- March 1, 2023
Episode #2: The Coming Tidal Wave of COVID-19-Inspired Litigation
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Episode #2: The Coming Tidal Wave of COVID-19-Inspired Litigation
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James McCarthy, esq
James has served as general and litigation defense counsel for 25 years in private practice, providing guidance on legal compliance obligations and structures contractual relationships with partners and customers. This includes local, county, and state government bodies. James is also an adjunct lecturer at Felician College on business law.
Bill Tolson
Bill is the Vice President of Global Compliance for Archive360. Bill brings more than 29 years of experience with multinational corporations and technology start-ups, including 19-plus years in the archiving, information governance, and eDiscovery markets. Bill is a frequent speaker at legal and information governance industry events and has authored numerous eBooks, articles and blogs.
Transcript:
Bill Tolson:
Welcome to the Archive360 podcast titled The Coming Tidal Wave of COVID-19-Inspired Litigation. What Will it Mean for Organizations? Joining me today is Jim McCarthy, Chief Compliance Officer and general counsel for Archive360. And my name is Bill Tolson. I'm the VP of compliance and e-discovery at Archive360.
Bill Tolson:
The COVID19 pandemic has changed almost all of our personal and work lives, from how we shop and eat to being required to wear face coverings and other types of PPP out in general public and at work. And also, it's dramatically changed how companies do business travel and in-person meetings. One of the obvious things that Jim and I have talked about, and I'm sure other people are aware of as well, is how COVID-19 is going to affect the lawsuits and how the legal industry basically responds to it. What's the future hold? And really, COVID-19-related lawsuits are quickly becoming known, and they're involving things like debt relief lawsuits, education-related suits, especially for colleges and universities and tuition and those kinds of things, and employment-related lawsuits for workplace safety and wrongful termination. And there's a whole bunch of other stuff. So far, the early trends in COVID litigation are focusing on a breach of contract, safety, negligence, and exposure violations, employment-related lawsuits, and business interruption lawsuits.
Bill Tolson:
Actually, I was looking at an article from the National Law Review back in July, and they have already logged or showing 190 class-action lawsuits, which are the big ones, and those are already filed and those are revolving around the CARES Act, the payroll protection program, debt relief, education, employment, things like that we've already talked about. Additionally, I was looking at a big law firm's article today, and they said that as of August 28th, there were total of 4,655 COVID-related lawsuits already filed, and obviously, I think that's probably going to pick up quite a bit, Jim, don't you think?
Jim McCarthy:
I do. Bill, I think we all know that there are companies like Amazon, Walmart, and even Corona beer distributors themselves, among the well-known winners of this horrible pandemic, but to be sure, lawyers will not be denied their place on this list. And we do expect COVID litigation to be around a lot longer than it takes to have a vaccine. So, I think this is something that we should get into, and look forward to speaking with you today.
Bill Tolson:
Well, and the reason we're talking about it, besides it's just interesting to talk about, is that the all of this COVID-related litigation is going to trigger costly and complex e-discovery requirements and litigation backlogs. I mean, it all comes down to, with these lawsuits, especially when they're business or organizational-related, it's not neighbor to neighbor, but it's a university or an employee or something like that, they're all going to be pulled into e-discoveries.
Bill Tolson:
And e-discovery, as some of us know, and Jim and I know really well, is that e-discovery is especially costly, and lots of companies who haven't been involved with it before that are going to be involved during the COVID litigation are going to be negatively impacted and overwhelmed by what it actually means for the kinds of dollars that need to be paid out both in resources, as well as just payments to consultants and legal specialists and lawyers and all that kind of stuff. What this increase in COVID litigation is going to involve, it's really going to come down to the plaintiff asking for specific data documents, emails, chats, all that kind of stuff to support their case, and that's what really is going to cause a lot of financial difficulty for many of these places that have never been really associated with it before.
Jim McCarthy:
Right. Bill, we even have a new data type that's matured during this Coronavirus situation, which is those collaborative tools that almost every company is now using to connect their remote workforces from home to the office place, right?
Bill Tolson:
Oh, yeah.
Jim McCarthy:
These types of Zoom or Team sessions or Circuit, whatever provider we're talking about, these are massive amounts of data that companies have not been used to archive, and what would certainly be the subject of e-discovery [inaudible 00:05:55] in these types of litigations.
