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Electronic Discovery

Defendants Claim of Lightning Strike and Power Surge Doesn’t Save Them from Sanctions: eDiscovery Case Law

In a recent post in Craig Ball’s excellent blog, Ball in your Court, Craig stated that “you are more likely to be hit by lightning than to be sanctioned for non-preservation of ESI”.  So, if you claim that your devices are hit by lightning, causing your relevant ESI to be lost, does that make it more or less likely that you will be sanctioned?  :o)

In InternMatch, Inc. v. Nxtbigthing, LLC, et. al., No. 14-05438 (N.D. Cali., Feb. 8, 2016), California District Judge Jon S. Tigar, finding that the defendants “consciously disregarded their obligations to preserve relevant evidence” when they discarded various electronic devices after experiencing an alleged power surge without checking to see if they could recover any files from them, granting an adverse inference instruction sanction and plaintiff’s attorneys’ fees.

Case Background

In this trademark infringement case, the plaintiff requested copies of any documents, including electronic documents, relating to the defendants’ defense that it had continually and extensively used the disputed trademark. The defendants responded (and the owner of the defendant company (Chad Batterman) stated in his deposition) that a lightning strike in 2011 and a power surge in April 2015 had destroyed responsive documents, including corporate records central to the parties’ dispute and marketing materials that allegedly established prior use of the trademark.

in November 2015, the plaintiff filed a motion for terminating sanctions, accusing Defendants of intentionally destroying the electronic versions of the documents.

Judge’s Ruling

Using the newly amended FRCP Rule 37(e) as a guideline, Judge Tigar also considered the five factors identified by the Ninth Circuit in determining whether the terminating sanction is justified:

(1) the public’s interest in expeditious resolution of litigation; (2) the court’s need to manage its dockets; (3) the risk of prejudice to the party seeking sanctions; (4) the public policy favoring disposition of cases on their merits; and (5) the availability of less drastic sanctions.

With regard to the defendant’s duty to preserve and whether that duty was upheld, Judge Tigar found “that at least by January 2015, Defendants knew about the present action and were under a duty to preserve relevant evidence.  The evidence shows that Defendants violated this duty…Prior to discarding the desktop, Batterman did not make any effort to determine whether the hard drive on the desktop was salvageable or any data could be recovered from it…As a result, the parties can only access the few existing paper copies of the relevant documents, rather than the electronic files, which would include valuable information such as the creation and modification history of the files.”

Continuing, Judge Tigar stated: “The Court finds that at the very least, Defendants consciously disregarded their obligations to preserve relevant evidence. There is no evidence that Defendants took any steps to preserve relevant information after the litigation began…After the alleged power surge, Defendants failed to identify whether data from the electronic devices might be recoverable, and instead simply discarded the devices.

The Court also finds Defendants’ evidence that the surge occurred in the first place to be unbelievable. Not only is the alleged chronology of events highly improbable, but Defendants’ story is filled with inconsistencies. The Court does not know what actually happened to the missing evidence, if it ever existed, but concludes that Defendants have failed to show that it was lost in a power surge.”

While finding that sanctions were warranted, Judge Tigar concluded “that sanctions short of entry of default are appropriate” and granted the plaintiff’s request for an adverse inference instruction sanction, as well as attorneys’ fees associated with bringing the Motion for Terminating Sanctions.

So, what do you think?  Should the termination sanction have been awarded?  Please share any comments you might have or if you’d like to know more about a particular topic.

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.

eDiscovery Daily Is Sixty Six! (Months Old, That Is)

Let’s get our kicks on Route 66!  Sixty six months ago yesterday, eDiscovery Daily was launched.  It’s hard to believe that it has been 5 1/2 years since our first three posts debuted on our first day, September 20, 2010.  Now, we’re up to 1,375 lifetime posts, and so much has happened in the industry that we’ve covered.  And, yes, we’re still crazy after all these years for committing to a daily post each business day, but maybe we’re crazy like a fox!

Twice a year, we like to take a look back at some of the important stories and topics during that time.  So, here are just a few of the posts over the last six months you may have missed.  Enjoy!

Thanks for your support!  Our subscriber base and daily views are bigger than ever!  And, we owe it all to you!  Thanks for the interest you’ve shown in the topics!  We will do our best to continue to provide interesting and useful eDiscovery news and analysis.  And, as always, please share any comments you might have or if you’d like to know more about a particular topic!

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.

