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Electronic Discovery

Court Recommends Finding of Intent to Deprive for Defendant’s Lost Text Messages: eDiscovery Case Law

Shark Week on the Discovery Channel continues, which means Case Week on the eDiscovery Channel (a.k.a., eDiscovery Daily) continues as well.  Today’s case opinion comes from March and resulted in a different opinion for failure to preserve text messages than this case we covered last week.  Enjoy!

In NuVasive, Inc. v. Kormanis, No. 1:18CV282 (M.D.N.C. Mar. 13, 2019), North Carolina Magistrate Judge L. Patrick Auld recommended that, “because the record supports but does not compel a ‘finding that [Defendant Kormanis] acted with the intent to deprive [Plaintiff] of the [lost text messages’] use in the litigation, the Court submit that issue to the ‘jury, [with] the [C]ourt’s instruction[s] mak[ing] clear that the jury may infer from the loss of the [text messages] that [they were] unfavorable to [Defendant Kormanis] only if the jury first finds that [he] acted with the intent to deprive [Plaintiff] of the[ir] use in the litigation’”.

Case Background

In this case filed against a former employee over breach of contract for promoting and selling a competitor’s products within his former territory, the plaintiff notified Defendant Kormanis in March 2018 (through counsel) of its “concern[ ] that [his] new position with Alphatech will lead to … violation[s] of his contractual obligations with Ino[S]pine” and advised him “to refrain from the destruction of relevant evidence … including … texts … and to take steps to preserve all such information”.  After the case was filed, the defendant wrote in response to the plaintiff’s production requests:

“As for text messages, due to space limitations on his iPhone, Defendant Kormanis only is able to keep data on his device from the previous 30 days. In order to comply with the litigation hold letter, Defendant Kormanis backs up his iPhone to his MacBook Air so that all messages are preserved. However, at this time, Defendant Kormanis has not been able to retrieve said messages from his personal devices. Once these communications are retrieved, they will be produced.”  The defendant ultimately produced text messages on October 5, 2018, but there were no text messages produced prior to August 5, 2018.  The defendant indicated that his vendor was unable to retrieve earlier text messages from his devices, but he declined to allow the plaintiff’s vendor to examine the devices.

In his subsequent affidavit and deposition, it became clear that the defendant failed to turn off the 30-day automatic delete function on his iPhone, leading to the loss of text messages after the defendant was advised of his duty to preserve them.  Despite the defendant’s argument that “[t]he Court should deny [the instant] Motion because [Plaintiff] has failed to demonstrate that any of the allegedly spoliated text messages … would be relevant to this action”, Verizon records demonstrated that the defendant had regular text message communications with key parties in the case during that period where text messages were lost.

Judge’s Ruling

Judge Auld agreed with the plaintiff that “the relevance of these [text messages] is evident” and also stated: “Nor does any material dispute remain as to whether the loss of relevant text messages resulted from Defendant Kormanis’s failure to take reasonable steps to preserve them.”  Judge Auld also noted that failure to follow the “simple steps” of suspending the auto-delete function on his phone and utilizing “relatively simple options to ensure that [his] text messages were backed up” was “sufficient to show that Defendant [Kormanis] acted unreasonably.”

As a result, Judge Auld granted the Plaintiff’s Motion for Imposition of Sanctions for Spoliation of Evidence in part.  Judge Auld gave the plaintiff additional time to depose and subpoena text messages from a key Alphatech contact beyond the discovery deadline and ordered Defendant Kormanis to pay plaintiff’s fees/expenses associated with that effort and also all fees/expenses associated with filing, briefing and arguing the Instant Motion.  He also issued the following recommendations:

“IT IS RECOMMENDED that the Court defer until trial the decision of whether other “serious measures are necessary to cure prejudice [from the loss of text messages], such as forbidding [Defendant Kormanis] from putting on certain evidence, permitting the parties to present evidence and argument to the jury regarding the loss of information, or giving the jury instructions to assist in its evaluation of such evidence or argument, other than instructions [that it may or must presume the lost text messages were unfavorable to Defendant Kormanis],” Fed. R. Civ. P. 37 advisory comm.’s note, 2015 amend., subdiv. (e)(1).

