E-Discovery Law Review : Electronic Discovery Lawyers & Attorneys : Cozen O'Connor Law Firm : Data Preservation & E-Discovery Disputes

As we all know, social media has made it easier for employers to search for and obtain information about employees.    And, sometimes, employees put the information right in your lap. 

Craigslist recently announced that it was shutting down its “adult services” section. Many objected to what was perceived to be a form of censorship, including a blogger named Melissa Petro who posted her own “thoughts from a former Craigslist sex worker” on the Huffington Post, in which she wrote: “From October 2006 to January 2007 I accepted money in exchange for sexual services I provided to men I met online in which was then called the ‘erotic services’ section of Craigslist.org.”   Such an admission from a participant on Craigslist wouldn’t be all that surprising, I suppose, except for the fact that Ms. Petro is currently an elementary school teacher in the Bronx, New York.  

The news media and parents of school-aged children have grabbed hold of this story and it has exploded.   The issue does not appear to be about whether prostitution is wrong, but whether Ms. Petro should be able to continue in her position as an elementary school teacher.    According to Ms. Petro’s post, she no longer engages in such “activities”.   So there are some who have argued that her prior “activities” have no bearing on her ability to perform her job as a school teacher, while others argue that a former prostitute is not someone who should be teaching children.   Ms. Petro has been placed on administrative duty by her employer.

There are so many sexy issues here.   The school apparently did not seek out this prior background information about Ms. Petro; rather, she openly posted her background for the world to see.    In addition, Ms. Petro’s posts arguably brought her current employment situation into the discussion when she expressed her hope to “never again make the choice to trade sex for cash even as I risk my current job and social standing to speak out for an individual’s right to do so,” and when she apparently spoke out later on a video and compared her teaching career to having sex with her boyfriend.

Which prompted the question of whether an employer is limited in taking adverse action against an employee because of prior criminal offenses that are discovered through social media?   The answer is generally, of course, “it depends.”   Many states have statutes which preclude an employee from inquiring about or taking any action with regard to prior convictions (prior arrests are typically a forbidden topic completely). New York is one of those states.   

By way of example, New York’s Correction Law provides that no application for employment can be denied, and no current employment can be acted upon adversely, because the individual was previously convicted of one or more crimes unless (1) you can demonstrate a “direct relationship” between the specific employment position sought or held and the prior criminal offense, or (2) the acceptance of or continuation of employment would pose an unreasonable risk to property or to the public’s welfare or safety.    New York law also provides 8 specific factors that must be considered when making such an employment-related determination, and requires, among other things, that any individual previously convicted of a criminal offense be provided, upon request, a written statement setting for the reason for any denial of employment.

Employer Take Away:   What should you as an employer take away from this development?    Notwithstanding the salacious facts presented in Ms. Petro’s case, and the sympathy she has perhaps garnered with those who applaud her for being open and honest, this case offers a good lesson to you:

(1)        As suggested in prior posts, strongly consider the extent to which you truly want to (and need to) obtain information about potential and current employees from social networking sites and other forms of social media.   If you decide you do, take appropriate steps to insulate the unwanted information from the decision makers.

(2)        To the extent you obtain information about an applicant or current employee, such as prior criminal convictions, make sure that you consider the legal requirements in your state for basing employment-related decisions on that information.

(3)        Don’t forget that social media can be wrong.    While much of Ms. Petro’s circumstances appears to have come directly from her own keyboard and mouth, it is important to confirm the source of your information, and limit discussions about the information to those within your company who need to know.

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“Among the sanctions that this memorandum imposes is a finding, pursuant to Fed. R. Civ. P. 37 (b) (2) (A)(vii), that Pappas’s pervasive and willful violation of serial Court orders to preserve and produce ESI evidence be treated as contempt of court, and that he be imprisoned for a period not to exceed two years, unless and until he pays to Plaintiff the attorney’s fees and costs that will be awarded to Plaintiff as the prevailing party..”

The above quotation from a recent opinion out of the United States District Court for the District of Maryland is striking. The decision, Victor Stanley, Inc. v. Creative Pipe, Inc., 2010 U.S. Dist Lexis 93644 (D. Maryland 2010) contains the most egregious examples of eDiscovery misconduct of any recent case of note (and perhaps ever). In addition to imposing a sanction of possible jail time for civil contempt, the court also imposed a default judgment, and awarded attorney’s fees-- the court even considered forwarding the case to the U.S. Attorney’s Office for criminal prosecution as a criminal sanction for discovery misconduct.