Craig Ball’s “Alexa-lent” Example of How the Internet of Things is Affecting Our Lives: eDiscovery Trends

I probably shouldn’t be writing about this as it will give my wife Paige another reason to say that we should get one of these.  Nonetheless, Craig Ball’s latest blog post illustrates how much data can be, and is being, captured these days in our everyday life.  Now, if we could just get to that data when we need it for legal purposes.

In Craig’s blog, Ball in your Court, his latest post (“Alexa. Preserve ESI.”) discusses how many cool things the Amazon Echo (with its “Alexa” voice command service) can do.  Sounding like he has gotten a little too up close and personal with the device, Craig notes that:

“Alexa streams music, and news updates.  Checks the weather and traffic.  Orders pizzas and Ubers.  Keeps up with the grocery and to do lists.  Tells jokes.  Turns on the lights.  Adjusts the temperature.  Answers questions.  Does math. Wakes me up.  Reminds me of appointments.  She also orders stuff from Amazon (big surprise there).”

Sounds pretty good.  Hopefully, my wife has stopped reading by this point.

Have you ever seen the movie Minority Report where Tom Cruise walks into his apartment and issues voice commands to turn on the lights and music?  Those days are here.

Anyway, Craig notes that, using the Alexa app on his phone or computer, he can view a list of every interaction since Alexa first came into his life, and listen to each recording of the instruction, including background sounds (even when his friends add heroin and bunny slippers to his shopping list).  Craig notes that “Never in the course of human history have we had so much precise, probative and objective evidence about human thinking and behavior.”

However, as he also notes, “what they don’t do is make it easy to preserve and collect their digital archives when a legal duty arises.  Too many apps and social networking sites fail to offer a reasonable means by which to lock down or retrieve the extensive, detailed records they hold.”  Most of them only provide an item-by-item (or screenshot by screenshot) mechanism for sifting through the data.

To paraphrase a Seinfeld analogy, they know how to take the reservation, they just don’t know how to hold the reservation (OK, it’s not completely relevant, but it’s funny).

In a call to action, Craig says that both “the user communities and the legal community need to speak out on this.  Users need an effective, self-directed means to preserve and collect their own data when legal and regulatory duties require it.”  I agree.  Some, like Google and Twitter, provide excellent mechanisms for getting to the data, but most don’t.

As Wooderson says in the movie Dazed and Confused, “it’d be a lot cooler if you did”.

So, what do you think?  Will the “Internet of Things” age eventually include a self-export feature?  Please share any comments you might have or if you’d like to know more about a particular topic.

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 Rules Plaintiff’s Duty to Preserve Did Not Extend to Employee’s Internet History: eDiscovery Case Law

In Marten Transport, Ltd. V. Plattform Advertising, Inc., No. 14-02464 (D. Kansas, Feb. 8, 2016), Kansas Magistrate Judge Teresa J. James denied the defendant’s Motion for Spoliation Sanctions, ruling that, although the plaintiff had a duty to preserve relevant ESI as of Fall 2013, that duty to preserve did not extend to the internet history of one of its employees until June 2015, and by then the internet history was lost.

Case Background

In this action under the Lanham Act for trademark infringement and unfair competition, the plaintiff accused the defendant of making unauthorized job postings to the defendant’s sites using the plaintiff’s trademarks and information after the plaintiff terminated its agreement with the defendant.  Plaintiff’s counsel sent a cease and desist letter in September 2013 and ultimately filed suit in September 2014.

In January 2015, the plaintiff served its Rule 26 disclosures identifying one of its employees (Jolene Vinck), as an individual “believed to have discoverable information relating to the matter.”  In June 2015, Defendant’s counsel sent a letter to the plaintiff alleging that after the defendant removed all of the plaintiff’s job postings from its website on September 17, 2013, the plaintiff logged back in and created six job postings on five separate dates.

In September 2015, as part of its first supplemental production, the plaintiff produced a December 2013 email to Vinck from a third party informing her that the relationship with the defendant had been terminated, which included Vinck’s response that she didn’t know and “had been posting on there all along”.  After the defendant requested Vinck’s internet history in its second request for production, the plaintiff advised the defendant that Vinck’s internet history was no longer available as she received a new work station in February 2015 in the ordinary course of business, and the plaintiff did not have access to any web browsing history relating to any computer assigned to her prior to February 2015.  After attempting to confer, the defendant filed a motion seeking spoliation sanctions due to the plaintiff’s failure to preserve Vinck’s internet history on the previous computer.

Judge’s Ruling

As directed by the Court during the hearing on the subject motion, the plaintiff subsequently filed Declarations regarding its unsuccessful efforts to search for and locate the previous computer and regarding whether it otherwise had the capability to retrieve Vinck’s internet history.  As a result of those efforts, Judge James indicated that “the Court is satisfied that Plaintiff has made thorough and reasonable good faith efforts to locate Computer 1, but it cannot be located”, concluding that “the internet history on Computer 1 is lost and cannot be restored or retrieved by other means”.

