. v. Boats.com, Copy. L. Rep. (CCH) ¶28, 815 (M.D. Fla. 2004) (holding that “momentary copying of open . . . public Web pages in order to extract yacht listings facts unprotected by copyright law constitutes a fair use.”); Ticketmaster Corp. v. Tickets.com, Inc., No. 09-CV-07654 (C.D. Cal. Mar. 7, 2003) (“Taking the temporary copy of the electronic information [from the Ticketmaster.com website database] for the limited purpose of extracting unprotected public facts leads to the conclusion that the temporary use of the electronic signals was ‘fair use’ and not actionable.”); see also Assessment Technologies, LLC v. WIREdata, Inc., 350 F.3d 640 (7th Cir. 2003).

Federal Judge Sanctions Corporate Defendant and Its Counsel for Gross Negligence, Bad Faith, and Failure to Comply With Discovery Requests and Court Order

In Brown v. Tellermate Holdings Ltd., Tellermate Holdings, the defendant company, terminated two employees for allegedly failing to meet sales targets over several years.  The employees, feeling that they were wrongfully terminated due to their age, filed an employment discrimination action against the company as well as other entities and individuals associated with Tellermate. Throughout pre-trial proceedings, the case was plagued with numerous discovery mishaps.  The plaintiffs requested from the defendant company data stored and maintained by Salesforce.com,[1] which would, in theory, evidence plaintiffs’ sales records over the last few years in addition to allowing the plaintiffs to compare their sales figures with other (younger) employees.  However, even though numerous discovery conferences were held, numerous discovery motions filed with the court, and several discovery orders issued by the court, the defendant corporation failed to produce the requested data and documents.  Ultimately, the plaintiffs filed for judgment and sanctions under Federal Rule 37(b)(2); the court held a three-day evidentiary hearing on the matter. The presiding judge, United States Magistrate Judge Terence P. Kemp, identified three areas in which the defendant company or its counsel failed in its obligations to the plaintiffs and the court in relation to production of documents and data: Defendant’s counsel failed to understand how Tellermate’s data stored with Salesforce.com could be obtained and produced to plaintiffs, which resulted in counsel making false statements to the plaintiffs’ counsel and the court; By failing to understand how the defendant’s data was stored and maintained, defendant’s counsel took no steps to preserve the integrity of the information in Tellermate’s database located with Salesforce.com; Defendant’s counsel failed to learn of the existence of documents relating to a prior age discrimination charge until almost a year after plaintiffs requested the documents; Defendant’s counsel produced a “document dump” resulting from counsel’s use of an overly-broad keyword search that yielded around 50,000 irrelevant documents, which plaintiffs’ counsel could not review within the time period ordered by the court. The Salesforce.com Data Judge Kemp found that Tellermate’s failure to preserve and produce the data logged on Salesforce.com’s website irreparably deprived the plaintiffs of reliable information necessary in supporting their claims.  Although defendant’s counsel initially stated that Tellermate “does not maintain salesforce.com information in hard copy format,” “cannot print out accurate historical records from salesforce.com,” and that “discovery of salesforce.com information should be directed at salesforce.com, not Tellermate,” the court found such statements to be on their face false.  In fact, Tellermate did have access to the information sought by the plaintiffs as one, and sometimes two, of Tellermate's employees enjoyed the highest level of access to the Salesforce.com information.  The court determined that the information eventually produced by the defendants could not be trusted as “even a forensic computer expert has no way to detect hat changes, deletions[,] or additions were made to the database on an historical basis.”  Because of Tellermate’s failure to preserve the Salesforce.com data, Judge Kamp precluded Tellermate from providing evidence showing that the plaintiff-employees were terminated for their alleged underperformance. Counsel’s Obligations With Respect to ESI The court found that the defense’s counsel fell short of their well-established obligations[2] to critically examine the documents and data Tellermate provided to them.  Tellermate made false representations to its counsel about the data’s availability and therefore caused undue delay in document production as well as false and misleading arguments to be made to plaintiffs’ counsel and to the court.  Subsequently, the plaintiffs were forced to file discovery motions before the court to address these discovery issues which produced the Salesforce.com data that was never properly preserved albeit its significance to the plaintiffs’ case. Judge Kemp ultimately determined that counsel for the defendant conducted an inadequate investigation of Tellermate’s electronic data while simultaneously failing to understand the most basic concepts of cloud computing and cloud storage, which led to counsel’s failing to preserve key electronic data. Control of Data Stored in the Cloud As mentioned above, Tellermate and its counsel repeatedly represented to the plaintiffs and to the court that it did not possess and could not produce any of the Salesforce.com data requested by plaintiffs.  Additionally, the defendants asserted that in light of those facts, the defendants could not preserve the data stored on Salesforce.com’s databases at any point prior to litigation. Judge Kemp dismissed these claims.  