Internet Law Update 2015 Evolving E-Discovery David Cohen April 16, 2015 2014 in Review E-Discovery Cases Other E-Discovery Developments AGENDA E-Discovery Evolution: 2015 & Beyond Social Media The Internet of Things Big Data & Analytics Cloud Storage, Data Security 1
2014 in Review E-Discovery Developments General Themes Fewer groundbreaking decisions about e-discovery Further exploration of subtopics Preservation & collection Sanctions & taxation Predictive coding 2
Riley v. California 134 S. Ct. 2473 (June 25, 2014) A warrant is required for law enforcement to search the data on a mobile phone Two primary concerns Threat to officers Destruction of evidence Primary e-discovery impact arises from cementing the status of cell phones as significant repositories of data The term "cell phone" is itself misleading shorthand; many of these devices are in fact minicomputers that also happen to have the capacity to be used as a telephone. They could just as easily be called cameras, video players, rolodexes, calendars, tape recorders, libraries, diaries, albums, televisions, maps, or newspapers. Duty to Preserve, Sanctions Small v. University Medical Center of Southern Nevada, Case No. 2:13-cv-00298-APG-PAL (D. Nev. Aug. 18, 2014) Special master recommendation of significant sanctions citing Defendant s substantial and willful spoliation of relevant ESI Failure to implement a litigation hold at all for any portable devices, including Blackberry devices containing over 25,000 text messages On top of failure to institute a litigation hold for 250+ days after action was filed and failure to preserve other relevant data sources Recommended sanctions included default judgment against the defendant, reimbursement of plaintiffs for costs/fees to address discovery violations, and others 3
E-Discovery Sanctions T&E Investment Group LLC v. Faulkner, 2014 WL 550596, (N.D.Tex.) (Feb. 12, 2014). Sanctions awarded for deliberate falsification of computer files to enable substitution of altered computer for requested hardware Adverse inference jury instructions and monetary penalties based on additional fees incurred by the spoliation investigation Novick v. AXA Network, LLC, No. 07-CV-7767 (AKH)(KNF), (S.D.N.Y. Oct. 22, 2014) Sanctions awarded for spoliation of audio recordings and delayed email production Adverse inference jury instruction, attorney fees and costs associated with sanctions motion, and retaking of depositions E-Discovery Sanctions, continued Solara Ventures IV, LLC v. PNC Bank, No. 1212 WDA 2013 (Pa. Super. Ct. Aug. 7, 2014) Sanctions awarded to Appellee for spoliation based on Appellant s extended and contradictory non-compliance with discovery requests Attorneys fees incurred in pursing spoliation motion ($70k) and immediate production of 41k emails at issue 4
Cost Shifting & Taxation in E-Discovery Kuznyetsov v. W. Penn Allegheny Health Sys., Inc., No. 10-948, (W.D. Pa. Oct. 23, 2014) Upholding the clerk of court s taxation of costs related to e-discovery Plaintiffs argue that OCR costs were unnecessary, but the court observes that such processing was requested as part of production formatting Apple, Inc. v. Samsung Elecs., Co., Case No. 11-CV-01846-LHK, (N.D. Cal. Sept. 19, 2014) Both parties challenged Clerks taxation of costs Many of Apple s claimed e-discovery costs related to documents not produced to Samsung Apple s award for e-discovery costs was reduced to an amount proportional to the approximate number of pages produced to Samsung roughly 16% of the total Social Media & E-Discovery Ogden v. All-State Career Sch., 299 F.R.D. 446 (W.D. Pa. 2014) Employment law case where the defendant was seeking full access to plaintiff s social media accounts Facebook, Twitter, MySpace Ruling that defendant is entitled only to communications which discuss or related to underlying workplace conduct and/or his emotional state of mind during and after time of employment, and any causes attributable to that state of mind Highlights boundary between private life (as represented via social media) and the workplace what a person views as acceptable or welcomed sexual activity or solicitation in his or her private life, may not be acceptable or welcomed from a fellow employee or a supervisor. 5
Social Media & E-Discovery, continued Smith v. Hillshire Brands, Case No. 13-2605-CM (D. Kan. June 20, 2014) Another broad request for all social media activity, both to support defendant s defense as well as to establish Plaintiff s mental/emotional condition as related to emotional distress claims Information on social networking sites is not entitled to special protection, but a discovery requests seeking it nevertheless must meet Fed. R. Civ. P. 26 s requirement of being reasonably calculated to lead to the discovery of admissible evidence. Reminder to be cautious about requests being turned around: Indeed, if the court were to accept defendant s position on the scope of relevant discovery, defendant would likely be unhappy with the ramifications hypothesizing the relevance argument that could be made with respect to Defendant s managers/supervisors social media accounts Predictive Coding in 2014 Hasn t revolutionized e-discovery yet Gaining acceptance across jurisdictions Increasing focus on process Methodology Efficiency 6