While finding that “Plaintiff had a duty to preserve relevant information, and that duty commenced in Fall 2013”, Judge James assessed the scope of that duty and determined that there was “nothing in this record to support a conclusion that Plaintiff knew or should have known that Vinck’s Fall 2013 internet history would be relevant in this case until Plaintiff received the June 16, 2015 letter from Defendant’s counsel.”  In denying the defendant’s motion for spoliation sanctions, Judge James stated:

“The stated reasons behind the 2015 amendments to Rule 37(e) further support the Court’s conclusions in this case. The general intent of amended Rule 37(e) was to address the excessive effort and money being spent on ESI preservation as a result of the continued exponential growth in the volume of ESI, along with the uncertainty caused by significantly differing standards among the federal circuits for imposing sanctions or curative measures on parties who failed to preserve ESI.  In revising Rule 37(e), the Advisory Committee expressly instructed that ‘reasonable steps’ to preserve ESI suffice; the Rule ‘does not call for perfection.’”

So, what do you think?  Should the plaintiff’s duty to preserve have extended to employees’ internet histories?  Please share any comments you might have or if you’d like to know more about a particular topic.

Happy St. Patrick’s Day!!

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.

Ex-Employee Sues Volkswagen Claiming He Was Fired for Refusing to Spoliate Documents: eDiscovery Trends

The troubles for Volkswagen continue into the electronic discovery arena.  According to the Courthouse News Service, an ex-employee of the company has filed suit, claiming that he was fired for refusing to take part in an alleged three-day purge of documents related to the automaker’s emissions-cheating scandal known as “Dieselgate”.

According to the article, Daniel Donovan (who worked in the Volkswagen Group of America’s Office of General Counsel as its Electronic Discovery Manager) says he had seven years under his belt at VW in Sept. 18, 2015, when the Environmental Protection Agency forced a recall of cars it found had been outfitted with “defeat-device” software that had been hoodwinking emissions inspectors for years.

Though the EPA’s case necessitated a legal hold on Volkswagen’s data, Donovan claimed in his March 8 lawsuit that VW’s “information technology department did not stop all deletion jobs until Sept. 21” (which was three days after they should have stopped).  Donovan also alleged that the company’s IT department was adamant about limiting access to Volkswagen data for the accounting firm conducting the independent investigation and knew it was violating the Justice Department hold by not preserving back-up disks.

Worried about “significant legal sanctions” Volkswagen could see for evidence spoliation and obstruction of justice, Donovan refused to take part in such actions and reported his concerns to a supervisor, according to the complaint.  “Donovan also asserts that he was fired because VWGoA [short for Volkswagen Group of America] believed that Donovan was about to report the spoliation of evidence and obstruction of justice to the EPA and/or the United States Department of Justice, the Federal Bureau of Investigation, or some other public body,” the complaint states.

Volkswagen told the Associated Press that Donovan’s claim of wrongful termination is without merit, claiming that his departure from the company was unrelated to the emissions scandal.

Facing penalties of up to $37,500 per day for Clean Air Act violations, Volkswagen is expected to face billions of dollars in fines.  The scandal, now widely known as “Dieselgate”, also led to the resignation of CEO Martin Winterkorn, hundreds of federal class actions consolidated in San Francisco, plus multiple investigations and congressional hearings.

So, what do you think?  Could Volkswagen have fired its Electronic Discovery Manager because he was “far from purgin”? (sorry, I couldn’t resist)  Please share any comments you might have or if you’d like to know more about a particular topic.

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.

I Tell Ya, Review Attorneys Get No Respect, No Respect at All: eDiscovery Trends

If Rodney Dangerfield had been an attorney, he probably would have been a review attorney…

As the volume of data in the world doubles as frequently as every 1.2 years, the challenges to manage that data in discovery compound significantly as well.  With review being the biggest component of the discovery process – as much as 80% of the cost of eDiscovery – review attorneys have become a significant participant in that review process (even in some cases where technology assisted review may be used).  That doesn’t mean that review attorneys get the respect that they may deserve.

A recent article in the Washington Post (The lawyers who are fighting for the same rights as janitors, written by Lydia DePillis) discusses the challenges facing review attorneys who are trying to pay law school debt as large as $300,000 with an hourly rate as low as $25 per hour and how a group of attorneys is organizing to do something about it.

