Social media, presidential intervention steered e-discovery in 2011 as ESI emerged in new roles

December 30, 2011

By Robert Hilson 

Start of government records overhaul and social media impact were two leaders of major 2011 events.

This is the second and final part of our review of the major e-discovery developments in 2011, according to ACEDS. To read Part I of this series, see our In the News Page.

Presidential directive marks start of government effort to modernize records, level e-discovery playing field

On November 28, President Barack Obama issued a memorandum instructing more than 450 US government agencies, in effect, to overhaul their records management systems and begin a process of information governance that meets the times. While the memorandum says nothing about e-discovery or mention it by name in its 950 words, it carries the promise of far-reaching implications in the government's ability to respond to the many diverse requests and demands it receives for its records and other information.

The president's mandate, “Managing Government Records,” marks the beginning of a transition to digitized government records and a comprehensive reform of its records system. The president said government records systems have not been significantly updated since Harry Truman was president more than 60 years ago.

The memorandum came on the heels of a survey by the National Archives and Records Administration (NARA), which serves as the government's principal record keeper, which reported that 95 percent of the 270 federal agencies that responded had records that were at “high or moderate risk” of being improperly destroyed. NARA, which will share with the Office of Management and Budget (OMB) the responsibility of carrying out the president’s order, has not much to brag about. It scored a 46 out of a possible 100 points in its own survey on the risk of its records being improperly destroyed.

The memo orders the NARA and OMB to issue a directive by next summer on how the agencies can improve records management, institute cost-effective systems, and comply with legal requirements concerning preservation of records in litigation. Just in the past 12 months, the Securities and Exchange Commission, Department of Justice, and Immigration and Customs Enforcement (ICE), and possibly others, have been castigated by federal judges and attacked by courtroom adversaries for failings in e-discovery legal responsibilities (See Part 1 of ACEDS Year in Review).  

Electronic discovery vendors, information governance companies and other service providers are jumping at the opportunities the presidential directive creates to sell their goods and services to government agencies. The job faced by government agencies will not be easy. NARA estimates it has taken in about 475 million pages of paper records for its archives annually in the past decade. It says it has also collected a total of more than 142 terabytes in its electronic databases. Use of outside vendors by government agencies is a foregone conclusion.

In 2011, the Government Accountability Office reported that NARA paid $317 million to Lockheed Martin in 2005 to develop an Electronic Records Archive, which was recently completed. NARA also awarded $243 million over 10 years to IBM to maintain the system. According to USASpending.gov, which tracks government contracts, federal agencies paid about $2.7 billion to private companies in fiscal year 2011 to purchase information technology and IT architecture.

“There needs to be a conversation inside the government about how business needs align with records management,” Paul Wester, NARA’s Chief Records Officer, in Washington, DC, told ACEDS. “Our job will be to find how the technology and policies in some agencies might benefit others across the board.

Arrival of social media as evidentiary weapon is a landmark and challenge to litigants, lawyers

Personal injury attorney Matt Murray was a respected member of the Charlottesville community

and bar when he resigned from his law firm in July after it was revealed in court that he had told a client, Isaiah Lester, to delete racy photos from his personal Facebook account. Murray's instructions to the client were given before the start of a wrongful death trial against a company whose truck had crushed Lester's wife while she was riding with her husband.

The immediate past president of the Virginia Trial Lawyers Association, Murray told Lester not to “worry about sanctions…. If we get sanctioned, after the trial, you’ll have plenty of money to pay for it.” That turned out not to be the case. In November, a Virginia state judge ordered Murray to pay $522,000 for ordering Lester to remove a Facebook picture of himself with a beer in hand and wearing a t-shirt that said “I [heart] hot moms.” Lester was ordered to pay $180,000 for obeying Murray's instructions. The court also reduced a state record $8.6 million verdict the jury had awarded Lester by more than $4 million for inappropriate conduct, according to the judge, some of which may have been related to the Facebook tampering. Murray says he no longer practices law.

The case is one of several examples in 2011 in which improperly handled social media, on Facebook, Twitter, shared workspaces and other Cloud sites, compromised the outcome of litigation and cost parties large sums. The Murray-Lester case also shows that courts are treating data from social networks as they do other forms of possible evidence and are penalizing litigants and lawyers for failure to preserve and produce, and setting boundaries on what is discoverable.

In May, a Pennsylvania state judge in a personal injury case ruled that the defendant should have access in discovery to the plaintiff’s private, password-protected information on Facebook and MySpace. State Judge Charles Saylor wrote in May 19, “With the initiation of litigation… any relevant, non privileged information about one’s life that is shared with others and can be gleaned by defendants from the internet is fair game….”