Efficiency the Promise of Predictive Coding Bridgestone Americas Inc. v. International Business Machines Corp., 2014 WL 4923014 (M.D.Tenn.) Court permits Plaintiff to switch horses in mid-stream regarding methodology of technology-assisted review The need for openness and transparency is emphasized Progressive Cas. Ins. Co. v. Delaney, No. 2:11-cv-00678-LRH- PAL, (D. Nev. July 28, 2014) Not permitted to unilaterally substitute predictive coding for linear review on an already-reduced data set Solution: produce the body of documents reflecting the search term hits, after running privilege filters to extract more likely privileged documents Growing Acceptance of Predictive Coding Dynamo Inc. v. Commissioner, No. 2685-11, 143 T.C. No. 9, (Sept. 17, 2014) First case in Tax Court to authorize use of predictive coding Decision describes predictive coding as a potential happy medium between the cost of a full review and the risk of full productions with attendant clawback agreements Fed. Deposit Ins. Corp. v. Bowden, Case No. CV413-245, (S.D. Ga. June 6, 2014) Affirmative suggestion by the court: To that end, the parties shall consider the use of predictive coding 7
Rule 16(b) Meet & Confer Boston Scientific Corporation v. Lee, Case No. 5:14-mc-80188- BLF-PSG, (Case No. 1:13-cv-13156-DJC (D. Mass.)), (N.D. Cal. Aug. 4, 2014) Court quashed subpoena for full forensic imaging of second laptop that could potentially contain relevant data Third party (competitor to Plaintiff) provided images and other relevant ESI but resisted forensic imaging of second laptop containing significant non-responsive and sensitive content Plaintiff sought to fall back on alternative initially proposed by third party during a Meet & Confer Court denied this request to encourage parties to seek reasonable strategies at the outset, not as a fallback Other Developments Federal Rules Proposed Amendments to the Federal Rules of Civil Procedure will likely go into effect on December 1, 2015 Rule 16 Incorporates clawback agreements, FRE 502 orders Rule 26 Incorporates proportionality, considers allocation of costs, allows discovery requests prior to Meet & Confer Rule 34 Changes in timing language to facilitate discovery requests and production Rule 37 More clearly defines the guidelines for sanctions related to failure to preserve ESI 8
F.R.C.P Amendment Timeline Duke Litigation Review Conference May 2010 Advisory Committee Submits Draft Rules November, 2012 Standing Committee Conditionally Approves January, 2013 (Sends back to Advisory Committee) Advisory Committee Approves for Publication April, 2013 Standing Committee Approves for Publication June, 2013 Public Comment Period August, 2013 February, 2014 Back to Advisory Committee April 10 11, 2014 (Redraft of Rule 37(e)) Standing Committee Approves May 29 30, 2014 Judicial Conference September, 2014 Supreme Court By May 1, 2015 Congress By December 1, 2015 Summary of Amendments Rule 1. Rules will be construed, and administered and employed by the court and the parties to secure the just, speedy, and inexpensive determination of every action and proceeding. Rule 4(m). Service of process time limit reduced from 120 to 90 days. Rule 26(d). Section added to allow delivery of discovery requests prior to 26(f) meet and confer. Rule 34(b)(2)(A) amended to provide parallel time to respond. Rule 16(f). Language struck re: scheduling conferences by telephone, mail or other means. Now authorizes inclusion in scheduling orders of requirement for parties to seek conference prior to moving for a discovery order. Rules 26(f) and 16(b). Require identification of open preservation issues involving ESI in discovery plans and their resolution in scheduling orders. 9
Summary of Amendments Rules 30 and 31. Presumptive limits on discovery were not adopted. Rules 34 and 36. Reduction of number of interrogatories and requests to admit were not adopted. Rule 26(c). Provides that protective order against undue burden or expense may contain provision for allocation of expenses. Rule 34. Amended to better facilitate requesting and producing discoverable information: Grounds for objecting to the request must be stated with specificity. Party must state whether it will produce copies of documents or [ESI] instead of permitting inspection. When stating an objection, a party must state whether any responsive materials are being withheld on the basis of [the] objection. Rule 26(b)(1) Current Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense including the existence, description, nature, custody, condition, and location of any documents or other tangible things and the identity and location of persons who know of any discoverable matter. For good cause, the court may order discovery of any matter relevant to the subject matter involved in the action. Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence 10
Rule 26(b)(1) New Rule Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party s claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties relative access to relevant information, the parties resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Information within this scope of discovery need not be admissible in evidence to be discoverable. Rule 37(e) - Current Rule 37. Failure to Make Disclosures or to Cooperate in Discovery; Sanctions (e) FAILURE TO PROVIDE ELECTRONICALLY STORED INFORMATION. Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system. 11