We’ve already seen two cases filed (one was settled, one was dismissed) where attorneys have sued for overtime pay based on their claim that the review work they were performing did not actually require legal skills.  As the article notes, a contract attorney in NYC (Valeria Georghiu) has banded attorneys together with help from a union and the National Lawyers Guild to launch a website for a new group called The United Contract Attorneys, which has taken small collective actions, like asking for higher rates on jobs that require specialized language skills, for which the labor pool is smaller.  They have also advocated paying contract attorneys time and a half for overtime, arguing that most of the work doesn’t require professional judgment.

“The assumption that lawyers earn a ‘professional’ salary – and are therefore categorically exempt from overtime compensation – is simply no longer true,” Gheorghiu wrote. “As a result, Contract Attorneys are a stark example of the disappearing middle class sorely in need of higher wages.”

To get a sense of how contract attorneys are treated, I asked the Director of Review Services at CloudNine, Karen DeSouza, if she had any examples of lack of respect for review attorneys in past review projects in which she worked.  She had plenty.  For example:

  • One project where she worked when the air conditioning went out in the middle of summer in Houston. The firm’s attempt to alleviate the issue was to put grocery sack paper over the floor to ceiling windows letting in the sunlight.
  • On that same project with 140+ reviewers, the bathrooms were out of commission at times.
  • On another project, the head paralegal and attorney in charge of the project took 10-15 reviewers into the office to tell them they were going too fast without even asking what documents were being reviewed.
  • She also worked on a project where a partner in the firm didn’t want the review attorneys walking past her office, so they were asked to walk a different way to their review stations.
  • Karen has also heard about projects where the reviewers were timed for restroom breaks and had their cell phones locked up in lockers while they worked.

Needless to say, review attorneys sometimes feel like they get no respect, no respect at all.  It will be interesting to see if they can at least get more pay through lawsuits for overtime pay and by organizing together in groups like the United Contract Attorneys.

So, what do you think?  Will organizing enable review attorneys to get the respect they deserve?  Please share any comments you might have or if you’d like to know more about a particular topic.

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.

Plaintiff’s Failure to Demonstrate Allegations Leads to Summary Judgment for Defendant: eDiscovery Case Law

In Malibu Media, LLC v. Doe, Case No. 13-6312 (N.D. Ill., Feb. 8, 2016), in a case of dueling summary judgment motions, Illinois Magistrate Judge Geraldine Soat Brown denied the plaintiff’s motion for summary judgment, but granted the defendant’s summary motion in its entirety, concluding that the plaintiff had not presented sufficient evidence to prove its allegations of illegally downloading movies.

Case Background

The plaintiff alleged that the defendant, identified through his Internet Protocol (“IP”) address, downloaded its copyrighted work, specifically, twenty-four adult movies from the plaintiff’s site, using BitTorrent.  In this matter, the defendant was allowed to proceed anonymously as “John Doe.”  With regard to the identification of the defendant via the IP address, the defendant claimed that, during the time in question, he had many guests at his house, and any number of people could have downloaded from his IP.

In a forensic examination of the defendant’s hard drives from his computer, the plaintiff’s expert did not find any evidence that the plaintiff’s copyrighted works, or the BitTorrent software, had been on the defendant’s computer.  However, he did find evidence that one external storage device and one internal hard drive that were capable of storing files downloaded via BitTorrent had been connected to the defendant’s computer, but they had not been produced by the defendant.  He also found several virtual machines on one of the defendant’s hard drives, but not the program “VMWare” he believed was used to create them.

The defendant retained his own expert to conduct a forensic examination of his hard drive.  The defendant expert also concluded that there was no evidence that the plaintiff’s copyrighted works, or the BitTorrent software, had been on the defendant’s computer.  With regard to the two devices identified by the plaintiff’s expert, the defendant’s expert determined that they were last used in 2012 (which was before the infringement period and before the date the plaintiff says the works at issue were created) and the virtual machines were last used no more recently than September 2010, which was the expiration timeframe for the one-year student license for VMWare that the defendant would have received as a graduate student.  The defendant also moved to strike declarations from plaintiff’s experts regarding the forensic and IP evidence, as the plaintiff never served any Rule 26(a)(2) disclosure – in response, the plaintiff characterized them as “lay witnesses — not experts”.

The plaintiff and defendant filed cross-motions for summary judgment in the case.

