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When it comes to network hacking, corporate espionage, intellectual property theft and managing massive volumes of data in a multi-million-dollar business dispute, everyone can pretty much plan to check their joysticks at the door.
LexisNexis recently assembled four speakers to address the critical early stages of discovery, presenting the perspectives of a U.S. Magistrate Judge, an experienced e-discovery litigator, a corporate data security executive and a litigation technology expert, in a complex case involving a dizzying volume of potentially discoverable information. This is the second in a four-part series covering what the speakers had to say. This article will address the role of the attorney in the process-from preservation through review and collection of data-focusing primarily on the comments of Mollie C. Nichols, a partner with Redgrave LLP.
The Webinar charted the probable course that discovery likely would take in the hypothetical case of Beta Co. v. Alpha Co., a complicated litigation matter pitting two rival video game manufacturers against one another. The claims ranged from patent infringement to corporate espionage, and implicated a massive volume of potentially discoverable information. Much of that information comprised elusive electronic data, with servers located in several states and countries. Beta alleged that Alpha hacked into Beta's databases to pirate proprietary information with the intention of beating Beta to the market with a competing video game. Among the more problematic allegations, from a discovery standpoint. was the charge by Alpha, the defendant, that Beta, the plaintiff, had launched a social media campaign against Alpha to generate negative reviews of Alpha's competing game.
U.S. Magistrate Judge John M. Facciola launched the discussion with an overview of what the bench expects from litigants when massive volumes of electronic information-starting with email and extending to more elusive media such as Twitter® Tweets, texts, and voice mails-demands aggressive management of the pretrial process. Lawyers can expect the bench to hold their feet to the fire, to adhere to increasingly common specific protocols for proactive management of discovery, and in particular to take seriously the "meet and confer" requirement imposed by Federal Rule of Civil Procedure 26, so that the parties and the bench will have a meaningful opportunity to resolve discovery issues as they arise and before costs run out of control. Lawyers will be expected to demonstrate a firm grasp of the technical issues inherent in the nature of electronic discovery, and to avail themselves of experts who can capably shepherd them through the discovery process with an eye toward efficiency. Lawyers will need to have a command of the theories of liability underlying the litigation, the nature of the case, and the appropriate methodologies for searching, collecting and preserving electronic data.
[To read the first installment of this series, click here.]
Getting the Lay of the Cyber Land
In this context, Nichols told the audience, the role of the litigator is to marshal the appropriate resources so that she can guide the client through the discovery process. The first step is establishing a solid working relationship with the client to identify the repositories of potentially discoverable litigation, she explained.
"It is very important as outside counsel, that I have the opportunity to work directly with my client, both in-house counsel and technology staff, and perhaps business unit heads, to figure out what the landscape of the potentially relevant information is, where it is stored, and what are the technical challenges, including where is it located," she explained. In a case like this one, part of the analysis involves identifying whether any of the information is located outside of the United States. "As best we can we need to identify the key players or the relevant custodians of this data," she added.
In a case involving an issue as complicated as computer hacking, there is an immediate need to bring in technical experts to determine how the intrusion occurred, what information was taken and from what sources, Nichols said. In addition, the lawyer will need to familiarize herself with the client's specific document retention methodologies. Some clients, Nichols explained, are able to preserve all data in a business unit, whereas others are more custodial based, relying on a designated person to retain data. The investigative stage is instrumental so that the lawyer understands what data types exist and how to implement a preservation plan. "It will take working with your client in order to determine how to preserve the data that's involved in this particular matter," she said. From preservation standpoint this represents a challenge, because data will encompass a broad spectrum of data: video images, employee records, contracts, emails,Twitter Tweets, and data stored in multiple places.
Data On the Move
At the next stage of discovery, review and collection, Nichols noted, lawyers and their clients need to be mindful of state data protection and data privacy laws. For example, she said, the Massachusetts data privacy law is potentially applicable even if none of the servers containing relevant information are located in Massachusetts. The law, she explained, covers the personal information pertaining to any Massachusetts resident, and how that information is to be stored and encrypted. "You have to be mindful of state privacy laws and data protection laws as the data starts moving," she cautioned.
In a case such as Beta v. Alpha, she added, the existence of servers in other countries adds to the complicated nature of the discovery. Some countries have enacted laws that prohibit the cross-border transfer of data unless certain processes are followed. France and Germany have enacted blocking statutes that prohibit production of certain information in United States civil litigation. Canada, Nichols added, also restricts to a certain extent, the transfer of data across the Canadian border into the United States. "We've got to be very careful that we're working with our clients and data protection authorities in those countries, in order to get consent where necessary, in order for data to be produced within the litigation," she noted.
Even further complicating this issue, Judge Facciola added, is the divergence of views in the American courts about the significance of the blocking statutes. The U.S. Court of Appeals for the Seventh Circuit, he said, has dismissed concerns that American companies should have any concerns regarding the blocking statutes, but others disagree. When the blocking statutes are involved, he said, the "meet and confer" requirement is automatically implicated. Where there is data overseas, the lawyers have to meet and confer on the process. "You just don't serve a subpoena to Germany and wait for the response," Judge Facciola added. "That's not the way it works."
In-house counsel in multi-national companies need to reach out appropriately to outside counsel to get a handle on what can and cannot be done under privacy laws, added panelist Matthew McKeever, VP Security & Compliance with Reed Elsevier. "EU privacy laws do allow "carve-outs" for data transfer agreements. Internal counsel should be reaching out to their privacy counsel," he said. In many cases, portions of the data may have to be collected and processed separately in a particular jurisdiction or country.
In a case such as this one, involving competitors, lawyers also need to work with the court to craft the appropriate protective order, involving a controlled review of the data and possible redaction of certain data, Nichols noted.
It's critical that the attorney turn to technical experts for help, Nichols said. "Use your technical people in all aspects of the litigation," she advised. "Have them at your side. I have a computer expert on speed dial."
Note: Parts 3 and 4 of this series will focus further on the contributions collectively of Magistrate Judge Facciola, Mollie C. Nichols of Redgrave LLP; Matthew McKeever, VP Security & Compliance with Reed Elsevier; and Trent Walton, president of Electronic Legal LLC and Cumulus Data LLC. Part 3 will address the practical aspects of the discovery process from the panel's perspective, and Part 4 will address future trends in e-discovery.
1. Increasingly complicated forms of data production mandate that lawyers make efficient use of technical expertise. Have your computer go-to person on speed dial.
2. When confronting the production of large volumes of electronic data, counsel must be cognizant of the web of privacy laws, international blocking statutes, and the like. In-house counsel needs to know when to reach out to outside counsel with expertise in these areas.
3. Lawyers need to work proactively with their clients to understand the manner in which the client maintains its data, and who within the client is the repository for data. This needs to happen at the outset of discovery.