The court concluded that, without any factual basis whatsoever, no substantive argument could be made that Tellermate was prohibited from accessing the information stored on the Salesforce.com databases or that Salesforce.com was responsible for preserving Tellermate’s information and data as it was the entity that maintained possession and control of the data. In reality, Tellermate was the custodian of the data stored on the Salesforce.com databases.  While information can be stored in locations outside the immediate control of the corporate entity by third party providers, it can still be under the legal control of the owner of the data and therefore must be produced by the owner under Federal Rule 34(a)(1)(A).  Additionally, had Tellermate’s counsel critically examined the agreement between Tellermate and Salesforce.com, it would have realized that Tellermate was the owner of all data created by its employees and that Tellermate could, at any time, download the data stored on the Salesforce.com databases for preservation and production purposes. Limitations on Document Production to Avoid “Document Dumps” Tellermate produced to the plaintiffs 50,000 pages of irrelevant documents, classified by Judge Kemp as a “document dump.”  Tellermate’s counsel refused to disclose which search terms it used in deciding which documents to produce to the plaintiffs, claiming that the search terms were privileged.  In actuality, the court discovered, Tellermate’s counsel only used the full names and nicknames of employees as its search terms, which obviously yielded irrelevant documents.  Without reviewing the returned documents, and because the court’s deadline for producing relevant documents was rapidly approaching, Tellermate’s counsel produced to the plaintiffs the documents as “Attorney’s Eyes Only.” The court recognized that a protective order was permitted only when counsel held a good faith belief that such information constituted a “trade secret or other confidential research, development, or proprietary business information, and that such material was entitled to a higher level of protection than otherwise provided in the protective order.”  Tellermate could not demonstrate entitlement to this level of protection with respect to the search terms used in procuring documentation for discovery: The alleged burden imposed by a high volume production does not provide the producing party or its counsel free reign to choose a given designation and ignore the Court’s order pertaining to that designation. First, the court looked to whether competitive harm would result from the disclosure of the types of documents produced by Tellermate to a competitor; however, Tellermate’s memorandum on the issue did not contain any evidence about the harm which might result if the plaintiffs were permitted to review any particular document that was labeled “Attorney’s Eyes Only.” Second, Tellermate’s argument as to the harm it would experience was entirely conclusory and was not supported by evidence: Apart from the general concept that disclosure of some types of sensitive information to a competitor may result in harm, it contains no particularized argument which is specific to [the plaintiff], the way in which he was competing with Tellermate, and how the disclosure of any one of the 50,000 pages marked as attorneys-eyes-only would harm Tellermate’s interests. The court was astounded that Tellermate continually failed to meet the burden required to designate the documents as “Attorney’s Eyes Only” and, up until the hearing date, made no effort the redesignate a single page of the 50,000 produced in order to permit the plaintiffs from viewing the documents. Sanctions The court had absolutely no qualms with an award of attorneys’ fees for all motion practice connected to the preservation and production of the Salesforce.com data.  “Had Tellermate and its counsel simply fulfilled their basic discovery obligations, neither of these matters would have come before the Court, or at least not in the posture they did.”  The court took great concern to the extraordinary lengths the plaintiffs had to go to in order to obtain the documents maintained by the defendant and, even after several rounds of motions, were not able to obtain all of them.  The “Attorney’s Eyes Only” designation on the 50,000 documents produced was also unfounded, the court held, and unduly precluded plaintiffs from necessary evidence that supported their case, which warranted fees under Federal Rule 37(a)(5)(A). Conclusion Tellermate provides a warning to all attorneys that the realm of technology in which their clients are constantly interact with is always changing.  Therefore, so does the practice of electronic discovery.  Counsel must always meet its duties with respect to ESI by engaging in discussions with its clients and opposing counsel about ESI; being aware, and perhaps even knowledgeable, of new and emerging technologies; and investigating and assessing with its clients the sources and status of potentially relevant ESI.  By forgoing these practices, counsel opens itself and its clients to easily avoided and costly sanctions. Daniel is the Editor-in-Chief of eLessions Learned and a third-year law student at Duquesne University.  To read more about him, click here. [1]       Salesforce.com is a cloud-based customer relationship management system with more than 100,000 corporate customers around the world.  Tellermate and its employees used Salesforce.com to track their sales and other interaction with customers.  The court recognized that each sales person using the Salesforce.com management system could add, remove, or otherwise change data on their sales account. [2]       See Zubulake v. UBS Warburg LLC, 382 F.Supp.2d 536 (S.D.N.Y. 2005) (counsel had an affirmative duty to monitor preservation an d ensure all sources of discovery information were identified).

Is Negligent Spoliation of Evidence Sufficient to Warrant Permissive Adverse Jury Instruction?