The facts of the case are fairly straightforward, though somewhat unusual:

• Plaintiff Victor Stanley, Inc., (“VSI”) a manufacturer of bike racks, outdoor furniture, and other site furnishings sued, among others, competitor Creative Pipe, Inc (“CPI”) and its president Mark Pappas for alleged violation of copyrights and patents, and unfair competition.
   
• VSI alleged that someone from CPI logged into VSI’s website to download design drawings and specifications using the pseudonym “Fred Bass.” It was alleged that CPI used the drawings to develop products that would directly compete with similar VSI products. It eventually became clear that “Mr. Bass” was either CPI President Mr. Pappas or another person at CPI working under his direction.

The examples of eDiscovery misconduct in this case are almost too numerous to list:

• As the court explained “[f]or years, Pappas engaged in a cat and mouse game to hide harmful ESI from production during discovery, repeatedly trying to stall or prevent VSI from discovering evidence that he improperly accessed or used VSI’s website or drawings.”
   
• Just after VSI filed suit, computer forensics indicated 353 user-initiated deletions of files from Pappas’ laptop.
   
• Pappas sent an email to an Argentine business contact instructing him to “destroy various emails and attachments relating to the VSI drawings” that the Argentine contact was going to convert to CPI drawings.
   
• Pappas “attempted to delete over 5,000 files,” and later claimed to have moved the emails to a deleted items folder for “storage purposes.”
   
• Pappas “delayed in producing relevant ESI after Plaintiff indentified it and requested it in discovery, and he lied about the completeness of Defendants’ ESI production.”
   
• On the eve of a scheduled discovery hearing, “Pappas deleted 9,234 files from his work computer.”
   
• Four days prior to the plaintiff’s scheduled imaging of Pappas’s work computer, “Pappas deleted almost 4,000 files.”
   
• The court concluded that the defendants did not even consider, let alone implement a litigation hold after the Plaintiff filed suit or even after the court issued preservation orders. Under the circumstances that court concluded that “ESI would be lost or modified biweekly, under the best of circumstances” because no measures were taken to preserve potentially relevant electronic data.
   
• Forensic examination of Pappas’s work computer revealed that Pappas had used an external hard drive (“EHD”), and the EHD contained 62, 071 files that were copied from his work computer. The EHD was never produced and Pappas claimed that he had returned the EHD to “Bob from Office Max.”
   
• 9,282 user-initiated deletions of files from Pappas’s work computer occurred after the court issued a preservation order.
   
• At a discovery hearing, the court became aware that certain ESI had been deleted. Despite the court’s admonishments to preserve relevant ESI, someone logged onto Pappas’s work computer and ran a Disk Cleanup program, deleted files, accessed the Registry Editor, and ran the system’s Disk Defragmenter. The court concluded that the net effect of these actions was to “ensure that deleted filed could not be recovered.”
   
• Pappas / the defendants failed to preserve ESI when CPI replaced a server.
   
•  “Following a series of ESI preservation and production orders by the Court, Defendants allowed their computer consultant to run programs that eliminated temporary internet files.”

As a result of the egregious eDiscovery misconduct described above, the court imposed a sanction of a default judgment for the copyright claims, awarded attorneys fees and costs allocable to spoliation, and found Pappas’s to be in civil contempt. In so holding, the court noted:

“I have explained the relevance of the evidence lost and why the loss caused prejudice to Plaintiff in prosecuting its case. Taken individually, each section demonstrates intentional misconduct done with the purpose of concealing or destroying evidence. Collectively, they constitute the single most egregious example of spoliation that I have encountered in any case that I have handled or in any case described in the legion of spoliation cases I have read in nearly fourteen years on the bench.”
 

Without a doubt, the Victor Stanley opinion is going to be widely cited throughout the country. Chief Magistrate Judge Paul Grimm provides a survey of national case-law on preservation / spoliation issues, which is, as he put it, “an analytical framework” that will enable counsel to “resolve preservation / spoliation issues with a greater level of comfort.” The case is also a welcome articulation of the different standards applied nationwide, which often make predictability on preservation issues difficult.
 

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When you think about the obligation to make a “place of public accommodation” accessible to individuals with disabilities, it is likely that you primarily think about access to physical, concrete structures such as ramp access for ingress and egress, changes to restroom facilities, and access to aisles, counters or other office spaces.    However, a quickly emerging issue under the Americans With Disabilities Act (“ADA”) is whether virtual spaces such as your company’s website will now be held to the same accessibility standards.

