1 EMPLOYERS BEWARE- PROTECTION OF ELECTRONICALLY STORED INFORMATION IN THE NEW TECHNOLOGICAL AGE POZZUOLO RODDEN, P.C. COUNSELORS AT LAW 2033 WALNUT STREET, PHILADELPHIA, PA /FAX FEBRUARY 2011 NEWSLETTER REPORT FROM COUNSEL Pre Trial Litigation Discovery of Electronically Stored Information Similar to how many employees may place themselves in unintended jeopardy from their reckless use of Facebook, Twitter, and other social media sites, employers should take heed to watch
2 what their employees, voluntarily and involuntarily, transfer electronically. It is important for employers to take certain steps to protect themselves from highly sensitive, confidential and/or embarrassing information unintentionally ending up in the hands of a counterparty or competitor. ESI and Metadata Courts have historically allowed and required the handing over of tangible paper files with respect to litigation discovery (a formal pre trial judicial proceeding of gathering information about a counterparty). However, today as data retention has evolved from a paper oriented process to one that is dependent on computers, electronically stored information ( ESI ) is now allowable pre trial litigation discovery. ESI is expansive and includes all electronic data such as , digital voic s, instant message conversations (Gchat, AIM, etc ), websites, browsing history, word documents, etc. including a subset of information called metadata which is data about data. Metadata loosely defined is information used to catalogue the content and context of information similar to a card catalogue in a library; however, it is more extensive and describes the characteristics, origins, usage and validating of other electronic evidence. It sheds light on the origins, context, authenticity, reliability and distribution of electronic evidence, as well as providing clues to human behavior. It is the electronic equivalent of DNA, ballistics and fingerprint evidence, with a comparable power to exonerate and incriminate. Metadata is discoverable evidence that employers are obligated to preserve and produce. More importantly, because metadata is the most fragile electronic evidence around, it is a short trip from mishandled metadata to spoliation sanctions. Thus, by this newsletter this office wants to emphasize to employers how expansive ESI is and that it may be used against them in litigation. Not only is there the direct electronic communication of , instant messages, voice mails, etc, but in today s electronic age even more information can
3 be found indirectly. A simple example would be a collection of simple Google search inquiries discovered in a misrepresentation/fraud case arising from the sale of worthless securities. A search inquiry of How to sell worthless securities? gives evidence collaborating the misrepresentation/fraud. Many individuals tend to treat this type of direct and indirect communication as private; however, during litigation these searches may be subject to pre trial litigation discovery. United States Supreme Court Approval of ESI The Federal Courts have addressed electronic discovery in a 2006 amendment to the Federal Rules of Civil Procedure. This amendment recognized that ESI is discoverable material and allows parties to request and search ESI as part of pre trial litigation discovery provided the request is made with reasonable particularity. Pennsylvania has yet to have such a steadfast legislative rule of procedure, but the trend is towards adoption of formal ESI discovery. A Pennsylvania Court recently opined in favor of an ESI discovery request, but placed limitations on the requests as to the scope, sensitivity/private nature, the nature of the parties/case, and the cost. In addition, similar to other such discoverable material, employers have a legal duty to identify and preserve ESI. Similar to how Enron was not able to shred documents, employers cannot delete and destroy databases if there is a pending case or even a future lawsuit reasonably anticipated or threatened. Otherwise, the employer could be faced with heavy judicial sanctions. Employers must be cognizant that ESI is harder to destroy than simply pressing the delete button. Many times, even though the information is deleted and the hard drive is destroyed, information can still be retrieved. Further, metadata should advise the other party whether or not you deleted whole
4 stores of discoverable evidence violating the duty to preserve and produce. How to Protect Oneself There are a number of steps, while far from foolproof, that an employee can take to protect oneself from disclosing sensitive information to counterparties as a part of discovery: Evaluate your communication methods: Look at what communication systems you use ( , instant messaging, snail mail, phone, and face to face conversation). Evaluate what types of information are recorded for each communication medium and determine when it is optimal to use each medium. Become aware of information recorded: Look at and be aware of any other type of tracking systems such as Google search inquiry recorders, website trackers, sniffers that record keystrokes,. Communicate with this awareness in mind: Since it is impossible to survive in today s world without communicating electronically, be aware that certain communications are not in fact private and use the proper formality and awareness as one would in public or in court. Separate work from personal life: Keep separate , cell phones, computers, etc for business and personal purposes. This is so if your , cellphone, or computer is seized in connection to a work lawsuit, there is a greater chance your personal communication, files, and information will not need to be handed over and cause potential personal embarrassment. Speak in person if plausible: If plausible, speaking in person has the luxury of not being recorded. While people may be cross examined in a court as to the conversation, there is no word for word transcription as with electronic communications.
