New England Litigation

More Congressional Activity on Post-Iqbal Attempts to Return to Simple Notice Pleading

As a follow-up to my post of October 28th discussing a bill introduced in the Senate to wipe out the Bell Atlantic and Iqbal decisions that made clear that something more than bald implausible allegations is required for notice pleading purposes under the federal rules, there is a companion bill pending in the House of Representatives that was referred to the Judiciary Committee for consideration about a week ago.

H.R. 4115, the Open Access to Courts Act of 2009, does essentially what the Senate bill would do.  It would enact a new section 2078 in Title 28 that would provide:

A court shall not dismiss a complaint under subdivision (b)(6), (c) or (e) of Rule 12 of the Federal Rules of Civil Procedure unless it appears beyond doubt that the plaintiff can prove no set of facts in support of the claim which would entitle the plaintiff to relief. A court shall not dismiss a complaint under one of those subdivisions on the basis of a determination by the judge that the factual contents of the complaint do not show the plaintiff's claim to be plausible or are insufficient to warrant a reasonable inference that the defendant is liable for the misconduct alleged.

The bill ostensibly would preclude courts from eroding the statutory language through caselaw, as it further provides that its provisions "govern according to their terms except as otherwise expressly provided by an Act of Congress enacted after the date of the enactment of this section or by amendments made after such date to the Federal Rules of Civil Procedure pursuant to the procedures prescribed by the Judicial Conference under this chapter."

Of course, the fact that the provision itself can't be cast aside by the judiciary doesn't mean the courts can't interpret its terms in a a more lenient manner. 

Also, the bill seems to overlook Rule 9(b), which on its face requires particularity for fraud claims.  If the bill is enacted in its present form, one might try to argue that the statute trumps the rule, such that even in fraud cases particularity is not required.  Presumably the drafter of this bill does not intend as much, or the intent to work such a fundamental change in procedure would be much clearer.

It's Getting Even Harder to Appeal Interlocutory Discovery Orders, Even When Trade Secrets Are Involved

The First Circuit recently issued a helpful reminder on the difficulties in trying to file an interlocutory appeal from a discovery order, even where the order is going to place in the public eye materials for which there is a colorable argument about their status as confidential trade secrets.

In Awuah v. Coverall N. Am., Inc.,No. 09-1284 (1st Cir. Oct. 27, 2009), the defendant sought to keep sealed portions of the deposition of its former CFO, on the ground that the testimony revealed "confidential information about Coverall's business practices including various accounting matters."  The district court agreed to keep about half of the identified portions of the transcript under seal, but ruled that the remaining portions would be unsealed.  The practical issue from the plaintiffs' perspective was that, even though it had unfettered access to the complete transcripts and could rely upon them in its case (at least as long as they were filed under seal), the sealed status precluded them from sharing the material with experts and using it in other ways.

The defendant filed an interlocutory appeal, arguing that the discovery order imposed immediate harm that could not effectively be raised on appeal after final judgment, because the horse would already be out of the barn.  The court began by observing that

Many discovery orders are effectively reviewable on final judgment, but disclosure of allegedly privileged or sensitive information may threaten immediate harm that cannot later be undone on review of the final judgment. The unsealing order in this case meets that test and also definitively resolves the question whether the disputed passages are to be made public.

Nevertheless, the court ultimately rejected the appeal as premature, holding that the appeal failed to "present an important issue meriting immediate review."  The court rhetorically asked itself "why such requirements exist at all if an order may cause irreparable harm that cannot be undone by later review," and answered by noting unsympathetically that "the final judgment rule implicitly accepts that some harms may result from deferring appeals."  The court seemed most concerned about controlling its own docket, as "piecemeal appeals impose costs of their own by multiplying proceedings and delaying resolution."

As the court framed the "importance" issue, it stated that "cases deemed to qualify usually present a disputable legal issue whose importance turns on the likelihood that it will arise in other cases," where there is a generalized benefit to the "system" in resolving the interlocutory appeal.  Where there is no "legal issue presented by the merits of the discovery order," but rather a factual analysis of whether disclosure would or would not implicate confidential trade secrets, the court concluded that the importance step was not met. 

The court was careful to carve out situations involving discovery orders against third-parties.  "The situation is different where a discovery order is directed to a non-party who is not otherwise part of the litigation ... and thus cannot ordinarily appeal from a final judgment."  But that will serve as little consolation to the defendant or to parties challenging disclosure of trade secrets in other cases.