Most of you provide information about your company to your employees through an internal web-based portal, and may even offer information, goods and services to the general consuming public through an Internet web site.   While you must ensure that your internal postings (ranging from policy announcements, summaries of benefits, and job/position opportunities) do not unintentionally create a disparate impact on disabled employees, the focus of this post is on the latter situation when the general public’s access to your website is involved.   That is, Title III of the ADA governs “places of accommodation”, and requires that such places provide equal access for disabled individuals.  

In the ever burgeoning world of social media, courts have started to consider a company’s website to be a “place of accommodation” in increasing numbers.   As a result, your company could be held liable for violating the ADA if your website does not provide equal access for the disabled.    In an attempt to help bridge the gap between current regulation of physical structures, on the one hand, and virtual spaces such as websites on the other, the United States Department of Justice (“DOJ”) has solicited the public’s comments to its notice of proposed rulemaking.   The proposed rules attempt to “establish requirements for making the goods, services, facilities, privileges, accommodations, or advantages offered by public accommodations via the Internet, specifically at sites on the World Wide Web, accessible to individuals with disabilities.”  

It is likely that the statutes and regulations prohibiting disability discrimination will ultimately be applied to acts and statements in social media.   It is not a stretch, therefore, to believe that courts will continue to apply accessibility obligations to virtual places of public accommodation. In that vein, you should not neglect to consider ADA accommodation issues in the context of your company’s website.   The public comment period for the DOJ’s notice will expire early next year, after which the DOJ will likely issue its new regulations.

Employer Take Away:   What should you as an employer take away from this development?   

(1)        Conduct an effective impact audit of any internal web-based portals or intranet sites that your company currently uses to post information to your employees, to ensure that the site does not disparately impact disabled employees.

(2)        Make sure that online applications and other hiring-related descriptions, information and processes meet acceptable accessibility standards, including the elimination of any language barriers and improvement of document accessibility.

(3)        Consider whether other changes should be made to your website to comport with accessibility standards, such as text aides for graphic and visual material, the ability of users to engage in keyboard navigation, rather than being required to use a mouse, and making your website compatible with software such as “screen reader” that will allow users to convert graphic and textual information into speech that a synthesized “voice” reads out through a user’s computer speakers.

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When you think about the “sexy” kinds of employment-related claims, you tend to think first about discrimination, harassment, and perhaps even trade secret disclosure cases.   You don’t typically think about workers’ compensation claims.    But even workers’ comp cases can have a significant impact on your company’s bottom line, and it might be worth considering how social media can provide value to your response to workers’ comp claims.

We have previously posted thoughts on the various ways in which social networking sites, blogs, and other forms of social media can serve a useful role in litigation generally.   A new article to be published in the Pace University Law Review provides an illustrative discussion on the influence that social media has, and will likely continue to have, specifically in the workers’ compensation scheme.   Authored jointly by Jacyln S. Millner, Esq. and Professor Gregory M. Duhl, this article succinctly identifies the “crossroads” of social networking and workers’ compensation law through an analysis of social media’s impact on four components of the workers’ compensation process: discovery, attorney professional responsibility, privacy, and evidentiary rules. 

The point made is, again, not that workers’ compensation law and procedure have itself changed in this new social media world, but that social media has transformed the way in which traditional workers’ comp claims will proceed.   As if workers’ comp claims are the experimental guinea pigs, the authors conclude that “workers’ compensation is an ideal area of law for lawyers and judges to experiment with how to address some of the unique challenges and opportunities that social networking poses in litigation.”

Employer Take Away:   What should you as an employer take away from this development?   

(1)        Continue to recognize the value that social media can provide in the defense of all litigation claims, even the less “sexy” claims such as workers’ compensation.

(2)        Once information is obtained about an employee claimant, take care in determining strategically how best to use the information in your litigation, and how best to educate and persuade your judge, arbitrator, or administrative law judge that the social media source of your information is both reliable and relevant.

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The situation is not terribly uncommon.   You terminate an employee for failing to meet performance standards, and the employee sues the company for discrimination or wrongful discharge, claiming that the reason given by the company was truly a pretext for an otherwise unlawful motive.    

To bring this situation into 2010, suppose your CFO is roaming the Internet one night after your former employee’s lawsuit was filed, and discovers evidence that that employee had engaged in some form of misconduct that clearly would have resulted in his termination regardless of his poor performance.    Can you rely on that evidence as a basis for the termination of your former employee even after he is already gone and the lawsuit has started?