Judge’s Ruling

Stating that “[u]nlike other cases, Malibu has no evidence that any of its works were ever on Doe’s computer or storage device”, Judge Brown denied the plaintiff’s summary judgment motion, as follows:

“Considering all of Malibu’s evidence, including the Fieser, Patzer, and Paige declarations Doe has moved to strike, in the light most favorable to Doe, Malibu’s summary judgment motion must be denied. Even if those contested declarations are considered, Malibu has not eliminated all material questions of fact about whether there was actionable infringement and, if so, whether Doe was the infringer.”

With regard to the defendant’s motion to strike declarations from plaintiff’s experts, Judge Brown granted the motion pursuant to Fed. R. Civ. P. 26(a)(2) and 37(c)(1).  As a result, Judge Brown ruled “[w]ithout the evidence of Fieser’s and Patzer’s declarations, there is no evidence linking Doe or even his IP address to Malibu’s works. Paige’s evidence, which depends entirely on the finding of IPP using Excipio’s system, does not contain any evidence based on his personal knowledge that Doe copied or distributed any of Malibu’s works. Doe’s motion for summary judgment is, accordingly, granted.”

So, what do you think?  Should the defendant’s summary judgment motion have been granted?  Please share any comments you might have or if you’d like to know more about a particular topic.

Here are links to two previous cases we have covered regarding this plaintiff.

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.

New Survey Shows Biggest Concerns of Legal Professionals Regarding Cloud and Shadow IT: eDiscovery Trends

A big topic during LegalTech New York (LTNY) last month were the issues and concerns associated with information governance (IG) as it applies to the use of “Shadow IT” applications, including those that are cloud-based.  A new survey, actually conducted during LTNY, was released earlier this week that sheds light on those concerns of legal technology professionals.

According to the survey conducted by Consilio and announced this week, the pervasive use of cloud-based applications in the workplace is creating challenges for companies to effectively manage the potential data security risks of Shadow IT.  A total of 148 responses were collected from law firms (54.73% of respondents), in-house legal departments (27.03%) and government-affiliated entities (18.24%) in attendance.  Here are some notable findings:

  • Biggest Perceived Risks of Cloud-Based Applications: When asked what they thought were the biggest risks of cloud-based applications, 64% of respondents cited inadvertent disclosure of sensitive data as the biggest risk of using cloud-based applications, followed by theft of intellectual property (39%), regulatory compliance failures (26%), inability to adequately identify relevant data for eDiscovery (25%), service outage (21%) and inadequate application of document retention (16%).
  • Concern about Potential Security: When asked how concerned they were with the potential security risk of cloud-based applications, 31.7% of respondents indicated that they were concerned, followed by very concerned (29.7%), moderately concerned (21.6%), slightly concerned (14.8%) and not at all concerned (2.0%).
  • Over Half of Respondents Usually Have Cloud-Based Data to Consider Collecting: 54.7% of respondents often or almost always use cloud-based applications to store company data affiliated with legal and investigatory matters on a regular basis.
  • Majority of Respondents See Cloud Migration as Important to IG: More than two-thirds (67%) of respondents regard the migration of company data to the cloud as important or very important to an organization’s information governance program.

It’s also worth noting that over a quarter (26.9%) of respondents reported that their organization rarely or never actively addresses security risks associated with Shadow IT, which is hardware or software used within an enterprise that is not supported or administrated by the organization’s IT department.  Almost half of legal technology professionals (45.2%) cited that their organization addresses these risks sometimes, while only a quarter (25.6%) committed to this process very often.

“The survey confirmed what we have already seen anecdotally for the last few years; many organizations are enabling Shadow IT to enter their daily business operations without enough concern about the risks of these platforms,” said John Loveland, managing director, Consilio. “If an organization is faced with litigation in the future, this cavalier approach can make eDiscovery exponentially more complicated and expensive, during a time when efficiency and accuracy are paramount.”

A copy of the infographic containing key findings from the survey can be found here.

So, what do you think?  How does your organization handle the use of “Shadow IT” applications?  Please share any comments you might have or if you’d like to know more about a particular topic.

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.

Details Released on the New EU-US Privacy Shield: eDiscovery Trends

As we discussed last month, the EU-US Privacy Shield, an important new framework for transatlantic data flows was announced on February 2.  Within the same month, the European Commission released details on the new trans-Atlantic data transfer arrangement.

The EU-US Privacy Shield reflects the requirements set out by the European Court of Justice (ECJ) in its ruling in the Schrems case last October 2015 (covered by us here), which declared the old Safe Harbor framework invalid.  As discussed on JD Supra Business Advisor (EU-U.S. Privacy Shield Details Released – Is the New Data Transfer Arrangement Right for Your Company?, written by Robert Stankey and Bryan Thompson of Davis Wright Tremaine LLP), the European Commission released its 34 page Draft Adequacy Decision and supplemental documents on the EU-U.S. Privacy Shield.