Bill Tolson:
No. That's a great point, and that's what's going to cause so many of these companies to be caught flat footed. With the increasing adoption of these collaboration applications, like Jim said, Zoom, WebEx, Microsoft Teams, even SMS, all these kinds of things that companies who all of a sudden have gone remote, and they're adopting these collaboration applications to help keep our employees in more in real time touch. Those all generate data. For example, Microsoft Teams has the obvious chat functions, which probably most people know about, but they also... And by the way, these are fantastic applications. We can't live without them. But they generate all kinds of different types of data like video calls, like audio recordings, like uploaded files that you want to share amongst a group that you're chatting with or having an actual Teams call with. All of that data, potentially, is discoverable, and if the company who had quickly adopted these collaboration applications don't know, didn't do the research, and don't have people on staff who can forewarn them about this stuff...
Bill Tolson:
For example, if a company is, is using using Teams, like we do and many, many, many others, and if they are either potentially going to be involved in litigation, the anticipated litigation stuff in the FRCP, or in fact they're already in litigation in under e-discovery, then that data potentially needs to be captured and placed under litigation holds, in case the opposite side is going to ask for it. And if the company didn't know enough to actually save that data or protect it, then they are destroying evidence and being involved in spoliation. Right, Jim?
Jim McCarthy:
Yeah. We have potential spoliation claims which, in a litigation, could result in something called an adverse inference, meaning the court may impose a sanction on a party if they do not save relevant information to a suit. An adverse inference means there'll be an instruction to either the jury, or to the bench deciding the case, that the fact that that was removed must've meant that piece of data was detrimental to the party that removed it, and therefore, the case gets an adverse inference. Meaning that, now, the party removing the data has to prove that it wasn't done because it was going to look bad if it was revealed. So, spoliation claims, adverse inferences, these are dangerous litigation pit balls that you want to avoid. And here, the way in which to avoid it is simply to capture these collaborative calls and meetings and notes and properly document them in your archive.
Bill Tolson:
And make them available if the other side asks for them. Adverse inference, I found those so interesting. I've actually been in a courtroom where a judge has issued an adverse inference instruction to a jury. And basically, and not quoting, but in what actually happened was, the judge basically looked at the jury and said, "The defendant was not able to produce data that they should have, that the plaintiffs wanted to use to protect their case. Because of that," and again, looking at the jury, he basically said, "You can infer that the defendant destroyed the evidence, the potential documentation, by the discovery order on purpose because they didn't want you to see it." And therefore, you can make a decision on the case based on knowing the defendant hid or destroyed evidence. And I've also talked to a judge in a personal setting where he basically said, if I issue an adverse inference in most cases, the only question now is how many zeros is the defendant going to write on the check to the plaintiffs? Because they've already lost the case.
Jim McCarthy:
I think you're right, Bill. All litigators like me remember the phrase that you cannot unring the bell, and when you have a judge essentially telling a jury that one of the parties is cheating by destroying its evidence, it's very hard to get that stink off you. You can't unring that bell. Yeah. It's really not about whether there's liability. It's about how much damages we're talking about, like you said.
Bill Tolson:
Yeah. And are you going to have to pay for for the plaintiff's counsel's fees. Jim, I know some of the legal people listening to the podcast today are going to say, "Well, gee, why do I need to worry about using collaboration applications in real time now? Aren't most cases, most lawsuits, backward looking? Meaning, gee, I'm suing company ABC because of something they did back in 2015 or 2016, and that has nothing to do with what's going on today." And before you answer, Jim, I mean, I agree that probably a majority of cases, at least these kinds of lawsuits are backward looking, so you're going back in discovery looking for old data to actually support your case. But in certain circumstances that I've been involved with, lawsuits and e-discovery can be ongoing. Is that true? You run across that, Jim?
Jim McCarthy:
Yes. In fact, most states' evidence rules and discovery rules are uniform in that there's a continuing obligation on a party to provide discovery throughout the course of the case and even up to trial date. In fact, in one case I was on, Bill, it was a case about lost profits and unfair competition that involved bringing in witnesses from all over the world. It was a mini arms dealer that was suing another arms dealer. And in that case, the judge actually stopped the cadence of the trial and ordered us to go back to discovery for a limited period of six months, and it was for just that purpose. It was to gather information that came about during the start of the trial that was relevant to the claims that dated back three years before.