Depending on your jurisdiction and the facts in your particular situation, you may be able to use the “after-acquired evidence” doctrine as a defense to your former employee’s claims. The defense was first created by the United States Supreme Court in 1995 to limit or altogether preclude an employee from obtaining remedies due to a claimed unlawful termination if the employer later acquired evidence of wrongdoing that would have led to the termination of the employee anyway.

This summer, courts have continued to apply the “after-acquired evidence” defense to benefit employers.   For example, on July 16, 2010, a federal court in North Carolina applied the defense when an employer learned during discovery in a lawsuit that an employee may have violated expense reimbursement policies.   The court in Rinaldi v. CCX, Inc. ruled that the following elements must be established for the defense: (1) the employee was guilty of some misconduct about which the employer was unaware, (2) the misconduct constituted an act of dishonesty, gross neglect of the employee’s obligations, or an illegal act, and (3) the employer would have discharged the employee for cause if it had known about the misconduct.

On August 17^th, a federal court in California in the case of First v. Kia of El Cajon permitted an employer to serve subpoenas on a former employee’s former employers on the ground that “[f]ormer employment records are relevant to the after-acquired evidence defense available in Title VII employment discrimination cases.” And on that same day, a federal court in Texas in the case of Garza v. Mary Kay, Inc. allowed the employer to proceed to a jury on its defense that evidence that the employee “collected and removed confidential documents” while previously employed, but about which the employer learned after termination, could be relied upon after the fact to justify the termination.   The jury was, however, entitled to also determine the employee’s response to that defense that the employer “had never before terminated an employee for the same behavior.”

Employer Take Away:   What should you as an employer take away from this development?   We have already suggested to you in prior posts that social media can be a valuable tool when defending a lawsuit brought by a former employee.   One significant way is to look for evidence through social media that would support an otherwise legitimate reason for terminating the employee, even if that reason was not known and articulated at the time of termination.

For example, perhaps a LinkedIn profile demonstrates that the individual did not work for an entity identified on an application for employment with your company, or did not have the experience represented on your application.   Perhaps other posts by the individual boast about, or demonstrate the existence of, theft of trade secrets or competition during the prior employment with your company, or otherwise reflect that the individual violated a policy of your company while employed. Or maybe evidence found through social media can belie the reason given to you for the employee’s separation from a prior employer.

The ability to raise and rely upon the “after-acquired evidence” defense may presuppose the existence of a policy (or statement on the application itself) that clearly identifies your company’s right to terminate for the after-acquired reason.    You should also determine whether you can demonstrate to the Court that others in the past had in fact been terminated on similar grounds. Just another reason why it is important for you to maintain policies that say what you want them to say, and that are enforced effectively and consistently.

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It is, by now, axiomatic that our new social media world has increased the risk of disclosure (intended or inadvertent) of information and documents that are not meant for public consumption.  As an employer, you must understand these risks and take pro-active measures to protect the private and confidential information of your company, your clients, and your employees. And you must act swiftly when you determine that a breach has occurred.

According to a CNN report this week, Google did just that, announcing that it had fired one of its employees for violating privacy policies by accessing user accounts.   CNN reported that the employee “used his position as a key engineer evaluating the health of Google’s services to break into the Gmail and Google Voice accounts of several children.”    The conclusion reached there: “The incident highlights how easy it can be for anyone with access to confidential information stored online to abuse it, regardless of any systems that are in place.”  

Some, many, or all of your employees have access to certain private and confidential information, and those employees are blogging, tweeting, and otherwise actively engaging in social networking sites.   What types of potentially harmful disclosures are we talking about?    For one, the potential disclosure of your own company trade secrets or confidential information. An employee may be violating a contractual commitment or duty of loyalty by disclosing certain information through social media, but perhaps more importantly, that disclosure to competitors or the general public will cause irreparable harm to your business.    You can’t un-ring that bell.

There is also the potential disclosure of trade secrets belonging to your clients or customers.   The disclosure of sensitive information with which you have been entrusted could lead to a damaged business relationship, and a possible lawsuit against your company for failing to adequately maintain privacy controls.   In a similar vein, is the potential disclosure of your employees’ information, such as medical-related information and an employee's social security number or other banking or financial-related information.

The Google firing highlights the cataclysmic result that could come when the ease of employee access to social media collides with the ease of employee access to private and confidential information.

Employer Take Away:   What should you as an employer take away from this development? 