As the article notes, “the Privacy Shield will go further than just restoring the status quo ante Schrems. Instead, the new data transfer framework is built upon a set of stringent ‘Privacy Principles’ issued by the Commerce Department” (and also 34 pages) “that U.S. companies will have to comply with” in order to import data from the EU under the framework.  For those of us who haven’t made it through the 68+ pages yet, Stankey and Thompson have summarized the requirements required of U.S. companies, as follows:

  • Provide notice to EU citizens regarding how their data is collected and processed;
  • Allow individuals to choose to “opt-out” (or in the case of sensitive information, “opt-in”) when their personal data is shared with non-agent third parties or used in ways “materially different” from its original purpose;
  • Implement “reasonable and appropriate” data security measures, including contractually requiring all sub-processors to provide the same level of data security demanded by the Privacy Principles;
  • Ensure the reliability and integrity of personal data, and process personal data in only those ways authorized;
  • Provide EU citizens with access to their personal information, including the right to confirm whether their personal data is being processed by an organization;
  • Limit “onward transfers” of personal data to specific purposes that are based upon a contract and which include data protections equivalent to the Privacy Principles, with more detailed responsibilities and conditions than under Safe Harbor on data processing by suppliers and other third parties (including some form of notice and choice); and
  • Provide “robust” compliance and recourse mechanisms, giving EU citizens access to free and independent recourse mechanisms to redress alleged non-compliance.

Key to the new Privacy Shield are those mechanisms for complaint handling, dispute resolution and redress requirements that require self-certifying companies to respond to complaints of non-compliance within 45 days and designate an “independent dispute resolution body” to investigate and resolve EU citizens’ complaints free of charge.  It’s also important to note that the Commerce Department can remove a company from the Privacy Shield List if it finds the company has “persistently” failed to comply with the Privacy Principles, and refer perceived violations to the FTC for further enforcement action.

What’s next?  The European Commission is awaiting comments from the EU’s Article 29 Working Party (“WP29”) and the Article 31 Committee representing EU national governments before deciding whether to have the Draft Adequacy Decision approved by the full European Commission or make further changes in the terms of the Privacy Shield.  There could also still legal challenges.  So, there are still some milestones to complete before the Privacy Shield goes into effect.

So, what do you think?  Now that we know more details, does the new “Privacy Shield” appear to be an appropriate replacement to the old Safe Harbor?  Please share any comments you might have or if you’d like to know more about a particular topic.

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.

Ralph Losey of Jackson Lewis, LLP: eDiscovery Trends

This is the eighth and final of the 2016 LegalTech New York (LTNY) Thought Leader Interview series.  eDiscovery Daily interviewed several thought leaders at LTNY this year to get their observations regarding trends at the show and generally within the eDiscovery industry.  Unlike previous years, some of the questions posed to each thought leader were tailored to their position in the industry, so we have dispensed with the standard questions we normally ask all thought leaders.

 

Today’s thought leader is Ralph Losey. Ralph is an attorney in private practice with the law firm of Jackson Lewis, LLP, where he is a Shareholder and the firm’s National e-Discovery Counsel. Ralph is also a prolific author of eDiscovery books and articles, the principal author and publisher of the popular e-Discovery Team® Blog, founder and owner of an online training program, e-Discovery Team Training, with attorney and technical students all over the world, founder of the new Electronic Discovery Best Practices (EDBP) lawyer-centric work flow model. Ralph is also the publisher of LegalSearchScience.com and PreSuit.com on predictive coding methods and applications.

What are your general observations about LTNY this year and about eDiscovery trends in general?

{Interviewed the second day of LTNY}

I have not been on the vendor floor yet, but I hope to get there.  I have been in several meetings and I was able to attend the keynote on cybersecurity today by Eric O’Neill, who was a terrific speaker.  They started out by showing the movie that was made of the big event in his life where they caught the biggest spy America has ever had.  He talked about that incident and cybersecurity and it was very good.  Of course, cybersecurity is something that I’m very interested in, but not so much as an expert in the field, but just as an observer.  My interest in cybersecurity is only as it relates to eDiscovery.  O’Neill was talking about the big picture of catching spies and industrial espionage and the Chinese stealing American secrets.  It was very good and the auditorium was filled.

Otherwise, the show seems quite alive and vibrant, with orange people and Star Wars characters here and there as a couple of examples of what the providers were doing to get attention here at the show.  I have been live “tweeting” during the show.  Of course, I’ve seen old friends pretty much everywhere I walk and everybody is here as usual.  LTNY remains the premier event.