Bill Tolson:
Wow. Wow. No, I haven't seen that, but I have been involved in cases where, like you say, the discovery is ongoing. And in some cases, the company, the defendant, the IT people didn't know enough to be capturing that data. In fact, I remember, this was years ago, but sitting in a early meet and confer meeting... No, I think it was one of the pre-meetings, and the the plaintiff's counsel was asking the VP of accounting for the company being sued... They were actually cross suing. Asked them, "Do you, in fact, use any instant messaging technology?" And the defendant's lawyer immediately said, "No, we don't allow that. It's against our policies. Therefore, we do not have instant messaging that you can look for in discovery or you can ask for it now." And the VP of accounting interrupted the lawyer and said, "Actually, we do. Many of the people in our department have downloaded their own instant messenger software, and we use it within the department." And you could see the plaintiff's attorney smile and lick his lips and go, "Okay." And that was an issue.
Jim McCarthy:
So, that brings up another area is device control. How many devices are we talking about in these complex litigations? We're not talking about simply stationary computers or laptops anymore. We're talking about phones and iPads and myriad types of communication-
Bill Tolson:
And social media.
Jim McCarthy:
... devices that are out there. This is a rich area for e-discovery, and just keeping it all straight is more than a full-time challenge.
Bill Tolson:
So, Jim, we've talked some about collaboration platforms and what they mean for discovery, especially Microsoft Teams has been top of headlines forever since COVID started, a lot of companies reverting to collaboration software to help keep their employees communicating and feeling like they're part of a group. Teams has been especially popular. One of the issues that I've written about, and we've talked about, is the idea of capturing Teams data objects for discovery for litigation. And it's not as straightforward as I think a lot of the people who've adopted Teams expects. Teams generates not just chats, but also, you're able to share files, upload files, you're able to express sentiment and emojis and record audio and video. And all of these things are part of Teams, a Teams conversation, for example.
Bill Tolson:
The issue with Teams is Teams stores all of these various data objects in different parts of Office or Microsoft 365, so companies need to be especially aware of where these data objects are and what they need to do with them. If they are looking at a potential litigation or they're, in fact, in litigation, like we've talked about, ongoing litigation and a need to place litigation hold on new data. But one of the questions I've posed in several articles is this idea of plaintiffs' attorneys basically picking up on that and that being part of the expectation and the requirement when defendant's lawyers are rounding up, collecting, reviewing, and then turning over this data. Am I wrong in believing that the plaintiff's counsel, or opposing counsel, can demand specific Teams data objects beyond just the chats when an e-discovery case is ongoing? And if a company has not captured that stuff, does that open up a charge of spoliation on them?
Jim McCarthy:
So, you're not wrong. That is required, Bill. Excuse me. Just as a basic point, the federal rules of civil procedure, and specifically rule 26, determines what kind of electronic stored information falls within the scope of a particular case. And these captured, let's call them teams meetings, whether they're on zoom or wherever, these captured meetings squarely fall within this rule. So, plaintiffs' lawyers may certainly ask for not only the meeting itself, let's call it the video part of the file, but also the metadata surrounding it. Participants who accepted, who declined, things like that, who left the meeting, et cetera. So, the ability to be able to store that is very important from a records management perspective.
Bill Tolson:
Well, and that's absolutely on mark, and one of my pet peeves... I wouldn't say pet peeves. One of the discussion points I brought up over the years is that one of the ABA's model rules that I think 30 or 35 states actually abide by is this idea that attorneys on both sides must be technologically proficient enough to know this stuff. And this is where I think a lot of attorneys can be caught unaware that there's all these other different types of data that they should be aware of and have their clients capturing and protecting and things like that. Have you ever run across the idea of, especially in the ABA model rules, attorneys, one of the requirements is they be technologically proficient enough to know this stuff?
Jim McCarthy:
In general, lawyers are directed to accept cases which they have a familiarity with both the subject matter and if it's in the litigation, the litigation requirements of each jurisdiction that they're involved with in that case. So, if New York, for example, has a drastically different rule than, say, California, a lawyer is not permitted to take on that New York case if he or she is not familiar with that jurisdiction's rules. So, yes, there is a basic predicate that the lawyers have to be familiar with, both the procedural and the substantive matters, cases they handle. There is not a litmus test, though, Bill, on how much technical prowess they have with respect to that. We will often find that smart litigators hire third parties to do what you're suggesting, how to call that relevant information and become a litigation assist entity.