(1)        It is not enough to maintain and communicate policies dealing with the unauthorized access to and disclosure of confidential information. It is critical that your policies refer expressly to social media and, specifically, bans on inappropriate disclosure of information and documents through the various forms of social media.    Moreover, your policies should not only apply when the employee has departed from the company, but also while he or she is employed and has access to the information.

(2)        You should consider establishing a “trade secret program” that will allow the company to defend against a position taken prior to or during a lawsuit that the disclosed information does not rise to the level of a trade secret because the company did not treat it as such. The manner in which certain information must be treated and accessed internally (as distinguished from other non-sensitive information), an identification of those employees who may have access to that information, and what monitoring controls are in place to avoid unauthorized disclosure, are among the components of an effective program. 

(3)        You should consider the current state of the law as it relates to employer obligations to properly maintain certain types of information.   For example, certain obligations to segregate medical and benefits information from the contents of a “normal” personnel file, and the requirements enacted legislatively in states such as New York for the use and disposal of documents containing personal information such as employee social security numbers.

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A recent case out of Southern District of New York demonstrates the “perils of failing to strike the proper balance” between thoroughness and cost in analyzing data sets for relevant documents. In Harkabi v. SanDisk Corporation, 2010 U.S. Dist. Lexis 87483 (2010), Judge William Pauley III imposed an adverse inference and a monetary sanction of $150,000 against electronic storage giant SanDisk for discovery misconduct.
 

 Facts of the Case:

Plaintiffs Dan Harkabi and Gidon Elazar were executives and principal shareholders of a software development company bought by SanDisk.  They sued SanDisk for breach of contract related to the failure  to pay the plaintiffs for the use of their software in devices sold by SanDisk.

While employed by SanDisk, the plaintiffs were issued laptops and corporate email accounts. In 2007, when it became clear that litigation would be likely, plaintiffs’ counsel sent SanDisk a document preservation letter.  SanDisk’s in-house counsel issued four “Do-Not-Destroy” memoranda and instructed SanDisk’s Director of Global Operations to preserve the laptops that were issued to the plaintiffs.

The laptops were put in a secure storage area where they remained for approximately one year. Sometime in early 2008, SanDisk’s in-house counsel was forwarded a request from a “helpdesk employee” to reimage and reissue the plaintiffs’ old laptops.  According to the “helpdesk employee,” the request was approved. Before the re-imaging, data from the laptops was allegedly saved on a SanDisk file server.

In December of 2008, the plaintiffs requested electronic discovery from SanDisk. In response, SanDisk’s outside counsel advised the plaintiffs that when employees leave the company, laptops are typically recycled 30 days later.  SanDisk’s counsel omitted the fact that the plaintiffs’ laptops had been secured for more than a year and that SanDisk was unable to locate the laptop data on its servers.

When the plaintiffs noticed a Rule 30(b)(6) deposition of SanDisk on topics related to the preservation of documents, SanDisk provided a declaration from its in-house counsel stating “I have no reason to believe that the four ‘Do-Not-Destroy’ Memoranda issued on April 12, 2006 were not fully complied with by SanDisk and its employees, temporary employees, and contractors.”

The plaintiffs later served SanDisk with a specific request for copies of the hard drives of the SanDisk-issued laptops.  SanDisk produced 1.4 million electronic documents and labeled that production as “everything,” and refused to produce the hard drives stating “all electronic documents from the hard drives that are relevant to the dispute have already been produced.”

Despite spending considerable time and effort examining SanDisk’s native production for the laptop data and email files, the plaintiffs were unable to locate any of the material that they remembered being on the laptops.

SanDisk’s counsel later disclosed that information from the hard drives had not been included in the native production, and acknowledged that SanDisk was unable to locate the laptop data on SanDisk’s servers or backup tapes despite its “best efforts.”

After analyzing SanDisk’s native production, the plaintiffs hypothesized that SanDisk had not produced data from agreed upon records custodians.  The plaintiffs subsequently filed a motion for sanctions against SanDisk under Rule 37 of the Federal Rules of Civil Procedure.
 

Spoliation of the Laptops:

A party moving for a severe sanction such as dismissal or an adverse instruction for spoliation, must prove, among other things, that the opposing party “acted with a culpable state of mind upon destroying or losing the evidence.”

The plaintiff advanced several arguments on SanDisk’s culpable state of mind, and one of the most salient was the contention that “SanDisk’s expertise in electronic data storage undermines its claim of an innocent mistake.”