More recently, US district Judge Garrett Brown, of New Jersey, wrote in August that changing one’s profile picture during discovery could lead to a spoliation inference. He said this after the defendant in a case removed a photo containing an allegedly infringing trademark.

The proliferation of social media in cases placed a premium on sound organizational policies addressing its use and preservation in litigation. USA Today reported in September that the National Labor Relations Board fielded more than 100 complaints about social media in the past year. This number is likely to rise as more businesses turn to social networks to connect employees and enhance the reach of their messages. Organizations are now regularly implementing new social media rules to make them legally defensible. In September, Symantec reported that 41 percent of its large business survey respondents said that legal or regulatory requests for electronically stored information included some form of social media data.

(Note: The ACEDS Annual Conference on April 2-4, 2012 will dissect the proliferation of social media and show best practices in e-discovery in the panel, “Harnessing social media’s power and potential harm – ‘Friending’ can be hazardous to your case (and career).” The four speakers include a senior at Reputation.com. Visit the Conference page of ACEDS.org for full information.)

E-discovery continues incursion in criminal field, but its court rules remain silent on subject

The trial of Casey Anthony, the young Central Florida mother who was accused of killing her two-year-old daughter, Caylee, glued many people to their television sets last summer. Anthony was acquitted of first-degree murder in July, but the case put on an international stage the continuing incursion of e-discovery into criminal law and procedure, a process that is just beginning.

The trial and underlying investigation underscored how electronic evidence helps determine state of mind, premeditation and intent, which are crucial concepts in criminal cases. They also revealed how prosecutors and defense attorneys are turning to electronic venues to gather evidence and evidentiary trails. Christopher Myers, a Holland & Knight partner in Northern Virginia, told ACEDS the proliferation of electronically stored information (ESI) will produce growing challenges in computer forensics and e-discovery in prosecutions and internal investigations. 

In October, the trustee in the global effort to locate assets in the $65 billion Bernard Madoff fraud asked a Manhattan federal bankruptcy judge to allow the establishment of data rooms and appoint special masters to streamline the e-discovery process in the 15,000-party liquidation case. The motions, which are still pending, have put in focus the intersection of electronic discovery and fraud cases and the subsequent asset recovery efforts.

In August, a Seattle federal judge rejected an alleged fraudster’s bid for temporary release from prison to help his lawyer perform their e-discovery responsibilities related to a Ponzi scheme case with nearly two million documents. Defendant Darren Berg’s lawyer had accused the government of “dumping” data and thus compounding the difficulty of discovery in a complex financial case.  

In September, a federal magistrate judge in a Buffalo criminal case applied Federal Rule of Civil Procedure 34 to order government prosecutors to produce data from wiretaps that helped uncover a drug ring. Highlighting the difficulties caused by an absence of e-discovery rules for the criminal realm, him Judge Hugh Scott, in US v. Antonio Briggs, et al., wrote:

“(The) Federal Rules of Civil Procedure sets forth a procedure for electronic discovery that a party produce… ‘electronically stored information… stored in any medium from which information can be obtained… by the responding party into a reasonable useable form.’ This Court’s Local Civil Rules expressly consider the manner for production of electronically stored information, including the formats…. There is no such express ESI regime, however, for criminal cases. The few commentators on this subject note that this… would be best solved by ESI discovery rules… tailored for criminal cases, with one commentator concluding that wholesale borrowing of the Federal Rules of Civil Procedure… for ESI discovery may not be appropriate for the different needs in criminal cases….”

New and proposed state rules and model orders highlight discrepancies in treatment of e-discovery

Nearly half the states have adopted civil procedure rules to deal with the proliferation of electronically stored information in civil litigation. No jurisdiction in the United States, including the federal government, has yet promulgated rules that applied to e-discovery in criminal cases.

In 2011 two large states took major steps to join the ranks of those that have confronted e-discovery in their rules. In Florida, the Florida Bar sent to the state Supreme Court proposed amendments to the state rules of civil procedure that would deal with e-discovery. In the works for nearly five years, the rules have been set for accelerated consideration by the Supreme Court. Much of the time was devoted to debating the merits and effectiveness of the federal e-discovery rules that were promulgated in December 2006 after consideration by the US Supreme Court and the Congress.

The proposal under consideration by the Florida Supreme Court differs from the federal rules in a major way by its omission of the mandatory “meet-and-confer” conference. That is a required meeting of the attorneys in a case, under Federal Rule 26(f), where they discuss pretrial discovery issues and other points of contention. The omission highlights the different attitudes of lawyers who practice in urban areas as opposed to those in rural, less-populated locations. These distinctions are not unique to Florida, and similar ones are found in the rules of other states.