Recent Maine Decision Involving Juror Use of Facebook to Dig for Dirt on the Plaintiffs

By now pretty much everyone has heard about, or maybe even experienced, the problem of jurors accessing the Internet during trial to dig up information about the parties, lawyers or issues involved in a case.  Although every judge tells jurors not to do it, some do anyhow, and it can cause real problems with the integrity of the trial process.

Judge Hornby in the District of Maine issued an interesting opinion recently on a motion for a new trial arising out of the discovery that one of the jurors had "friended" the plaintiff on Facebook and had browsed around the plaintiff's photos showing the plaintiff engaged in what the juror thought was a drunken state.  See Wilgus v. F/V Sirius, Inc., Civil Action No. 08-225-P-H (D. Me. Oct. 27, 2009).

After the trial had ended, one of the jurors sent an email to plaintiff's counsel, stating:

[D]id you know your plaintiff[s] advocated the use of mushrooms and weed smoking, and binge drinking all over the internet? ...  It[’s] really sad what happened but with all the work going into this don[’t] you think you should have address[ed] this issue and known such things so they could clean up their acts before court? I’m just trying to help.[] [I]f you want more info and insight [I] will help you.

Id. at 2.  Plaintiff's counsel promptly filed a notice of juror contact with the court, provided a copy of the email to defense counsel and filed a motion to conduct post-trial voir dire of the juror.  Judge Hornby found that, "While the e-mail did not say explicitly that the juror considered information from the Internet during the trial, that was certainly a possible interpretation. (I had explicitly told the jury more than once not to do research about the case or the parties on the Internet, explaining why it would be unfair.) The extraneous information could reasonably have prejudiced a hypothetical average juror."  Id. at 3.  Accordingly, the allegation of misconduct was "non-frivolous," requiring an investigation.

In preparing for a conference with counsel and the juror, Judge Hornby also found that one of the anonymous post-trial juror questionnaires returned by one of the jurors in the case stated that one of the plaintiffs “was a party drug [illegible] animal.”  Id. at 4. 

The court then summoned the juror and the jury foreperson back with a regular juror summons, without explaining the purpose of the summons.  The court, with counsel present, questioned the foreperson and juror separately.  The foreperson could recall no substantive discussion by any of the jurors about accessing the Internet to research the plaintiffs or any comments about concerns that the plaintiff was a drug user.

The juror who sent the email professed not to recall whether he sent in the juror questionnaire that mentioned drug use by the plaintiffs.  He did admit to sending the email, but stated that he had used Facebook to "friend" the plaintiffs a couple of days after the trial ended, and that was when he discovered the photos.  He said that neither he nor any of the other jurors discussed accessing the Internet during trial.

The court found that "some of the juror’s answers to my questions, particularly his uncertainty about his handwriting, are troubling, I have no basis for finding him untruthful in answering the one key question—when he discovered the information."  Id. at 8.  "Under these circumstances, I see no reason to summon other jurors (and the lawyers did not request me to do so) to inquire about extraneous information reaching the jury."  Therefore, "having found no evidence that juror misconduct actually occurred," the court denied the request for a new trial.  Id.

The only way to know whether the juror was telling the truth would be to find out from Facebook when he actually "friended" the plaintiffs, to see whether it occurred after trial as he said or at some point before.

New Hampshire and Vermont Wade into the Metadata Mix

New Hampshire and Vermont have issued recent ethics opinions addressing the ethical obligations of sending and receiving lawyers as they relate to metadata.  Both jurisdictions (As has essentially every other state to consider the issue) concluded that sending lawyers have a reasonable duty to avoid inadvertently disclosing metadata.  When it comes to receiving lawyers, however, the states diverged.  (The views of Maine and other states are discussed in my posts here and here.)

As the New Hampshire committee concluded in Ethics Committee Opinion 2008-2009/4: 

Lawyers sending electronic materials to opposing counsel are ethically required to take reasonable care to avoid improper disclosure of confidential information contained in metadata, including appropriate training and education on reasonable measures that can be taken to reduce the likelihood of improper disclosure of confidential information through transmission of metadata. There can be no per se rule on what constitutes reasonable care in transmission of metadata, as the facts and circumstances of each case will dictate the reasonableness of protective measures taken by sending lawyers.

Receiving lawyers have an ethical obligation not to search for, review or use metadata containing confidential information that is associated with transmission of electronic materials from opposing counsel. Receiving lawyers necessarily know that any confidential information contained in the electronic material is inadvertently sent, triggering the obligation under Rule 4.4(b) not to examine the material.