5 Conclusion As the world moves faster and faster, there is a need for computer communication and recording that enable more fluid communication and enhanced information flow. Sometimes, enhanced information flow can be a drawback; however, any disadvantages can be minimized by learning how to effectively navigate through the new computer inundated world. UPCOMING SEMINARS JOSEPH R. POZZUOLO, ESQUIRE AND JEFFREY H. SMITH, ESQUIRE WILL BE PRESENTING: THE NUTS AND BOLTS OF ACQUISITION, EMPLOYMENT AND COMMERCIAL LOAN BUSINESS DOCUMENTS FOR THE SUBURBAN GENERAL PRACTITIONER AND CPA INCLUDING ETHICS A CONTINUING LEGAL EDUCATION/CONTINUING PROFESSIONAL EDUCATION (CLE/CPA) SEMINAR FOR ATTORNEYS AND CERTIFIED PUBLIC ACCOUNTANTS ON FRIDAY, MAY 6, 2011 AT NEUMANN UNIVERSITY. JUDITH P. RODDEN, ESQUIRE AND LESLEY M. IBANEZ, ESQUIRE WILL BE PRESENTING: EMPLOYMENT LAW IN THE NEW TECHNOLOGICAL AGE A CONTINUING LEGAL EDUCATION/CONTINUING PROFESSIONAL EDUCATION (CLE/CPA) SEMINAR FOR ATTORNEYS AND CERTIFIED PUBLIC ACCOUNTANTS ON FRIDAY, MAY 20, 2011 AT NEUMANN UNIVERSITY. JOSEPH R. POZZUOLO, ESQUIRE AND JEFFREY S. POZZUOLO, ESQUIRE WILL BE PRESENTING: THE CLOSELY HELD BUSINESS BOOTCAMP FOR THE GENERAL PRACTITIONER AND CPA INCLUDING ETHICS A CONTINUING LEGAL EDUCATION/ CONTINUING PROFESSIONAL EDUCATION (CLE/CPA) SEMINAR FOR ATTORNEYS AND CERTIFIED PUBLIC ACCOUNTANTS ON FRIDAY, JUNE 3, 2011 AT NEUMANN UNIVERSITY. Publications All of the following professional publications and past newsletters written by attorneys of this office are available by clicking here: Articles.shtml Corporate/Tax Design Buy Sell Agreements For Maximum Utility
6 Deferred Compensation Rewards And Retains Key Employees How To Use Non Qualified Deferred Compensation Arrangements As A Business, Retirement And Tax Planning Tool Protecting A Client's Business From Unfair Competition Using Restrictive Covenants Money Purchase Pension Plan Falls Out Of Favor Why An Employment Contract Is Mandatory What Type of Qualified Corporate Retirement Plan Best Serves Your Business, Tax And Retirement Needs Structuring Loans From Qualified Plans How To Handle The Strict Tax Rules How An S Corporation Avoids The Double Taxation Incurred When Excessive Compensation Is Treated As A Dividend Bankruptcy How To Prevent It And How To Cope With It Should It Happen To Your Business How To Look, Act And Sound Like A Professional Corporation How Mortgage Lenders Should Draft Broker Agreements To Avoid RESPA Violations How to Structure a Suitable Buy Sell Agreement Estate Planning The Limited Liability Company A Sophisticated Tool For Estate Planning Diversify Strategies For An Effective Estate Plan Use Wills To Maximize Family Protection And Minimize Tax Six Proven Estate Planning Techniques Divorce Raises The Need For Performing An Estate Planning Review Divorce and Estate Planning Remarriage Situations Can Raise Special Estate Planning Considerations College Funding Tool Offers Estate Planning Advantage
7 Drafting The Durable Power Of Attorney For Wealth Protection Purposes Why Living Wills Advance Directives Are An Essential Part Of Estate Planning Special Needs Trust An Estate Planning Tool For The Disabled Adapt Estate Planning Strategies to Fit the Needs of Same Sex Couples Actual resolution of legal issues depends upon many factors, including variations of facts and state laws. This newsletter is not intended to provide legal advice on specific subjects. It is to provide insight into legal developments and issues. You should always consult with legal counsel before taking any action on matters covered in our updates. This newsletter is courtesy of Pozzuolo Rodden, P.C. To subscribe, unsubscribe, or for any questions, please contact us at
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