One trend that I’ll comment on is the new rules.  I didn’t think the rules would make that much difference.  Maybe they would be somewhat helpful.  But, what I’m seeing in practice is that they’ve been very helpful.  They really seem to help lawyers to “get it”.  Proportionality is not a new message for me, but having it in the rules, I have found more helpful than I thought.  So far, so good, knock on wood – that has been a pleasant surprise.  I’m upbeat about that and the whole notion of proportionality, which we’ve really needed.  I’ve been talking about proportionality for at least five years and, finally, it really seems to have caught on now, particularly with having the rules, so I’m upbeat about that.

I’ve observed that there seems to be a drop off in sessions this year discussing predictive coding and technology assisted review (TAR).  Do you agree and, if so, why do you think that is?

I read that too, but it seems like I’ve seen several sessions that are discussing TAR.  I’ve noticed at least four, maybe five sessions that are covering it.  I noticed that FTI was sponsoring sessions related to TAR and Kroll was as well.  So, I’m not sure that I agree with that 100%.  I think that the industry’s near obsession with it in some of the prior shows is maybe not a fair benchmark in terms of how much attention it is getting.  Since it’s my area of special expertise, I would probably always want to see it get more attention, but I realize that there are a number of other concerns.  One possible reason for less coverage, if that is the case, is that TAR is less controversial than it once was.  Judges have all accepted it – nobody has said “no, it’s too risky”.  So, I think a lot of the initial “newsworthiness” of it is gone.

As I stated in my talk today, the reality is that the use of TAR requires training via the old fashioned legal apprenticeship tradition.  I teach people how to do it by their shadowing me, just like when I first learned how to try a case when I carried the briefcase of the trial lawyer.  And, after a while, somebody carried my briefcase.  Predictive coding is the same way.  People are carrying my briefcase now and learning how to do it, and pretty soon, they’ll do it on their own.  It only takes a couple of matters watching how I do it for somebody to pick it up.  After that, they might contact me if they run into something unusual and troublesome.  Otherwise, I think it’s just getting a lot simpler – the software is getting better and it’s easier to do.  You don’t need to be a rocket scientist.

My big thing is to expose the misuse of the secret control set that was making it way too complicated.  No one has stood up in defense of the secret control set, so I think I’m succeeding in getting rid of one of the last obstacles to adopting predictive coding – this nonsense about reviewing and coding 10,000 random documents before you even start looking for the evidence.  That was crazy.  I’ve shown, and others have too, that it’s just not necessary.  It overcomplicates matters and, if anything, it allows for a greater potential for error, not less as was its intent.  We’ve cleaned up predictive coding, gotten rid of some mistaken approaches, the software is getting better and people are getting more knowledgeable, so there’s just no longer the need to have every other session be about predictive coding.

One trend that I’ve observed is an increased focus on automation and considerable growth of, and investment in, eDiscovery automation providers.  What are your thoughts about that trend?

It is the trend and it will be the trend for the next 20 or 30 years.  We’re just seeing the very beginning of it.  The first way it has impacted the legal profession is through document review and the things that I’m doing.  I love artificial intelligence because I need the help of artificial intelligence to boost my own limited intelligence.  I can only remember so many things at once, I make mistakes, I’m only human.  So, I believe that AI is going to augment the lawyers that are able to use it and they are going to be able to do much, much more than before.  I can do the work of one hundred linear reviewers with no problem, by using a software AI enhancement.

It’s not going to put lawyers out of work, but it is going to reduce the volume of menial tasks in the law.  For mental tasks that a lawyer can do that require just simple logic, a computer can do those tasks better than a human can do them.  Simple rules-based applications, reviewing documents – there are many things that lawyers do that a computer can do better.  But, there are also many, many things that only a human can do.  We’re nowhere near actually replacing lawyers and I don’t think we ever will.

Just like all of the great technology doesn’t replace doctors in the medical profession – it just makes them better, makes them able to do miraculous things.  The same thing will happen in the law.  There will be lawyers, but they will be able to do what, by today’s standards, would look miraculous.  How did that lawyer know how that judge was going to rule so exactly?  That’s one of the areas we’re getting into with AI – predicting not just the coding of documents, but predicting how judges will rule.  Right now, that’s an art form, but that’s the next big step in big data.  They are already starting to do that in the patent world where they already have a pretty good idea how certain judges will rule on certain things.  So, that’s the next application of AI that is coming down the road.

I think the continued advancement of AI and automation will be good for lawyers who adapt.  For the lawyers that get technology and spend the time to learn it, the future looks good.  For those who don’t and want to keep holding on to the “buggy whip”, they will find that the cars pass them by.

