E-Discovery Lawyer & Attorney : Quarles & Brady Law Firm : Electronic Discovery, Data Preservation, Conversion, Computer Forensics

Things are getting really ugly in what has turned into a grudge match discovery dispute between Qualcomm and the company's outside lawyers.

I wrote recently about the impressive sanctions handed down by a magistrate judge against Qualcomm and its outside counsel after they failed to turn over hundreds of thousands of documents in patent litigation.  Qualcomm's lawyers sought to defend themselves at the sanctions hearing by pointing the finger at Qualcomm's failures in the discovery process.  However, the magistrate judge ruled that they were prevented from doing so by the attorney client privilege.

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Be wary of your electronic communications regarding settlement -- they may bind you to an agreement.  That's the basis of the ruling in Basis Technology Corp. vs. Amazon.com Inc., 2006-P-1048.  The Jan. 7 decision serves as a reminder to lawyers that e-mail settlements carry the same weight as deals on paper.

Citing the trial judge's decision to terminate the trial instead of suspending it for exploratory negotiations, Associate Justice Mitchell J. Sikora Jr. rejected Amazon's argument of characterizing the e-mail exchange as a "framework" causing the "suspen[sion]" of the trial and forming a "starting point" toward a "final settlement."

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A California federal court judge sanctioned wireless chip developer Qualcomm Inc. and six of its outside lawyers on January 7, 2008 for what the judge labeled a "monumental discovery violation" in connection with Qualcomm's failure to turn over electronically-stored information.  One of Qualcomm's central arguments in patent litigation against Broadcom Corp. rested on Qualcomm's position that prior to September 2003 it had not been involved in working on a committee tasked with creating a video coding standard. 

The fly in the ointment was 46,000 emails (totaling over 300,000 pages) showing that Qualcomm had, in fact, been involved with the committee as early as August, 2002.  What to do? 

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 A recent New York appellate court decision offers some guidance on the interplay among an employer's right to monitor email traffic, an employee's expectation of privacy in their email and the attorney-client privilege.  In a decision by the Supreme Court for New York County, the Plaintiff, Dr. Scott, was fired by Beth Israel Medical Center and sued for $14 million in severance payments.  Dr. Scott got a bit ahead of himself, though, and sent several emails about the impending suit to his lawyers while still employed by the hospital, using his work email account and a hospital computer.  When the hospital informed his attorneys that it had the emails, Dr. Scott moved for a protective order preventing their use in litigation.

The question, then, was what took precedence, the attorney-client and work product privileges, or the hospital's email policy, which provided that the hospital's email system was not for personal use and that the hospital reserved the right to access emails at any time.

The court found that "A 'no personal use' policy combined with a policy allowing for employer monitoring and the employee's knowledge of these two policies diminishes any expectation of privacy," and the combined effect "is to have the employer looking over your shoulder every time you send an e-mail."  Thus, the court held that the emails were not protected, and were properly discoverable in litigation.  The full decision appears here: Scott v. Beth Israel Medical Center.

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Kroll Ontrack, an electronic discovery and computer forensic service provider, has put together an interesting analysis of the electronic discovery case law that has been decided since the new federal rules were enacted a year ago.

According to Kroll, of the approximately 105 e-discovery opinions reported since December 1, 2006, the major issues involved in these cases break down as follows:

• 25% of cases addressed discovery requests and motions to compel
• 24% of cases addressed spoliation/sanction
• 23% of cases addressed issues involving the form of production
• 9% of cases addressed preservation/litigation holds 
• 7% of cases addressed attorney-client privilege and waiver 
• 6% of cases addressed production fees 
• 6% of cases addressed admissibility of electronic evidence

The moral of the story?  75% of the cases analyzed by Kroll Ontrack dealt with discovery requests, motions to compel, the destruction of electronic data, sanctions, and the format in which electronic data must be produced.  E-discovery is not going away any time soon and corporations must have a game plan and a document retention policy in place that permits them to respond efficiently and cost effectively to document requests and motions to compel that request electronic data.  Without a game plan, corporations could, quite unintentionally, find themselves in the quarter of the cases that discuss sanctions and the spoliation of evidence.

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In a recent and previously sealed federal fraud and tax evasion case (U.S.A. v. Amazon.com, W.D.WI, Case No. 07-GJ-04, filed 6/26/07), the district court ruled that customers who bought used books via Amazon.com have a cognizable First Amendment right to maintain the privacy of their reading choices.

The case stemmed from the U.S. Justice Department's discovery attempt (via a grand jury subpoena) to obtain Amazon customer records in order to advance its criminal case against a used bookseller suspected of committing criminal fraud and tax evasion. The Justice Department in this case does not suspect Amazon nor its customers of any wrongdoing. It simply wants to use the customer information to build a case against the defendant.

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Assume the worst of your employees, lest a judge or jury assume the worst of you. 

That's the upshot of a recent e-discovery case out of the US Bankruptcy Court for the District of Hawaii. The debtor, Hawaiian Airlines, had shared proprietary information with prospective post-petition investors under a strict confidentiality agreement. Hawaiian later claimed that Defendant Mesa Airlines, once a prospective investor, had breached the confidentiality agreement and misused proprietary information for Mesa's own competitive advantage. After Hawaiian filed its complaint, an attorney for Mesa promptly sent an email to Mesa's three top officers imposing a "litigation hold," which explicitly included electronic documents. One of the recipient executives, Vice President and CFO Peter Murnane, responded by sending out emails from his company account (um, wow) to outside individuals searching for a data-wiping program. Apparently his search bore fruit, and Murnane installed software containing a data-wiping feature on his two company laptops.  He also changed the system clocks on those two laptops in an attempt to make it appear that he had deleted the data well before Hawaiian filed its complaint.

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Yes-- at least on the server side.
In a recent federal drug trafficking case (.pdf), the USDC for the Eastern District of Calif. was able to convince a Canadian court to issue an order granting the U.S. Drug Enforcement Administration access to clear text copies of encrypted emails sent through a Canadian email service called Hushmail ...

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