IT IS FURTHER RECOMMENDED that, because the record supports but does not compel a “finding that [Defendant Kormanis] acted with the intent to deprive [Plaintiff] of the [lost text messages’] use in the litigation,” Fed. R. Civ. P. 37(e)(2), the Court submit that issue to the “jury, [with] the [C]ourt’s instruction[s] mak[ing] clear that the jury may infer from the loss of the [text messages] that [they were] unfavorable to [Defendant Kormanis] only if the jury first finds that [he] acted with the intent to deprive [Plaintiff] of the[ir] use in the litigation,” Fed. R. Civ. P. 37 advisory comm.’s note, 2015 amend., subdiv. (e)(2).”

So, what do you think?  Did the spoliation warrant a possible adverse inference instruction?  Please let us know if any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of eDiscovery Assistant.

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

Court Denies Defendant’s Motion to Compel Production of Documents and Metadata: eDiscovery Case Law

Yes, it’s that time of year!  Time for another Shark Week on the Discovery Channel, which means only one thing – it’s time for Case Week on the eDiscovery Channel (a.k.a., eDiscovery Daily).  That means a week full of case law, with our webcast on Wednesday regarding Key eDiscovery Case Law Review for First Half of 2019 in between!  Here’s the first case of Case Week!

In Washington v. GEO Group, Inc., No. 17-5806 RJB (W.D. Wash. July 1, 2019), Washington District Judge Robert J. Bryan denied the defendant’s Motion to Compel Production of Documents and Metadata, ruling that the defendant “fails to identify a specific response for production to which the State did not respond”, that the defendant “has not shown that the [metadata] is relevant and proportional to the needs of the case” and that the “the parties have not met and conferred as to this recent log as required under Fed. R. Civ. P. 37(a)(1).”

Case Background

In this unjust enrichment case filed by the State of Washington against a private corporation that operates a detention facility, the defendant filed a motion in August 2018 for an order compelling the State to produce information from various State agencies related to State work programs, maintaining that the information was “extremely relevant to GEO’s affirmative defenses of unclean hands and laches.”  The State opposed the motion, arguing that the State Agencies were not parties to the case and that the State agencies were better positioned to respond themselves.  In October 2018, the defendant’s motion to compel was granted.

Subsequently, the defendant moved for an order compelling the State to produce: 1) relevant information from all agencies for (a) the State’s use of work programs at its correctional or rehabilitation facilities, including why it pays some (but not all) work program participants market wages, whether the participants are volunteers, the hours worked, duties performed, and pay rates for participants, and the State’s use of contractors to assist in the operation of work programs and (b) the State’s assessment of federal and/or state law as it relates to the operation of work program; 2) accurate and complete metadata for all of its productions, including custodian and author information, dates of creation and modification, and file path without modification; and 3) logged documents on the common interest privilege log that are missing date, author, sender, recipient, or subject matter information and communications between third parties for which no basis for common interest privilege exists.

Judge’s Ruling

Regarding the motion to compel documents regarding work programs, Judge Bryan stated: “GEO’s motion to compel documents regarding the work programs should be denied. The State argues that it reviewed thousands of pages of discovery from five agencies and produced hundreds of pages responsive to the requests for production. GEO fails to identify a specific response for production to which the State did not respond. In its reply, it identifies ‘discovery categories’ and then collectively cites 17 requests for production that it asserts applies.  This is not sufficient and the motion should be denied.”

Regarding the motion to compel accurate metadata, Judge Bryan stated: “GEO’s motion for an order compelling the State to produce accurate metadata should be denied. The State indicates that it has complied with the October 2, 2018 Order to the extent that it was able, particularly as it relates to the custodians. Further, GEO has not shown that the information is relevant and proportional to the needs of the case.”

Regarding the motion to compel related to common privilege log, Judge Bryan stated: “GEO’s motion to compel either an updated common privilege log or the documents for which the State has failed to meet its burden should be denied. The State has now produced an updated log. Moreover, it appears that the parties have not met and conferred as to this recent log as required under Fed. R. Civ. P. 37(a)(1).”

As a result, Judge Bryan denied the defendant’s motion to compel.

So, what do you think?  Should the motion to compel have been denied?  Please let us know if any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of eDiscovery Assistant.

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

Despite Protective Order, Court Orders Plaintiff to Produce Source Code and Log File Printouts: eDiscovery Case Law

In Opternative, Inc. v. Jand, Inc., 17-CV-6936 (RA)(SN) (S.D.N.Y. July 12, 2019), New York Magistrate Judge Sarah Netburn granted in part and denied in part the defendant’s motion to compel the plaintiff to produce printouts of two files of source code, a printout of a log file, and a listing of directories and files.  Judge Netburn ordered the plaintiff to produce the source code and log file printouts requested, but not the file directory listing, choosing to reserve judgment on that for the time being.