It seems like acquisition and investment in the eDiscovery market is accelerating, with several acquisitions and VC investments in providers in just the past few months.  Do you feel that we are beginning to see true consolidation in the market?

Yes, I think it’s more than just beginning – I think it’s well underway.  And, I think that’s a good thing.  Why?  Because there are so many operations that are not solid, that, in a more sophisticated market, wouldn’t survive.  But, because many legal markets around the country are not sophisticated about eDiscovery, they are able to sell services to people who just don’t know any better and I don’t think these people are helping the legal profession.  So, consolidation is good.  I’m not saying that “new blood” isn’t good too, if those providers are really good at what they do.  But, I think that’s a natural result of the marketplace itself becoming more sophisticated.

However, I do think the entire industry is vulnerable someday to extreme consolidation if Google and IBM decide to take an interest in it.  I’ve long predicted that, at the end of the day, there will be three or four players.  Aside from Google and IBM, who that will be, I don’t know.  Maybe Google and IBM will never go into it.  But, I believe Google will go into it and I think IBM will do so too.  While I don’t have any inside knowledge to that effect, I think they’re probably researching it.  I think they would be silly not to research it, but I don’t think they have a big staff devoted to it.

I read about this a lot because I’m curious about IBM in particular and I think that IBM is focusing all of its resources right now on medicine and doctors.  They do have a booth here and they do have some eDiscovery focus, particularly on preservation and the left side of the EDRM model.  What they don’t have yet is “Watson, the review lawyer”.  In fact, I have said this in my Twitter account that if there ever is a “Watson, the review lawyer”, I challenge him.  They can beat Jeopardy, but when it comes to things as sophisticated as legal analysis, I don’t think they’re there yet. Several of our existing e-Discovery vendor software is better. Anybody could beat a regular human, but when it comes to beating an “automated human”, I don’t think IBM is there yet. I bet IBM will have to buy out another e-discovery vendor to enhance their Watson algorithms.  I hope I’m still practicing when they are ready, because I’d like to take them on.  Maybe I’ll get beaten, but it would be fun to try and I think I can win, unless they happen to buy the vendor I use. Regardless, I think it’s clear that technology is going to keep getting better and better, but so will the tech savvy lawyers who use the technology to augment their human abilities of search and legal analysis. The key is the combination of Man and Machine, which is what I call the “hybrid” approach.

What are you working on that you’d like our readers to know about?

I am looking into the feasibility of having an eDiscovery “hackathon”.  If you’ve heard of a regular “hackathon”, you get the idea.  This would be a 24 hour event where the technology providers who think they are the best in document review come together and compete.  It would be a fair and open content, run by scientists, where everybody has the same chance.  Scientists will compute the scores and determine who obtained the best recall and best precision to determine a winner.  It would be a way for us to generate interest the same way that cybersecurity does, using a live event to allow people to watch how high-tech lawyers do it.  I think you would be amazed how much information can be found in 24 hours, if you’re using the technology right.  It will be a proving ground for those vendors who think they have good software.  Basically, I’m saying “show me”, “put up or shut up”.

The reality is, my presentation today was on TREC and I showed up with Kroll Ontrack – the only other vendor to show up was Catalyst, nobody else showed up.  So, I’m going to make it easier and say “it’s 24 hours, compete!”  Anybody can say that they’re great, but show me – I want to see it to believe it.  Everybody loves competition – it’s fun.  My concern is all the other vendors will be too risk adverse to compete against us. They are just empty suits.

For me, it’s exciting to do document review.  I enjoy document review and if you don’t enjoy document review, you’re doing something wrong.  You’re not really harnessing the power of artificial intelligence.  Because working with a robot at your side that’s helping you find evidence can be a lot of fun.  It’s somewhat like an Easter egg hunt – it’s fun to look for things when you have the help of AI to do the heavy lifting for you.   Review a million documents?  No problem if you have a good AI robot at your side.

So, I’m thinking of ways to show the world what eDiscovery can do and, within our community, to see who are among us is really the best.  I have won before, so I think I can do it again, but you never know. There are many other great search attorneys out there. If we do pull it off with a hackathon, or something like that, there may not be one clear winner, but there may be a few that do better than others. It’s never been done before and I like to do things that have never been done before. But it will not happen unless other vendors step up to the plate and have the confidence to dare to compete. Time will tell…

Thanks, Ralph, for participating in the interview!

And to the readers, as always, please share any comments you might have or if you’d like to know more about a particular topic!

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. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.