Bill Tolson:
And to know, at least the basics of this is the kind of technology and data generation that my clients are using, therefore I need to at least know a level of detail to know what I don't know.
Jim McCarthy:
Yeah. I mean, as you know, we are hired from some of the largest firms in the world who are involved in complex litigation because they need precisely that kind of capture and searchability in a very large volume of data engulfing the case.
Bill Tolson:
Henceward, why we're doing these podcasts. Hopefully, we're helping attorneys become aware of this stuff. I mean, there's so much new technology that is cropping up now every day. It has to be especially difficult for attorneys to keep up with it. So, like you say, there are law firms hiring people proficient in that information as well as consultants, as well.
Jim McCarthy:
Well, yeah. While it may not be an ABA, American Bar Association, or other jurisdiction's requirement that the lawyers have that technical knowledge, I will say that the failure to get an expert on how to cull this information and search it may expose some counsel to malpractice claims if they don't do it properly. And certainly, you have the, under the federal rules, is pretty strict sanctions available for withholding information, and the defense of, "I wasn't that proficient in the system to be able to get it out of the system," is not a defense.
Bill Tolson:
Yeah. Good point. Well, with all of that in mind and all of the, especially the collaboration software that we've talked about and how companies based off of the quick adoption of this collaboration software based on COVID-19, and especially Microsoft Teams... And again, Teams is a great product, but it is relatively complex when it comes to discovery. What would you suggest companies that have quickly adopted these collaboration apps like Teams do to lower their overall legal and compliance risk?
Jim McCarthy:
So, short of getting rid of it all, which is not a viable option anymore, I think that companies are well-advised to start to index these meetings, let's call them meetings, Bill, right?
Bill Tolson:
Yeah.
Jim McCarthy:
Index these meetings as to topic and participants and start getting a handle on this growing silo of data that they're creating now in their systems so they can easily search and produce it, both for business purposes and for litigation hold purposes, right? So, they need a tool that allows them to now put this data into manageable buckets and cabinets and things like that.
Bill Tolson:
That's interesting. And you mentioned this at the very beginning of this comment, not too long ago, when I was fully doing e-discovery consulting and helping companies respond and those kinds of things, the first thing that we would tell a company five, six, seven years ago would be if you have any instant messaging or anything like that going on, turn it off now so that you don't have employees inadvertently going around the data collection capabilities you need for an ongoing litigation hold and e-discovery response. And that obviously affected employee productivity, but that was the only thing they could do at the time, was just turn it off until that lawsuit or litigation was over with. So, no, I fully agree now that companies... The prob the problem here is that companies have quickly adopted this stuff, and especially those companies that don't have a big litigation footprint don't know to ask these things. So, hopefully, before they adopt applications, now they're fully aware of whether those things that they're going to need to... those actions are going to need to do if litigation is on the horizon.
Jim McCarthy:
Yeah. And Bill, one final point. Sort of a public service announcement, but I think companies should also not overlook the obvious. When we get onto one of these Teams or Zoom meetings, we're actually recording another party's conversation. Now, many states have what's called one way consent, meaning only one of the parties of the conversation needs to provide their consent, and theoretically, that would be the party who turns on the recording device, right? But in some states they require two party or all party consent, meaning each of the parties to the conversation have to agree to be recorded. So, one thing that companies should do is at the outset of each such meeting, or if it's a consecutive series of meetings, like my college classes, is we have permissions established up front that make all the participants know and be aware that their conversation is being recorded and may be gathered in the future.
Bill Tolson:
That's a great point I hadn't thought of, but two comments on that. Within the same company, even if you're dealing across state lines, like I'm in Colorado and you are in New York/New Jersey, but we both work for the same company, does that supersede that required notice?
Jim McCarthy:
So, it's interesting, you recording me within the context of my employment may fit and exemption, but oftentimes, these calls have third parties involved. Right? Or perhaps one of our teammates are in a state that doesn't recognize the employment exception, right? So, just best practices is to, at the outset of... We have a team call every Friday at 9:30, so at the start of setting something like that up in the invite, we should have something in the way of a consent, "By hitting accept, you also consent to have your conversations and images, if we're on video, recorded."