In accepting this argument the court noted:
 

Plaintiffs’ third argument must mortify SanDisk, a global business that champions itself a leader in electronic data storage. Its size and cutting-edge technology raises an expectation of competence in maintaining its own electronic records. The concatenation of omissions and missteps at SanDisk reveal a lack of attention to detail that has worked a hardship on the Plaintiffs and delayed this litigation.

The court held that “at a minimum SanDisk was negligent” due to “a cascade of errors, each relatively minor, which aggregated to a significant discovery failure.” Nevertheless, the court did not consider SanDisk’s conduct egregious enough to warrant terminating sanctions, and instead chose to fashion an adverse instruction to the jury.

Sanctions for the Late Produced Emails:

If not for the plaintiffs’ herculean effort in “forensic analysis and their counsel’s persistence,” the nature of SanDisk’s discovery deficiencies may never have become known.  The court imposed a sanction of $150,000 against SanDisk for compensation of the “David-and-Goliath-like struggle for electronic discovery” and specifically for the late produced emails.  In so holding, the court recognized the delicate economic balance at hand:

Integral to a court’s inherent power is the power to ensure that the game is worth the candle—that commercial litigation makes economic sense. Electronic discovery in this case has already put that principle in jeopardy. From this Court’s perspective, a monetary sanction of $150,000 should be sufficient to compensate Plaintiffs for their added expense and deter SanDisk from taking shortcuts. Experienced counsel on both sides of this litigation may accept this Court’s view or not. If either side believes it necessary to litigate the precise dollar amount of a monetary sanction, then this Court will entertain further submissions. But any further detour into Rule 37 should be expedited because the parties are well past the time that they should be addressing the merits of this lawsuit.

Take Away Points:

Proving electronic discovery misconduct can be incredibly expensive. In Harkabi, plaintiffs’ counsel contended that their attorney time and expenses related to the sanctions motion were estimated to be $201, 096.25.  The plaintiffs, who were computer experts, also spent a considerable amount of their valuable time analyzing data sets to prove discovery deficiencies. The costs that the plaintiff incurred  point to the frustrating reality that, unfortunately, in many cases, it may not be cost effective to undertake the effort necessary to prove discovery misconduct.

Another important lesson from the Harkabi case is that cooperation between inside counsel, outside counsel, and employees within a company is critical to proper compliance with a litigation hold.  The judge in  Harkabi  noted that SanDisk’s in-house counsel was “notably absent at critical junctures” including during an upgrade of SanDisk's computer systems which may have impacted the storage of the plaintiffs data.  Without active and continued cooperation, the management, processing, and maintenance of relevant electronic data sets is difficult—even for an expert in electronic data storage like SanDisk.

Although electronic data storage has made life much easier in many ways, the fact that we now store much larger volumes of data than in the past is not without significant costs.  In Harkabi, the court noted that in order to respond to the plaintiffs' electronic discovery request, SanDisk would have needed to search its backup tapes, which would require the processing of billions of pages of documents “at significant cost.”  There is no indication that SanDisk weighed the cost of complying with the electronic discovery request (considerable) against the probable cost of sanctions for non-compliance (also considerable), but many companies likely engage in this calculus.  In order to deter bad actors, judges will often take into consideration the incentives and disincentives inherent within the rules governing electronic discovery.  But as Judge Pauley recognized, it is also important, given the soaring costs of electronic discovery disputes, that  judges not allow eDiscovery related litigation to add significant delay or burden to resolution of an underlying dispute on the merits.
 

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Social media offers a valuable opportunity to employers who become involved (or who may become involved) in litigation with a former employee.   A recent survey of court personnel confirms that the use of social media among judges and jurors continues to increase. So what about the parties to those lawsuits?

On August 26^th, the New Media Committee of the Conference of Court Public Information Officers released a report entitled “New Media and the Courts: The Current Status and a Look at the Future.” (www.ccpio.org/documents/newmediaproject/new-media-and-the-courts-report.pdf.)     According to the report, approximately 1,500 members of the court community (federal and state) responded to an online survey inquiring into the use of various forms of social media.   Among the interesting results are that “more than one-third of state court judges and magistrates responding to the survey use social media profile sites like Facebook[.]” In addition, 56% of judges create jury instructions during actual trials that specifically address some component of juror use of social media during the trial proceedings, and more than 97% of those responding believe that judges and court employees should be educated in proper uses and practices of social media.