Id.at 1.  However, the committee noted that parties could reach "mutual agreement on review of metadata," apparently if both sides agree to it.  Id. at 7.

The committee likewise made clear that lawyers cannot use ignorance of evolving technologies as a basis for avoiding obligations under the rules.

The Committee recognizes that, as a result of rapid technological advances, some lawyers are generally unaware of the myriad of ways that client confidences may be disclosed in the form of metadata that accompanies electronic documents and files. However, unless lawyers obtain a reasonable understanding of the risks inherent in the use of technology in transmitting and receiving electronic materials that may contain confidential information, they risk violating their ethical obligations to clients.

Id. at 3.

The Vermont committee took a slightly different approach to the duty of receiving lawyers in Ethics Opinion 2009-1.  The committee determined that "a lawyer who receives an electronic document from opposing counsel that contains inadvertently disclosed, privileged and confidential metadata must notify the sending lawyer, with the question whether the receiving lawyer can use this information being decided by a court of competent jurisdiction."  Id. at 1. 

The Vermont committee concluded that, contrary to the decisions in Maine, New York and elsewhere, there is nothing in the rules "to compel the conclusion that a lawyer who receives an electronic file from opposing counsel would be ethically prohibited from reviewing that file using any available tools to expose the file’s content, including metadata."  Id. at 4-5.  On the contrary, the committee thought that receiving lawyers have a thorough duty to review every document received from opposing counsel, in whatever medium it is produced. 

Nevertheless, Vermont lawyers are not automatically free to review and use metadata produced by opposing counsel.  "Vermont lawyers are subject to the obligation to notify opposing counsel if they receive documents that they know or reasonably should know were inadvertently disclosed. Whether inadvertent disclosure results in waiver of the attorney client privilege or the work product protection, and whether the receiving lawyer can review and use the inadvertently disclosed information, remain issues of substantive law" subject to resolution by an appropriate court in the context of a waiver analysis.  Id. at 6. 

The issue of what to do with metadata - and even whether you can look for it at all - remains one that varies from one state to the next, requiring careful analysis in each case.

Pennsylvania Ethics Commission Clarifies its Prior Muddled Position on the Access and Use of Metadata

So I've previously written about the ethics implications on sending lawyers on taking reasonable steps to avoid sending confidential metadata to opposing counsel, and on receiving lawyers on avoiding trying to access such metadata, at least in some jurisdictions.  See, e.g., this post.

I had previously reported that the Pennsylvania Bar Association Committee on Legal Ethics and Professional Responsibility issued a prior opinion in 2007, which basically said it was up to each lawyer to decide on his or her own what to do, subject to being penalized by the bar authorities if they second-guessed the lawyer's choice in hindsight.  Pennsylvania has now issued Formal Opinion 2009-100, which acknowledges that "the prior opinion provided insufficient guidance to recipients of documents containing metadata and did not provide correlative guidance to attorneys who send such documents."  Id. at 1.

In the new opinion, the Pennsylvania committee generally adopts the ABA view, concluding that "an attorney has an obligation to avoid sending electronic materials containing metadata, where the disclosure of such metadata would harm the client’s interests.  In addition, an attorney who receives such inadvertently transmitted information from opposing counsel may generally examine and use the metadata for the client’s benefit without violating the Rules of Professional Conduct."  Id.

The committee concluded that "the responsibility of keeping client confidences is primarily that of the sending attorney, but recognize[d] that technological challenges require the offsetting duty of the receiving lawyer to notify the sender of the possible error."  Id. at 14.  As far as receiving lawyers are concerned, the committee considered the lawyer's duties owed both to the lawyer's own client and to the opposing party, and found that "the former takes precedence."  Id. at 5.  With respect to inadvertently disclosed metadata, as with other inadvertent disclosures, the committee found that for a receiving lawyer "any action other than reporting is purely a matter of intraprofessional courtesy and the lawyer’s sound judgment or substantive law."  Id. at 6. 

Therefore, the committee's opinion is that a receiving lawyer must (1) inform the opposing party upon receipt of the inadvertently disclosed metadata, then (2) determine as a matter of substantive law whether the party can use the disclosed metadata (it is unclear what body of substantive law would govern such an inquiry, other than the broad discovery rules that generally permit the discovery and use of anything that is potentially relevant), considering (3) the potential impact on the lawyer's own client's case if the metadata is used, in consultation with the client as to the appropriate course of action.

So there is now one more state that is aligned more with the ABA's view that access to inadvertently produced metadata generally is acceptable by a receiving lawyer.  As stated in my prior post, that is contrary to the rule in Maine.