Case Background

In this case involving alleged unlawful use of information that the plaintiff claimed the defendant used to launch a competing online eye-examination service, a big part of the case came down to source code.  The parties agreed to a protective order where “any material designated as ‘Highly Confidential — Source Code’ will not be produced in a native format…Instead, the source code must be ‘made available for inspection, in a format allowing it to be reasonably reviewed and searched, during normal business hours or at other mutually agreeable times at an office of the Producing Party’s counsel or another mutually agreed upon location’…The on-site review is highly circumscribed…It must be conducted in a ‘secured room without Internet access or network access to other computers’…The inspecting party is prohibited from copying, removing, or transferring any files from the secure location…The inspecting party may, however, request printouts ‘of limited portions of source code that are reasonably necessary for the preparation of court filings, pleadings, expert reports, discovery responses, or demonstratives (‘Papers’), or for deposition or trial, but shall not request paper copies for the purposes of reviewing the source code other than electronically.’”

Pursuant to that Order, the plaintiff designated the source code of an alleged prototype developed by Brian Strobach as highly confidential source code and the defendant’s counsel and its expert witness inspected the source code at the offices of Plaintiff’s counsel in May 2019, for about five hours.  The defendant followed up with that review by requesting printouts of twenty files, consisting of as much as 12,000 lines of code.  The plaintiff responded that it believed that this request was not compliant with the Protective Order, but that it “would be happy to consider a narrower request.”  In response, Defendant narrowed its request to printouts of: (1) two files of source code comprising 354 lines of code fitting on 6 pages; (2) a log file; and (3) a directory of the files contained in the source code written by Strobach.  The plaintiff refused, arguing that the request for the two files was not compliant with the protective order and that it would produce the log file and directory only if the defendant agreed to a reciprocal exchange.

Judge’s Ruling

With regard to the source code request and the plaintiff’s objections, Judge Netburn characterized the plaintiff’s belief that the Protective Order may allow for the use of printouts during a deposition, but that it prohibits requests for the purpose of preparing for the deposition as “frivolous”, stating “[t]hat definition would require attorneys writing their deposition outlines to sit in a secured room with the source code, away from their offices, without access to the internet or any other network. That is a significant burden that also would do nothing to promote the confidentiality of the source code.”  With regard to the plaintiff’s other objection that the defendant did not articulate why these two files were reasonably necessary for Strobach’s deposition, Judge Netburn ruled that the defendant had provided “a reasonably necessary basis for the request” that “likely would [not] be narrowed with further on-site review.”

With regard to the log file request, Judge Netburn referred to the impasse as “truly strange” and ordered the plaintiff to produce the file, ruling that “Plaintiff has not demonstrated anything resembling good cause” for denying the request and that their contention of the defendant’s definition of “Highly Confidential — Source Code” was “an airing of grievances” and “not a basis for denying Defendant’s motion.”

As for the file directory request, Judge Netburn denied the defendant’s motion without prejudice, stating: “Instead of blindly tilting the balance of this standoff, the Court will reserve its judgment. If Plaintiff or Defendant is unable to obtain file directories to its satisfaction, then they should file properly supported briefing with the Court.”

So, what do you think?  Do you agree with the judge’s reasons for ordering production of the source code and log file?  Please let us know if any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of eDiscovery Assistant.

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

Production is the “Ringo” of the eDiscovery Phases: eDiscovery Throwback Thursdays

Here’s our latest blog post in our Throwback Thursdays series where we are revisiting some of the eDiscovery best practice posts we have covered over the years and discuss whether any of those recommended best practices have changed since we originally covered them.

This post was originally published on December 1, 2011 – when eDiscovery Daily was a little more than a year old.  Back then, we had only 65 posts related to case law, now, we’re close to nine years old and have 689 posts related to case law (covering over 530 unique cases).  Case law has evolved over the years, especially since the 2015 Federal Rules changes impacted rulings on sanctions and proportionality, among other things.  And, we have seen more cases related to disputes over production format, as some (but not enough) requesting parties are realizing that requesting native productions gives them more metadata about the produced ESI (while also making it more “tamper-proof”).