While consideration must be given by jurists to applicable opinions on judicial ethics, it is clear that judges are using social media, including social networking sites and blogs, for both personal and professional reasons.   Recent news publications have also described jurors using social media during trials to “friend” or obtain information about lawyers, parties and witnesses. One should not, however, ignore the parties themselves to these lawsuits. And while social media use is not without its limitations, social media can be a valuable tool for employers who become embroiled in litigation with a former employee.

Employer Take Away:   What should every employer take away from this development? 

(1)        Restrictive covenant and trade secret lawsuits continue to be filed in state and federal court.   In those cases, it is mostly the employer suing a former employee (and, often, the former employee’s new employer) for breaching an agreement not to compete with the former employer or not to solicit the former employer’s customers or current employees.   Once an employee separates from the company, obtaining information through social media may provide valuable information about: the nature of the former employee’s current business endeavors; any solicitations in which the former employee may be engaged; posted announcements of the former employee’s current location, affiliation, or experience; inappropriate disclosure of your company’s trade secrets or proprietary information; and any potentially disparaging comments about your company.   Such information may prove valuable prior to, and even during, any lawsuit involving that employee.

(2)        Social media can also be useful in other lawsuits involving a former employee.   For example, an employer being sued for disability discrimination may find information and postings that suggest an employee may not truly suffer from the condition alleged. Or, the information derived from social media may demonstrate that a former employee’s claim of “mental pain and suffering” is in fact belied by the activities or relationships exposed by the employee’s own words or pictures.   Or, perhaps, information reveals some basis to utilize the “after-acquired evidence” doctrine to support an employment-related decision such as termination, or reveals some inappropriate motive behind the former employee’s commencement of the lawsuit in the first place.

(3)        Employers should, however, exercise caution when attempting to utilize social media in litigation involving current employees. As mentioned in prior Social Media Advisor blog posts, social media inquiries may reveal information about current employees that you did not necessarily seek to obtain, but now could contaminate any legitimate employment-related decision and lead to a claim by the current employee that a decision was based on an impermissible purpose as a result of the employer learning certain information about the employee.   In those circumstances, employers may want to limit the scope of any search, as well as create a “Chinese Wall” between those performing any search and those who have decision making or supervisory responsibilities over the particular employee.

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Access.   Much of what we write about when it comes to social media involves the nature of access that employees have to various forms of social media, including employee use of social networking sites and blogs.   Taking one step back, it is worth considering the means by which employees are given access to social media: employer-provided Blackberries and other PDAs.   Before just randomly giving out these devices to all employees, employers should heed a very important warning.

First, employers should think about the impact that easily accessible social media has on productivity.   According to the Department of Labor, workplace productivity for this past quarter (April to June 2010) saw its largest drop in almost four years.   Many factors account for this eye-opening data, but the amount of time that employees continue to spend accessing and actively engaging on social media sites, particularly during working hours, cannot be ignored.   It seems as if companies are constantly searching for that perfect balance between increased efforts to monitor such access in order to improve productivity, and a desire to avoid the George Orwellian-like atmosphere where “big brother” serves to eradicate employee morale.

Second, there is a potentially greater concern than simply trying to improve productivity while also maintaining high morale: the need to control employees’ work time. Technology has torn down the office walls, making anywhere and everywhere in the world a virtual cubicle.   Employees not only have greater access to company documents and e-mail from home computers, but Blackberries and similar devices allow employees to remain connected with the office, and with clients or customers, day and night.   These devices provide the means for employees to access company information, as well as social media through the Internet.

Indeed, coupled with the increasing number of employees allowed to telecommute, it is practically impossible for an employer to control, let alone know about, all hours in which employees are performing work for the company, particularly when much of that work is often done on a Blackberry.   Moreover, the fact that employees in many industries often receive their compensation in the form of commissions provides its own incentive for employees to work as many hours as possible without the encumbrance of the typical workday or office walls.

Employer Take Away:   What should every employer take away from this development? 

(1)        Effective policies should spell out issues such as when an employer can monitor employee access to the Internet, and what an employer can monitor (including the ability to monitor company-issued laptops and Blackberries, and private accounts on those devices).   In a similar vein, the very strict requirements contained in federal and state wage and hour laws compel a well-defined overtime policy that is distributed and communicated to all employees.   Even if an employee works overtime that is not authorized, an employer in most cases may still be required to pay overtime compensation for that work, although the employer can certainly discipline and even terminate an employee for performing unauthorized overtime.  

(2)        Employers should say what they mean and mean what they say.   If the company maintains a policy that employees should not work after hours, then it should not create a culture where employees feel as if they are expected to “check in” at all hours through home computers or Blackberries.

