The Legal Four Corners Of Social Media And E-Discovery For Businesess


Companies are on social media. They are interacting and connecting with customers through Facebook, Twitter and blogs. In a 2010 study, numbers on the conservative side show that 65% of Fortune Global 100 companies have active Twitter accounts, and 54% have Facebook fan pages. One third of these companies have a blog. This is how companies are doing business today. And, with this presence online comes legal obligations to capture and save these communications. These obligations can seem daunting, but when broken into four areas of action, or the four pillars of social media and eDiscovery, any organization should be able to meet this new challenge.

1. E-Discovery Rules Apply To Social Media Activity.

These communications and online activity should be thought of as an extension of “electronically stored information” (“ESI”) and the discovery rules that apply when a company is in a legal dispute that would trigger a duty to preserve company emails and electronic documents. When the Federal Rules of Civil Procedure were amended in 2006 to include ESI, the term was “intended to be read expansively to include all current and future electronic storage mediums.” Notes of the Advisory Committee to the 2006 Amendments to Rule 34. It does not matter how brief the storage period, courts will treat the information as discoverable. Accordingly, even storage in the “cloud” or on a social networking site will be treated as discoverable ESI.

To summarize the e-discovery rules, there is a duty to preserve relevant or potentially relevant information once litigation is pending or reasonably anticipated as long as it is in your custody or control. For the party filing the legal action, the litigation hold and “do not destroy” notice should be triggered before the complaint is filed. “A duty to preserve evidence arises when there is knowledge of a potential claim.” Micron Tech. v. Rambus, 255 F.R.D. 135 (D.Del.2009), aff’d in part, rev’d in part, 645 F.3d 1311 (Fed. Cir. 2011).

A 2010 study found that courts are imposing strong sanctions against attorneys and their clients for failing to comply with the e-discovery rules. In this study of 401 cases before 2010 in which sanctions were sought, sanctions were awarded in over half of them. Some of the sanctions were especially severe, and included case dismissals, adverse jury instructions and large monetary sanctions. $5 million sanctions were ordered in five cases, and $1 million or more in four others. Defendants were sanctioned for e-discovery violations nearly three times more often than plaintiffs, and the number one reason for imposing sanctions was failure to preserve electronic evidence. What this means in practical terms for companies is several things.

2. Update Document Retention Policies to Include Social Media Activity.

Companies should update their document retention policy to include social media activity. The procedures that the company is following for e-mails in terms of storage and retention periods may be a good starting point. By having established processes and following them, adversaries in litigation will have a hard time arguing that the company has destroyed relevant and possibly damaging information. The standard for preservation is “reasonableness and proportionality” so modeling it after the procedure for retention of company emails makes sense and is internally consistent.

The revisions to the document retention policy should also take into consideration any industry regulations, such as state laws governing real estate brokers, and SEC and FINRA record keeping rules for the financial services industry. For example, FINRA issued guidance in January 2010 for blogs and social networking sites, and set forth the record keeping responsibilities in the financial broker-dealer business:

“Every firm that intends to communicate, or permit its associated persons to communicate, through social media sites must first ensure that it can retain records of those communications as required by Rules 17a-3 ad 17a-4 under the Securities Exchange Act of 1934 and NASD Rule 3110.”

The company’s current document retention policy is a good starting point, and the assistance of legal counsel is advisable in making any revisions to include social media.

3. Identify a Vendor That Can Capture and Store Social Media Activity.

It is better to start early rather than later to identify a vendor that can capture and store the social media activity of your business. It is not enough to try and grab screenshots of your social media pages. For example, Facebook offers a “Download a Copy of Your Facebook Data” through “Account Settings,” but this feature was not designed with e-discovery rules in mind. For example, the downloaded data does not include comments that have been made by the user on other people’s posts, and reportedly does not include all of the unique metadata fields that are useful substantive information in litigation. In addition, the Download feature was not designed to capture posts that have already been deleted by the Facebook user.

4. Discuss With Legal Counsel Your Social Media Activity When Litigation Is Anticipated, and Remember To Include Social Media In Your Discovery Plan.

Knowing that social media activity is discoverable means that your business should give thought to how it is using social media as soon as litigation is reasonably anticipated. For example, there may be posts that are routine for the business about how well certain product lines are doing that the business may want to hold off on posting if the business is about to initiate a legal action in which it is seeking damages from a vendor relating to the quality of the product deliveries.

Alternatively, if your business monitors what your competitors are doing on social media, then you can alert your litigation counsel to what accounts may have public posts worth copying through a screenshot in order to support discovery requests seeking the social media activity that is not public. Many courts will order social media discovery if there has been some showing that it is relevant or likely to lead to the discovery of admissible evidence, and the discovery request is not overly broad. Courts are generally reluctant to order discovery of a party’s password, and probably more so with all of the negative press coverage of employers asking job applicants for their Facebook passwords. Nevertheless, there may be circumstances in which a party may be ordered to provide the password on their social media account. See, e.g., Largent v. Reed, Case No. 2009-1823 (C.P. Franklin Nov. 8, 2011).

5. Conclusion.

Businesses cannot afford to postpone updating their document retention policies, and finding a good solution for storing their social media activity. Courts are ordering sanctions for e-discovery violations, and businesses subject to state and federal regulations are being required to store much of this information as well. If a business anticipates being involved in litigation, make sure your legal counsel is asking about your social media activity, and how the potentially relevant or discoverable data is being maintained. Also, discuss the social media activity of your business and the other party so social media can be incorporated into your litigation strategy.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Michelle Sherman, Michelle Sherman | Attorney Advertising

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