We’ve noted that 80% of the costs associated with eDiscovery are in the Review phase and that volume of data and sources from which to retrieve it (including social media and “cloud” repositories) are growing exponentially.  Most of the “press” associated with eDiscovery ranges from the “left side of the EDRM model” (i.e., Information Management, Identification, Preservation, Collection) through the stages to prepare materials for production (i.e., Processing, Review and Analysis).

All of those phases lead to one inevitable stage in eDiscovery: Production.  Yet, few people talk about the actual production step.  If Preservation, Collection and Review are the “John”, “Paul” and “George” of the eDiscovery process, the Production phase is still the “Ringo” of eDiscovery phases, not talked about enough – even though it’s arguably the most crucial step of all.

It’s the final crucial step in the process, and if it’s not handled correctly, all of the due diligence spent in the earlier phases could mean nothing.  So, it’s important to plan for production up front and to apply a number of quality control (QC) checks to the actual production set to ensure that the production process goes as smooth as possible.

Planning for Production Up Front

When discussing the production requirements with opposing counsel, it’s important to ensure that those requirements make sense, not only from a legal standpoint, but a technical standpoint as well.  Involve support and IT personnel in the process of deciding those parameters as they will be the people who have to meet them.  Issues to be addressed include, but not limited to:

  • Format of production (e.g., paper, images or native files);
  • Organization of files (e.g., organized by custodian, legal issue, etc.);
  • Numbering scheme (e.g., Bates labels for images, sequential file names for native files);
  • Handling of confidential and privileged documents, including log requirements and stamps to be applied;
  • Handling of redactions;
  • Format and content of production log;
  • Production media (e.g., CD, DVD, portable hard drive, FTP, etc.).

I was involved in a case years ago where opposing counsel was requesting an unusual production format where the names of the files would be the subject line of the emails being produced (for example, “Re: Completed Contract, dated 12/01/2011”).  Two issues with that approach: 1) The proposed format only addressed emails, and 2) Windows file names don’t support certain characters, such as colons (:) or slashes (/).  I provided that feedback to the attorneys so that they could address with opposing counsel and hopefully agree on a revised format that made more sense.  So, let the tech folks confirm the feasibility of the production parameters.

The workflow throughout the eDiscovery process should also keep in mind the end goal of meeting the agreed upon production requirements.  So, you can adversely impact production long before you get to the production step.

Next week, we will talk about preparing the production set and performing QC checks to ensure that the ESI being produced to the requesting party is complete and accurate.

So, what do you think?  Have you had issues with production planning in your cases?  Please share any comments you might have or if you’d like to know more about a particular topic.

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

No Proof of Intent to Deprive Means No Adverse Inference Sanction: eDiscovery Case Law

We’re catching up on a few cases from earlier this year in preparation for our Key eDiscovery Case Law Review for First Half of 2019 webcast next Wednesday.  Here is an interesting case ruling from April.

In DriveTime Car Sales Company, LLC v. Pettigrew, No.: 2:17-cv-371 (S.D. Ohio Apr. 18, 2019), Judge George C. Smith granted in part and denied in part the plaintiff’s motion for spoliation sanctions against defendant Pauley Motor, denying the plaintiff’s request for an adverse inference sanction by ruling that “DriveTime has not sufficiently demonstrated that Pauley Motor acted with the requisite intent” when Bruce Pauley failed to take reasonable steps to preserve text messages when he switched to a different phone.  Judge Smith did “order curative measures under Rule 37(e)(1)”, allowing the plaintiff to “introduce evidence at trial, if it wishes, of the litigation hold letter and Pauley Motor’s subsequent failure to preserve the text messages.”

Case Background

In this case where the plaintiff alleged the defendants were conspiring to purchase vehicles at above market rates from Pauley Motor, the plaintiff filed a motion for spoliation sanctions against Pauley Motor.  During discovery, Pauley Motor first stated in its interrogatory responses that no text messages between Pauley Motor representatives and defendant Pettigrew existed.  However, in his 30(b)(6) deposition, Bruce Pauley stated that he had exchanged text messages with Pettigrew, but he was ultimately unable to produce the content of the text messages because he had obtained a new phone and had not preserved the contents of his previous phone, despite being put on notice to do so in November of 2016 by a litigation hold letter issued by the plaintiff’s counsel.  As a result, the plaintiff requested that the Court impose a mandatory adverse inference that the content of the text messages was unfavorable to Pauley Motor.