Bill Tolson:
That, again, brings up some really interesting points, especially you're pointing out third party participants. Even if you're part of a Teams chat, I think the assumption by many companies on both sides, even outside companies who were a part of that chat, you would have to at least assume that your chats are being recorded because you could see it in the window. But Teams is very good about if I press the record button right now on this Team's meeting that we're having, you get a warning at the top of the screen saying, "This thing is now being recorded. If you [crosstalk 00:29:40].
Jim McCarthy:
Yeah. Now, that warning about being recording is important, and it certainly puts you on notice, but I'm not so sure that that amounts to consent if I continue on the call. I may not have seen it. I may have walked away from the terminal, et cetera. Some sort of a [inaudible 00:30:01] act should be done by the participant to acknowledge their consent. Something like accepting the meeting that has this notice in it from the start.
Bill Tolson:
Maybe as part of the meeting invite, there's some text there that says, "By accepting this meeting, you're acknowledging that it's going to be recorded and you're okay with that." Something like that?
Jim McCarthy:
Exactly.
Bill Tolson:
So, maybe that's a disclaimer we put in the body of the meeting invite.
Jim McCarthy:
Yeah. And I have some sample language that works for that. One other note, Bill. Along the same lines but a little different. It comes up in educational circumstances a fair amount. That's the background when we're on video. We've all heard the stories of the barking dogs as becoming more commonplace in every meeting now, because everyone's working from home, but I'm talking about something else. When we're on video and in our homes, there are items, things, documents in the background that are visible to other participants. There have been cases where children had been suspended from school because while attending a remote class, there was a firearm in the back of the room. We've also had cases come about where people were terminated from their employment because of something in the background during a remote call. This is a ripe area for the youthful plaintiff Bar that wants to challenge these things. So, maybe a best practice is simply to require virtual backgrounds within your video meetings.
Bill Tolson:
Man, these are great points that I hadn't thought of. One thing we want to leave the listeners with is the idea that, yes, Archive360 is now capable of capturing Teams meetings, Teams calls, chats, all that kind of stuff, and the fact is, we can capture all of it, unlike many of our competitors. And the reason being what we just talked about, anything can be asked for in discovery if it's potentially relevant. So, the fact that you captured the chat, but you didn't capture maybe an audio conversation or an uploaded file or even down to an emoji being placed or something like that, all has potential legal meaning. So, if somebody didn't know to capture that, I would imagine that that would at least open them up to some pretty interesting questions from the judge.
Jim McCarthy:
It is. I peaked into one of our demos, and one of the really cool tools that I saw the resource use was there was a request by a customer who remembered clearly but couldn't remember when something was spoken about this person named Jared being fired. And the quote was, "Jared's never going to get fired, not as long as I'm his boss." And the cool tool was that they had 50 or 60 of these Teams meetings, but they couldn't remember which one it was in, and the tool was able to identify which meeting it was and queue it up to precisely that point of the Teams chat within seconds. And I just thought that was a really cool tool.
Bill Tolson:
Oh no, that's fantastic. I mean, when we're capturing chats or even audio and video, once it's archived, we can actually transcribe the spoken words on the audio and video and do a search on that. And I've been told that a lot of law firms who do the the pre-interviews with potential custodians and stuff, and they're recording them, for a big case, they could be recording hundreds or thousands of hours. And being able to find exactly where in those audio and video clips certain topics were discussed, huge time-savings. So, with that, and again, reminding everybody that, yes, Archive360's Archive2Azure is able to capture and archive all Teams content. That's exactly what we've been talking about.
Bill Tolson:
But with that, Jim, I think that wraps up this podcast on COVID-19 litigation and what that means for corporate information governance. If anyone has any questions on this topic, please send an email mentioning this podcast to info@archive360.com, and we'll get back to you on it. And just as an FYI, the next podcast in our series, Jim and I are going to be discussing data sovereignty in the age of the cloud and what that really means for corporate archiving and information management. And also, Jim and I will be posting even more additional podcasts on a wide range of subjects that we find interesting, so keep an eye out for that. And with that, I appreciate everybody who has taken the time to listen to this podcast. And Jim, it's been great, again, sharing the time with you.
Jim McCarthy:
Good speaking to you too, Bill. Look forward to the next one.
Bill Tolson:
Thanks.
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