In 2011, the New York Bar Association issued a 14-point report offering e-discovery guidance to the state’s 160,000 attorneys. New York, the world's financial capital and home of some of the largest corporations, is edging its way toward revision of its rules. Until that occurs, the bar has promised to update the guidelines annually. The guidelines warn of several e-discovery pitfalls created by new networks, systems and data storage devices, which could increase the possibility of inadvertent spoliation that could lead to court sanctions at state and federal levels.

The New York Bar report spotlights the difficulty litigants face under varying or ambiguous e-discovery standards. Constance Boland, a partner at Nixon Peabody in New York and co-chair of the Bar’s Commercial and Federal Litigation e-discovery committee, told ACEDS, “In state courts, New York has a dearth of e-discovery decisions and unevenness of treatment. Conduct can be treated differently in various areas of the state, so it’s helpful to have standards that apply to everybody.”

While New York has its new guidelines that all litigants may use, Judge Randall Rader, Chief Judge of the US Court of Appeals for the Federal Circuit, in Washington, DC, issued a model order that applies in patent cases only, a highly specialized field of litigation. Aiming to reduce the cost of patent cases, the three-page order proposes e-discovery cost-shifting measures, limitations on the number of custodians, metadata fields and search terms, and a ban on blanket production requests. Judge Rader said it is a remedy for fishing expeditions.

The order at once portends a tightening of e-discovery rules for special jurisdiction courts and promotion of e-discovery principles that apply in all cases in which ESI is at issue. 

While the model order applies to intellectual property disputes, its advocates say its principles could be employed by other courts to drive down litigation costs and streamline e-discovery. It has already been adopted by a federal court in the Northern District of California to focus discovery in a case of two competing technology businesses.

E-discovery and electronic data shape News Corp., Penn State, BP and other catastrophic cases  

Several high-profile cases stole headlines this year, but none with more dramatic and emotional impact than those that erupted in the recesses of News Corporation and Pennsylvania State University, or Penn State as it's known. The idea that electronic data plays a crucial role in sprawling, complex cases is not new. But, the prominent role of ESI in these and other calamities, such as the BP Oil Spill, have awakened professionals in many disciplines to the risk of taking information governance for granted or too lightly.

These catastrophe cases have alerted us to the evidentiary trails that electronic information offers. In the civil and criminal suits bubbling up against Penn State, its former football coach Jerry Sandusky and others, investigators, lawyers and computer forensics experts are seeking answers to the unresolved aspects of Sandusky’s alleged sex abuse of children. They are scouring the Cloud, social media networks, email archives, building entry and exit logs, and traversing other electronic avenues (see the ACEDS special report ). This, apparently, has started to bear fruit. A New York Times article on November 16 reported that a major investigative break in the case came from a tip gleaned from a college football message board.

The cases will continue providing important lessons on how to manage and preserve electronic records, maneuver the generational divide of paper and electronic discovery, best practices in electronic surveillance and others. In the News Corporation case, which jeopardizes Rupert Murdoch’s media empire and led to the closure of the 168-year-old News of the World tabloid, cross-border e-discovery also figures prominently. As the scandal spread from Great Britain to the US -- causing some US subsidiaries of New Corp. to institute litigation holds -- interested parties probed the cultural and legal differences between US and other countries in discovery, or “disclosure” as it is known in Great Britain. The US system promotes “broad and liberal” discovery in litigation, but discovery or e-disclosure abroad is either not accepted or it is complicated by stringent privacy policies and blocking statutes that prevent the disclosure of certain data outside the country.    

Characterized by phone hacking and covered up by the destruction of thousands of emails, the News Corp. scandal also spotlights the role of audio ESI and its admissibility in court, email archiving to recover deleted messages, and the procedures and practicality of enterprise-wide litigation holds by a global corporation, especially one with 50,000 employees. General Counsel, records managers, retained counsel, IT specialists and litigation support staffs are paying close attention to these lessons and those that will continue being taught in these catastrophe cases in 2012.

Geoff Black, Director of High Tech Investigations at Prudential Financial and a member of the ACEDS Advisory Board Member offered succinct advice in a July podcast:

“Like the Boy Scouts motto says: Be prepared. You can never insure that every employee in your organization will always do the right thing, but you can do everything in your power to be prepared when the worst happens. Have an e-discovery strategy. Have certified vendors on contract. Have a records hold order system. Be ready for the worst.”

(Note: The ACEDS Annual Conference on April 2-4, 2012 will offer best practices in managing catastrophic cases in a panel, “Succeeding in catastrophic cases like BP Oil, Penn State and Siemens – Preserving evidence and executing winning strategies on offense and defense.” Four speakers, including Professor John Bagby, co-director of the Institute for Information Policy at Penn State University, and top plaintiff lawyerErvin Gonzalezwill participate. Visit the Conference pageof ACEDS.org for full information.)