Judge’s Ruling

In considering the motion, Judge Smith stated that “Pauley Motor does not dispute that it had an obligation to preserve text messages between its representatives and Pettigrew or that it failed to take reasonable steps to preserve them…DriveTime has also established that the text messages cannot be restored or replaced through additional discovery, because neither Pettigrew nor the wireless carriers for Pauley Motor’s representatives have access to them either…Thus, in order to obtain the mandatory adverse inference it seeks under Rule 37(e)(2), the only additional requirement under the Rule is that Pauley Motor acted with the intent to deprive DriveTime of the text messages’ use in the litigation when it failed to preserve them.”

However, Judge Smith also said: “Although Bruce Pauley failed to take reasonable steps to preserve the text messages when he switched to a different phone, there is no evidence that he did so intentionally beyond DriveTime’s speculation. This is not sufficient to impose a mandatory adverse inference under Rule 37(e)(2).”  As a result, Judge Smith found that “DriveTime has not sufficiently demonstrated that Pauley Motor acted with the requisite intent.”

But, Judge Smith noted that “less severe sanctions are available to DriveTime under Rule 37(e)(1) upon a finding of prejudice.”  As a result, he stated that “the Court will order curative measures under Rule 37(e)(1)… In this case, the Court finds it appropriate to order that DriveTime will be permitted to introduce evidence at trial, if it wishes, of the litigation hold letter and Pauley Motor’s subsequent failure to preserve the text messages. DriveTime may argue for whatever inference it hopes the jury will draw. Pauley Motor may present its own admissible evidence and argue to the jury that they should not draw any inference from Pauley Motor’s conduct.”

So, what do you think?  Did the judge go far enough or should the failure to preserve the evidence have been considered intent to deprive?  Please let us know if any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of eDiscovery Assistant.

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

Heat Wave or Cool Front? Results of the Summer 2019 eDiscovery Business Confidence Survey: eDiscovery Trends

It’s that time again!  I’m here to cover the results of the Summer 2019 eDiscovery Business Confidence Survey, published (as always) on Rob Robinson’s terrific Complex Discovery site.  So, how confident are individuals working in the eDiscovery ecosystem in the business of eDiscovery?  Let’s see.

As always, Rob provides a complete breakdown of the latest survey results, which you can check out here.  As I’ve done for the past few surveys, I will provide some analysis and I’m continuing to take a look at all surveys conducted to look at trends over time.  So, this time, I will look at the results for all fifteen surveys to date, from January 2016 to present.

The Summer 2019 Survey response period was initiated on July 1 and continued until registration of 173(!) responses last week, another high number of participants, thanks in part to support and promotion from the Association of Certified E-Discovery Specialists (ACEDS).

Software and/or Services Provider Reclaim Their Normal Position: After a rare instance of another group (Law Firm respondents) leading in the Spring survey, we’re back to Software and/or Services Provider respondents as the top group with 31.8% of all respondents.  Law Firm respondents weren’t too far behind at 30.6% of all respondents (still higher than last time).  Corporation respondents were third at 15.6%, another high percentage of corporate respondents and Consultancy was fourth at 12.7%.  If you count law firms as providers (they’re technically both providers and consumers), they account for over three-quarters of respondents at 75.1% of total respondents, which is still the second lowest percentage of provider respondents (higher than only last quarter’s 72.2%).  So, expanding the respondents has still continued diversify the responses somewhat.  Here’s a graphical representation of the trend over the fifteen surveys to date:

So, how confident is the largest group of respondents ever in eDiscovery business confidence?  See below.

Most Respondents Consider Business to Be Good (Barely): After the lowest ever number of respondents last time considered business to be good, we saw a 9.8 point rebound to 50.9% of respondents.  While that’s higher than last quarter, it’s lower than the last two summers.  41.6% of respondents consider business to be normal, so the good and normal numbers pretty much flip-flopped from last quarter.  7.5% of respondents rated business conditions as bad, which is comparable to last summer, but higher than two summers ago.  So, was last quarter’s lower current business conditions rating an anomaly?  Hmmm…  Here is the trend over the fifteen surveys to date:

So, how good do respondents expect business to be in six months?  See below.