An employer doesn’t need an attorney to tell him or her that destroying evidence relevant to litigation may make the court very unhappy.  Often times, when a party acts in bad faith by intentionally destroying evidence, the court will impose a sanction such as an “adverse inference” jury instruction.  This type of instruction orders the jury to infer that the missing evidence would have been detrimental to the guilty party.  But what if a party did not intentionally destroy evidence in bad faith, but rather lost the evidence due to a negligent mistake?  Should the same adverse inference instruction be used? In Pillay v. Millard Refrigerated Services, the court held that even if a party is merely negligent in destroying evidence, a jury may presume that the evidence would have been unfavorable to that party.  This permissive adverse inference instruction differs from the circumstances where the court determines that the party acted in bad faith because the court gives the jury the option of making an adverse inference.  Typically, when bad faith is present, the court will instruct the jury that it should presume the missing evidence is detrimental to the party who destroyed it.  This instruction differs from the instruction in Pillay where the court gave the jury the option of making the adverse inference. The Pillay court imposed a permissive adverse inference jury instruction when an employer negligently deleted relevant information.  The employer claimed that it terminated an employee because the employee’s production levels were down.  The employee claimed that he was terminated for unlawful reasons and that the employer’s labor management system (“LMS”) would show that the employee’s production level exceeded expectations. The employer, however, no longer possessed the LMS data because of routine deletions of the data after one year.  The data was deleted despite opposing counsel’s numerous requests to preserve all relevant documents and evidence. The employer argued sanctions were not warranted because the LMS data was not deleted intentionally or in bad faith.  The court rejected this argument holding that even without a showing of bad faith, the court has the discretion to impose sanctions when a party’s negligence causes information to be lost.  The court sanctioned the employer with the following permissive adverse jury instruction: Pillay contends that Millard at one time possessed data documenting [an employee’s] productivity and performance that was destroyed by Millard.  Millard contends that the loss of data was accidental.  You may assume that such evidence would have been unfavorable to Millard only if you find by a preponderance of the evidence that (1) Millard intentionally or recklessly caused the evidence to be destroyed; and (2) Millard caused the evidence to be destroyed in bad faith. Moving forward, this case means litigants must be extra careful in preserving evidence that may be relevant to litigation.  One negligent misstep, even if done without any showing of bad faith, may be the cause of an adverse jury instruction that can potentially be the deciding factor in a lawsuit. E-DiscoParty, a Seton Hall University School of Law graduate (class of 2014), served on the executive board of the Seton Hall Law Review and is a member of the Interscholastic Moot Court Board. E-DiscoParty now clerks for a Justice on the Supreme Court of New Jersey. 

Request for E-Discovery Restart Because Defendant Used Keyword Culling is Shot Down by Seventh Circuit Judge

By the time In re Biomet made it in front of a Seventh Circuit Judge for a ruling, 2.5 million documents and attachments were produced to the plaintiffs in this large class action case against Biomet.  The plaintiffs wanted the judge to order the discovery of electronically stored information.  The plaintiff’s Steering Committee was unhappy with the amount of documents produced and claimed that it should have been almost five times that amount. The plaintiffs challenged the electronic discovery procedure that Biomet had undertaken.  Specifically, the plaintiffs wanted the judge to make a ruling that the defendant’s process was “tainted” by their use of keyword culling.  The judge disagreed and refused to make such a ruling, which would have thrown Biomet back to almost square one. Biomet went through an extensive process to cultivate documents to produce for the plaintiffs. Biomet first used “electronic search options, then predictive coding, and finally personal review.”  The plaintiff’s issue was primarily the first step that defendants irrevocably ruined the rest of their document production from the get-go. To first identify what documents would be relevant the defendant used a “combination of electronic search functions” which included keyword culling.  The defendant’s original pool consisted of 19.5 million documents and attachments which the first step narrowed down to 3.9 million (eventually getting to 2.5 million documents).  The plaintiffs thought they should have produced 10 million documents and said their keyword searches were the problem. The plaintiffs cited to a New York Law Journal article that said that keyword searches were “only 20 percent” responsive.  According to the plaintiffs, Biomet’s approach was flawed because it used the “less accurate” method of keyword search in the beginning instead of predictive coding.  They asked for the judge to rule that the defendants had to go back to the first step and use predictive coding with “plaintiffs and defendants jointly entering the ‘find more like this commands’. The judge found that the plaintiff’s journal article and one cited search claiming that Boolean and keyword searches are less effective at producing relevant documents were insufficient in proving that Biomet did not meet its discovery obligations.  Instead, the judge found that its procedure did comply with FRCP 26(b) and 34(b)(2).  The judge also refused to read into the rules that Biomet had to allow the plaintiffs to sift through possibly privileged documents with them. The judge also found that Biomet fulfilled their federal requirements as proven through their statistical sampling and confidence tests that they ran over their documents.  This sampling found that less than 1.34 percent of the documents that weren’t selected would be responsive and that between 1.37 and 2.47 of the original 19.5 were.  Biomet’s process singled out 16 percent out of that original. The judge cited heavily to FRCP 26 (b)(2)(C) and said that Plaintiffs’ request did not comport well with proportionality.  Biomet had already spent $1.07 million and “will total between 2 million and 3.25 million.”  Were Biomet to go back to their original bank of ESI, it would cost them in the low seven-figures.  The judge said that it would not make Biomet do that just to test the plaintiffs’ theory that more responsive documents would be found through predictive coding instead of keyword searches.