Rule 37(e) New Rule (e) FAILURE TO PRESERVE ELECTRONICALLY STORED INFORMATION. If electronically stored information that should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve the information, and the information cannot be restored or replaced through additional discovery, the court may: (1) Upon a finding of prejudice to another party from loss of the information, order measures no greater than necessary to cure the prejudice; (2) Only upon a finding that the party acted with the intent to deprive another party of the information s use in the litigation, (a) presume that the lost information was unfavorable to the party; (b) instruct the jury that it may or must presume the information was unfavorable to the party; or (c) dismiss the action or enter a default judgment. Other Developments E-Discovery & Ethics State Bar of California Formal Opinion Interim No. 11-0004 Drafted to specifically address attorneys ethical duties and obligations related to e-discovery Basic understanding of e-discovery and related issues defined as a requirement for competence in the area of litigation, with further case-bycase assessment needed An attorney without the requisite competence in e-discovery may address this lack by: Acquiring the knowledge Consulting with another attorney or a technological consultant/vendor with the necessary knowledge and skill set Declining the representation 12
Other Developments Ethics & Social Media The American Bar Association and State Bar Associations in California, New York, North Carolina and Pennsylvania all released ethical guidelines or opinions dealing with social media in 2014 Pennsylvania Bar Association issued formal statements on ten specific social media concerns Two implicate e-discovery Pennsylvania Bar Association Formal Opinion 2014-300 Attorneys may advise clients about the content of their social networking websites, including the removal or addition of information a competent lawyer should advise clients about the content that they post and how it can affect a case or other legal dispute The duty to preserve still applies discoverable information cannot be deleted, even if it is taken down or made non-public Attorneys may use information obtained from social networking websites in a dispute The information must be obtained ethically Motions to compel discovery may be available for private content 13
E-Discovery Evolves Social Media Cloud Storage The Internet of Things Big Data & Analytics Looking Back Social Media Cases in 2010 & 2011 Facebook (303), Twitter (30), LinkedIn (39) Common matter types Criminal Employment Insurance Claims/ Personal Injury Number of users in 2010: Facebook 350 million Twitter 54 million LinkedIn 90 million 14
Social Media Today s Numbers Facebook 1.4 billion users LinkedIn 190 million users Twitter 285 million users Pinterest 70 million users* Social Media cases in 2014 Looking Forward Referencing social media (537) Referencing Facebook (1545), Twitter (203), LinkedIn (136) These numbers will only continue to increase, necessitating specific strategies to handle this evidence 15
Social Media & E-Discovery Discovery Requests Must be customized to matter at hand Provided by plaintiff or collected by IT expert? Subpoena to service provider Publicly available data versus private, limited access profiles Examination of Data Understanding the architecture Evidence to support Motions to Compel What Forensics Can Retrieve From An iphone From ACLU report on data ICE retrieved from their client s iphone: Call logs Photos Videos Text messages Web history Passwords for various services 659 previous locations of the phone invisibly gathered from Wi-Fi networks and cell towers 16
What is the Internet of Things? No widely accepted definition connection of physical objects to the Internet and to each other through small, embedded sensors and wired and wireless technologies, created an ecosystem of ubiquitous computing comment by the Consumer Electronics Association at the 2014 FTC workshop on the Internet of Things The point in time when more things or objects were connected to the Internet than people Cisco Internet Business Solutions Group definition Accelerating Growth 2003 World population: 6.3 Billion Number of connected devices: 500 Million 2008 Population = Number of connected devices (approximately 6.7 Billion) 2010 World population: 6.9 Billion Number of connected devices: 12.5 Billion 17
Explosive Growth! 2015 2020 World population: 7.2 billion Number of Connected devices: 25 billion World population: 7.7 billion (est) Number of connected devices: 50 to 100 billion! 25 Billion Devices Right Now?! 18
Why is the Internet of Things Appealing? Collected data can be adapted to myriad purposes Consumer applications to make life easier Enterprise systems to make business more efficient or profitable The Internet of Things really comes together with the connection of sensors and machines. That is to say, the real value that the Internet of Things creates is at the intersection of gathering data and leveraging it. Wired, The Internet of Things is Far Bigger Than Anyone Realizes, D. Burrus, 11/21/2014 Real World Impact Tracking & Hacking: Security & Privacy Gaps Put American Drivers at Risk, Report from the Office of Senator Edward Markey (D-MA) (February 2015) Inquiries regarding vehicle connectivity and security were sent to 19 major automobile manufacturers 16 responses received [GRAPHIC] 19