Most Respondents Expect Business to be the Same Six Months From Now: While most respondents (96.0%) expect business conditions will be in their segment to be the same or better six months from now, that’s a drop of 1.8% as those expecting worse business conditions rose to 4.0% (from 2.2% last quarter), while the percentage expecting business to be the same fell to 56.1%.   More than half of respondents also expected the same on revenues and profits – 51.4% and 57.2% respectively.  When looking at previous summers, this summer reflects the lowest percentage of respondents expecting higher profits at 31.2% (only Winter 2019 was lower at 28%).  Great scott!  Here is the profits trend over the fifteen surveys to date:

Will the trend toward lower future profits predictions continue?  We’ll see.

Cost, Cost, Cost!  Budgetary Constraints Considered to Be Most Impactful to eDiscovery Business: Tag, you’re it!  Budgetary Constraints and Increasing Volumes of Data continued their almost reliable flip-flop between the top two positions, with Budgetary Constraints identified as the top factor this time with 27.2%.  Increasing Volumes of Data dropped back down to second at 22.5%. Increasing Types of Data was once again third at 20.8%, followed by Lack of Personnel at 12.7%, Data Security at 11.6% and Inadequate Technology (once again) bringing up the rear at 5.2%, the lowest number ever for any factor in the history of the survey.  Does this mean most people are happy with their technology?  Hmmm…  The graph below illustrates the distribution over the fifteen surveys to date:

Increasing Volumes of Data, Budgetary Constraints and (now) Increasing Types of Data continue to consistently be at the top of the most impactful factors quarter after quarter.

“Managing” to Be Somewhat Even in Distribution of Respondents: Operational Management respondents were the top group at 37.6%, almost it’s highest level ever (other than 38.9 percent in Fall 2016).  Tactical Execution respondents were second at 35.3% and Executive Leadership respondents were last again at 27.2%, though almost 3 percent higher than last quarter.  Here’s the breakdown over the fifteen surveys to date:

It’s clear that the more respondents we get, the more diverse the results with a much greater influence from the “rank and file” (i.e., managers and technicians).

Again, Rob has published the results on his site here, which shows responses to additional questions not referenced here.  Check them out.

So, what do you think?  What’s your state of confidence in the business of eDiscovery?  Please share any comments you might have or if you’d like to know more about a particular topic.

Image Copyright © Rankin/Bass Productions

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

This Makes the Potential GDPR Fine Against British Airways Look Like Peanuts: Data Privacy Trends

It was just last week that we discussed the new (probable) largest fine since the General Data Protection Regulation (GDPR) was enacted last May, with the proposed fine of nearly $230 million against British Airways for a data breach last year.  But, this fine approved by the Federal Trade Commission (FTC) against Facebook for data privacy violations makes that fine look like peanuts.

As discussed by Sharon Nelson in her excellent Ride the Lightning blog (FTC Approves Fine of Roughly $5 Billion Against Facebook for Privacy Violations), the New York Times (subscription required) reported on July 12th that the FTC has approved a fine of roughly $5 billion against Facebook for mishandling users’ personal information, according to three people briefed on the vote, in what would be a landmark settlement that signals a newly aggressive stance by regulators toward the country’s most powerful technology companies.

The much-anticipated settlement still needs final approval from the Justice Department, which rarely rejects settlements reached by the FTC. It would be the biggest fine by far levied by the federal government against a technology company, eclipsing the $22 million imposed on Google in 2012. The size of the penalty underscored the rising frustration among Washington officials with how large technology companies collect, store and use people’s information and the Facebook settlement sets a new bar for privacy enforcement by United States officials, who have brought few cases against large technology companies.  In addition to the fine, Facebook agreed to more comprehensive oversight of how it handles user data. But none of the conditions in the settlement will impose strict limitations on Facebook’s ability to collect and share data with third parties.

The FTC’s investigation was fueled by The New York Times and The Observer of London, which discovered that the social network allowed Cambridge Analytica, a British consulting firm to the Trump campaign, to harvest personal information of its users. The firm used the data to build political profiles about individuals without the consent of Facebook users.

The agency found that Facebook’s handling of user data violated a 2011 privacy settlement with the FTC. That earlier settlement, which came after the company was accused of deceiving people about how it handled their data, required the company to revamp its privacy practices.

Facebook made more than $55 billion in revenue last year.  So, at 9.1 percent of annual revenue last year, this fine would be even more than a GDPR fine would be at 4 percent of global annual turnover.  Nonetheless, when the FTC fine was revealed, Facebook’s stock price rose, making it clear that investors were concerned the result could be even worse.  Maybe the “bite” from GDPR fines isn’t painful enough?