(3)        Employers should ensure that the appropriate employee classifications are made for wage and hour purposes, and that the appropriate records are maintained to support the proper wage classifications for employees.   To avoid being concerned with the amount of time spent on a Blackberry, consider giving Blackberries only to exempt employees. Otherwise, care must be taken to ensure that work being done out of the office on a Blackberry or similar device is properly accounted for, and that one can distinguish between the performance of “work” and access to forms of social media for personal use.

In all cases, employers should consider instituting a documentation procedure for non-exempt employees (and even exempt employees) to better track (and better defend itself against) the number of hours an employee later claims he or she worked. In light of today’s changing workforce from the standpoint of increased use of technology and more time spent outside the traditional office, a company should consider requiring a written employee certification, for example, at the end of each pay period attesting to: (i) the number of hours worked during that period, and (ii) the fact that the employee did not work more than 40 hours during that period.   Such a certification will not eliminate the potential for an employee to claim in a subsequent lawsuit that hours were worked in addition to those identified on the certification. However, a contemporaneous certification completed regularly by the employee may bolster your company’s defense of that claim.

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Just last week, Mary Madden, Senior Research Specialist of the Pew Research Center in Washington, D.C., issued a very insightful report entitled “Older Adults and Social Media: Social Networking Use Among Those Ages 50 and Older Nearly Doubled Over the Past Year” (http://pewinternet.org/Reports/2010/Older-Adults-and-Social-Media.aspx).   The report offers a look into a significant trend, as well as a timely reminder for employers to make sure that age is properly addressed in their employment-related policies and decisions.

We begin with two axioms: First, the number of potential and current employees using some form of social media continues to increase dramatically.   Second, whether due to the state of our economy, or the fact that members of our society are both staying healthy and living longer, the current workforce is getting older.    Madden’s report for the Pew Research Center ties together these two assertions, with remarkable data and conclusions. For example:

·                     “Social networking use among Internet users ages 50 and older has nearly doubled – from 22% to 42% over the past year.”

·                     “Half (47%) of Internet users ages 50-64 and one in four (26%) users ages 65 and older now use social networking sites.”

·                     “One in ten (11%) online adults ages 50-64 and one in twenty (5%) online adults ages 65 and older now say they use Twitter or another service to share updates about themselves or see updates about others.”

·                     Among the implications of rising social media use by older adults is the increased use of social media for those who are looking to “embark on a new career”, and, more particularly, for those older adults looking to social media “for professional networking, continuing education, and political participation.”

Employer Take Away:   What should every employer take away from this development? No longer can the older generation of employees be ignored, or summarily dismissed as either being “technology illiterate” or too “old school” for new social media. It is, therefore, critical for employers to understand the extent to which there is an aging workforce, and that the rules pertaining to the use of social media in employment-related decisions apply equally to all employees, regardless of their age.

(1)        Employers should remember that sexual harassment is not the only form of proscribed harassment.   Harassment based on other protected statuses, such as age, may also expose a company to liability. Therefore, a company should ensure that social networking sites and other social media outlets are not being used to inappropriately harass or discriminate against older individuals on the basis of their age, with the same vigilance that most companies now take toward sexual harassment issues.   Employment policies (including electronic and social media policies) should be effectively written, and managers effectively trained, to encompass conduct that could lead to an age harassment claim by an employee.

(2)        In a similar vein, the increased use of social media by older employees necessarily puts certain personal information in the public domain, about which an employer could not otherwise inquire in a personal interview – most obviously, the age of the potential or current employee. Care should be taken to insulate decision makers involved with hiring or firing, as well as direct supervisors, from age-related information so as not to contaminate an otherwise legitimate business decision.

(3)        There is a legal irony whereby the law prohibits employers from treating employees differently because of their age, yet requires employers to treat employees differently because of their age when it comes to written release and waiver agreements entered into with departing employees.   The federal Older Workers Benefit Protection Act of 1990 (“OWBPA”) imposes very specific requirements in order to have a valid release and waiver of rights executed by an employee who is 40 years of age or older.    Among the OWBPA’s requirements are that the release and waiver must expressly refer to claims and rights under the federal Age Discrimination in Employment Act, must only be given in exchange for consideration to which the individual is not otherwise entitled, must expressly advise the individual to consult with an attorney, and must contain a set period of time for the individual to consider the agreement and to revoke the agreement even after its execution. To the extent an employer engages in a RIF or other mass layoff, it would also be wise to ensure that any age-related impacts are thoroughly considered.

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