Automobile Data Nearly 100% of cars on the market include wireless connectivity that could make them vulnerable to unauthorized access Security measures to prevent remote access are inconsistent and haphazard Automobile manufacturers collect large amounts of data on driving history and vehicle performance, often transmitting it wirelessly to data centers Encryption and/or other security measure for the transmission of data were not disclosed by manufacturers Customers are often not informed of these data collection efforts, and even if they are, cannot opt out without the loss of functionality, such as navigation systems The Internet of Things & E-Discovery Data collection and storage Who is collecting the data? Where is it being stored? Device-based storage or cloud-based storage? Possession, custody, or control, under F.R.C.P. 26(a) Subpoenas to third party data repositories Stored Communications Act 18 U.S.C. 2701 Regulates when/how an Electronic Communication Service provider may share information about a customer s electronic communications Designed to protect users who have information stored remotely, as with an ISP; prohibits providers of Electronic Communication Services from divulging contents of communications stored in their servers 20
Internet of Things [GRAPHIC] The dearth of case law referencing the Internet of Things suggests that these data troves have not yet become a focus of discovery. This is unlikely to last. Big Data What is Big Data? Data sets so large or complex that they exceed the capacity/capabilities of commonly used data processing methods and systems Can be analyzed computationally to reveal patterns, trends, and associations Multiple Vs are referenced in relation to Big Data: Volume Velocity Variety Veracity Value 21
Getting to Big Data Moore s Law Databases and processing power Storing something is useless if you can t find it Data points allow for algorithmic analysis Predicting an outcome based on seemingly unrelated data because statistical modeling linked them Correlation does not equal causation, but it s enough to justify business decisions Example: analysis of health tracking data reveals that people who exercise 4 hours per week are the least likely to default on a mortgage Big Data Legal Considerations Often considered more in the context of criminal law Extracting key information from a large database for exculpatory purposes Civil litigation examination will expand and it will come from multiple angles: Information governance: what really needs to be kept? If it is retained, it is available for discovery Discoverable information Raw data points and/or output of system analysis Processes that collected, loaded and indexed data (programming) How the data was categorized, analyzed, and used 22
Big Data & Analytics How the data is analyzed and put to use Active monitoring beneficial for real-time intervention Aggregate data allows the identification of patterns across systems and the prediction of behavior and/or outcomes Mathematical/probabilistic modeling using large data sets Will only increase in potential Computers getting more powerful every year More data is available for analysis, thanks to the Internet of Things Minority Report may not be science fiction for much longer! Cloud Storage What is cloud storage? At its simplest, it is the outsourcing of the storage and management of electronic information Allows ESI to be stored on and retrieved from remote servers, instead of a users local system 23
Cloud Storage & E-Discovery Considerations where cloud storage & e-discovery intersect When a client transfers data to cloud storage, is extraction/collection contemplated? How easy will it be to retrieve data to respond to discovery requests? Litigation databases often exist in the cloud: attorneys/firms must be proactive in considering risks and obligations Model Rules of Professional Conduct 1.1, 1.4, 1.6, 1.15, & 5.3 Worst-case scenarios Dispute with a vendor Physical location jurisdiction issues Data retention/destruction miscommunications Acts of God (natural disaster, terrorist attack, etc.) Risks of Cloud Storage Liquid Motors, Inc. v. Lynd, No.3:09-cv-0611-N (N.D. Tex. April 3, 2009) FBI executed search warrant, raided data storage center seizing all servers, including those holding Liquid Motors (LM) business data LM was not suspected of any wrongdoing Seizure and removal of servers prevented LM from conducting business LM clients who relied on the hosting service also suffered interruption LM had attempted to mitigate risk of server loss backups and generator LM filed for temporary restraining order, return of equipment Court found probable cause for FBI s retention of equipment, denied application, ordered storage array returned within three days (after being copied), ordered other servers and second storage array copied and returned to LM as soon as possible 24
Ethics of Cloud Storage The legal field has watched electronic information/communication advancements closely since the dawn of the consumer Internet in the 1990s Ethics of communication via email considered first, gave framework to later electronic data inquiries Ethical use of cloud storage and other forms of remote data storage have been examined by multiple state bars Unanimous conclusion that such storage is ethical under professional conduct rules, provided certain obligations are met Pragmatic extensions of existing Rules 1.1, 1.4, 1.6 Cloud Storage Obligations Due Diligence Service provider research Necessary credentials Existing policies/procedures for confidential information Data security measures in place Data backup measures Use of subcontractors? Attorney supervision Periodic assessment of security/technology Continuity of Service plan Service Agreements Communication of confidential nature of documents Purpose of access by vendor Confidentiality preserved by vendor and all employees Additional procedures for particularly sensitive content Return/destruction of data upon request 25
Questions? Thank You! David R. Cohen drcohen@reedsmith.com 412-288-1098 26