So, what do you think?  Do fines like cause your organization to re-evaluate your own security policies?  As always, please share any comments you might have or if you’d like to know more about a particular topic.

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

Thinking Like a Millennial: How Millennials are Changing Discovery, Part Five

Editor’s Note: Tom O’Connor is a nationally known consultant, speaker, and writer in the field of computerized litigation support systems.  He has also been a great addition to our webinar program, participating with me on several recent webinars.  Tom has also written several terrific informational overview series for CloudNine, including his most recent one, Biggest eDiscovery Challenges Facing Plaintiff’s Attorneys, which we covered as part of a webcast on June 26.  Now, Tom has written another terrific overview regarding the impact of millennials on eDiscovery titled Thinking Like a Millennial: How Millennials are Changing Discovery that we’re happy to share on the eDiscovery Daily blog.  Enjoy! – Doug

Tom’s overview is split into five parts, so we’ll cover each part separately.  Part one was last Tuesday, part two was last Friday, part three was Monday and part four was Wednesday, here is the fifth and final part.

Conclusions and Recommendations

The favorite tools of millennials are in use now.  We know them. We are trying to adjust to them. But perhaps the problem is not the tools. We must acknowledge the cultural shift in work flows and communication methods influenced by millennials as more employees work remotely, including from home, than ever before. Then we must be prepared to design eDiscovery tools to deal with these changes.

Millennials will quickly and easily embrace new apps. They will employ collaboration and innovation to yield more effective workflows. Responding to those changes requires proactive planning not reactive responses.

Companies need to design and establish data retention policies and deletion protocols around these new tools. Engage custodians now to understand how they are communicating and collaborating at work. Understand that overlooked applications which you may consider informal mobile apps can, in reality, be the main form of communication for many employees.

Service providers need to develop new strategies and processes for collecting data from these new tools.  These new tools may be will be less uniform and more diversified in their deployment and this implementation may vary widely within departments of the company. This will require extensive collaboration with IT departments in order to understand how their tools are implements

Data growth is expanding at an enormous rate. In 2018, DOMO reported that “over 2.5 quintillion bytes of data were created every single day and it estimated that by 2020, 1.7MB of data will be created every second for every person on earth”.  And, a recent report in the Visual Capitalist found the following:

  • 500 million tweets are sent daily
  • 294 billion emails are sent daily
  • 4 petabytes of data are created on Facebook daily
  • 4 terabytes of data are created from each connected car daily
  • 65 billion messages are sent on WhatsApp daily
  • 5 billion searches are made every day

By 2025, it’s estimated that 463 exabytes of data will be created each day globally – that’s the equivalent of 212,765,957 DVDs per day!

Source: Visual Capitalist

As technology advances, millennials will continue to blur the lines between personal and professional communications and the demand for faster and better tools and applications that are integrated with both work applications and personal social media will continue to create more and more data. This combination will place even more stress on the eDiscovery components of preservation and collection.

Companies and law firms will need to proactively identify and address all these new data sources and combinations by designing new internal policies while working with vendors to develop new collection tools.  Getting ahead of the technology curve is the best way to limit exposure to litigation risks and reduce the inevitable costs related to eDiscovery.

So, what do you think?  Have the habits of millennials impacted eDiscovery for your organization?  As always, please share any comments you might have or if you’d like to know more about a particular topic.

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

ILTACON is One Month Away. And, I’m Speaking – Twice!: eDiscovery Trends

Hard to believe, but we’re just one month away from ILTACON 2019, being held this year at the Walt Disney World Swan and Dolphin Resort in Orlando August 18-22.  CloudNine will be at the conference in a big way again this year.  And, so will I, as I will be speaking not just once, but twice at this year’s conference!

As always, the conference will be four days, preceded by some networking activities (including the annual golf tournament) on Sunday the 18th.  Educational sessions will begin on Monday the 19th and continue through Thursday the 22nd.  And, the Exhibit Hall will also be open for four days, starting with the annual opening reception: A Whole New World of Possibilities-A Journey through Classic TV.  Should be interesting to see what types of characters people dress up for that one!  Here’s a link to the summary agenda.

Speaking of the Exhibit Hall, CloudNine will be exhibiting again at this year’s show at booth #624.  We expect to have several exciting announcements regarding our products in the next couple of weeks and will announce what we plan to showcase before the conference begins.  If you are attending ILTACON this year and would like to schedule a meeting with us, you can go to this page to request a demo and indicate that you want to meet at ILTACON 2019!

When we get closer to the conference, we will have a preview post to identify some of the more interesting topics to be covered at this year’s educational sessions.  Here’s a link to the session grid – keep in mind that this is as of July 12 and still subject to change.

One thing that won’t change is that I’m speaking at ILTACON again this year.  This time, I’m speaking twice!  On Wednesday, I will be part of ILTACON’s brand new Litigation Support Day, which features a DAY of SPARK (Short, Provocative, Action-oriented, Realistic, and Knowledgeable) talks by leaders in the industry.  Organized by David Hasman of Bricker & Eckler, David Horrigan of Relativity, and Philip Weldon of Fried Frank, this program will be moderated by David, and the program will feature presentations on everything from cloud transformation to career development and job interview techniques.

I will be participating in Session One – Litigation Support State of the Union from 9:00-10:30am that day.

I will also be moderating the session Choosing a Predictive Coding Approach – “Predictive Coding For Dummies” on Thursday from 11:30am-12:30pm.  In that session, you can gain a full understanding of analytic jargon, acronyms [TAR, CAL, SPL, SAL?], learn the pros and cons of each approach, and collect a few tips for selling it to case teams, clients, and opposing counsel!  We’ll also conduct a fun exercise that illustrates how a supervised machine learning approach works.  Speakers for the session include: Doug Matthews, Partner at Vorys, Sater, Seymour and Pease LLP; Lia Majid, CEO and Founder of Acorn Legal Solutions; Julian Ackert, Managing Director at iDiscovery Solutions, Inc. and Trena Patton, Solutions Architect at Epiq.  Come check it out!

So, what do you think?  Do you plan to attend ILTACON this year?  As always, please share any comments you might have or if you’d like to know more about a particular topic.

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

Move Over Google, Here May Be Your New Largest GDPR Fine: Data Privacy Trends

Now, we’re talking some serious money!  In January, we covered the first big fine for failing to comply with Europe’s General Data Protection Regulation (GDPR) when France’s data protection regulator, the Commission nationale de l’informatique et des libertés (CNIL), issued a €50 million fine (about $56.8 million) fine to Google for failing to comply with GDPR.  Now, we have a new fine being proposed which is more than four times that amount.

As discussed by Sharon Nelson in her excellent Ride the Lightning blog (British Airways Faces Record Fine After Data Breach), the New York Times (subscription required) reported on July 8th that British authorities have said that they intend to order British Airways to pay a fine of nearly $230 million for a data breach last year, the largest penalty against a company for privacy lapses under GDPR.

Poor security at the airline allowed hackers to divert about 500,000 customers visiting the British Airways website last summer to a fraudulent site, where names, addresses, login information, payment card details, travel bookings and other data were taken, according to the Information Commissioner’s Office, the British agency in charge of reviewing data breaches.

In a statement British Airways said it was “surprised and disappointed” by the agency’s finding and would dispute the judgment, which isn’t final regarding the amount.

As we’ve noted many times on this blog, GDPR allows regulators in each European Union country to issue fines of up to 4 percent of a company’s global revenue for a breach. And by acting against an iconic British brand, officials showed that enforcement would not be limited to American-based tech companies, which have been seen as a primary target.

Before GDPR, fines by the Information Commissioner’s Office were capped at 500,000 pounds, or about $625,000. That was the fine it imposed on Facebook last year for allowing Cambridge Analytica to harvest information on millions of users without their consent. However, Facebook and Google are among other companies currently under investigation by the European authorities over breaches of the GDPR (despite previous fines before and after GDPR went into effect, respectively).

The large proposed fine against British Airways is thought to be based on the fact that this was an avoidable breach caused by alleged sloppy security and organizational practices.

As noted above, the British decision to fine British Airways £183.5 million, worth about 1.5 percent of the airline’s annual revenue, is not final. The agency said it would “carefully consider” responses from the airline and others to its penalty before issuing a final decision.  Even if it’s reduced, it seems inevitable to be a new record for GDPR fines (at least for now).

So, what do you think?  Do fines like this cause your organization to re-evaluate your own security policies?  As always, please share any comments you might have or if you’d like to know more about a particular topic.

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.