Tech ignorance a major hurdle to conducting modern litigation

Guest Post by Michael Goodwin

Although recent changes to the ABA model rules specifically require technological competence, many lawyers remain unapologetic luddites. According to one federal judge, this lack of tech savvy is a major hurdle conducting modern litigation efficiently.

In the Fall issue of the journal Litigation, United States Magistrate Judge Patrick J. Walsh takes lawyers to task for what he perceives as a failure to educate themselves on basic technology:

Lawyers need to be versed in technology if they are going to be successful in discovery. If they are not, they should find someone in their firm who is and bring that person into the case for the discovery phase. Because I find that the lawyers are often unable to adequately discuss discovery of electronically-stored data, I often require them to bring the client’s information technology person to the hearing or have that person available by telephone to explain what the company is capable of retrieving and the time and costs that would be involved in doing so.

The failure to articulate the logistics and costs to find data, particularly electronically-stored data, is often fatal to arguments that the discovery sought is unduly burdensome or disproportionate.

A modicum of self-education is required, but like many lawyering skills, competently handling e-discovery is as much about asking the right questions, and finding out to whom they should be addressed. Learning the necessary technological concepts to manage e-discovery does not require a degree in computer science or a formal education in information technology, but it usually does require consultation with people who have that background. As Judge Walsh observes in the article, the client’s employees should be key members of the e-discovery team. These are the people who are usually in the best position to know where their ESI “lives,” how to capture it, and how much it will cost to do so. At least one landmark decision in e-discovery jurisprudence endorsed active collaboration with clients in the e-discovery process:

[I]f you are knowledgeable about and tell the other side who your key custodians are and how you propose to search for the requested documents, opposing counsel and the Court are more apt to agree with your approach.

Da Silva Moore v. Publicis Groupe, 287 F.R.D. 182, 192 (S.D.N.Y. 2012). U.S. District Judge Shira Scheindlin made similar observations almost a decade ago in Zubulake v. UBS Warburg LLC, 229 F.R.D. 422, 439 (S.D.N.Y. 2004).

While obtaining appropriate tech skills does require some effort, lawyers aren’t alone. Teamwork, along with a willingness to learn, goes a long way.

Michael Goodwin is a litigation attorney at Jardine, Logan & O’Brien in Minnesota. Michael has experience in a range of practice areas, including government liability, insurance coverage, products liability, and employment law. He can be reached at mgoodwin@jlolaw.com.

Negligence might finally be actionable for breach of duty to protect customer data

Business relationships are often strained when a third party successfully breaches the data security of a target, creating profound negative consequences not only to the target but also to that company’s vendors, business associates, and customers. These damages are often costly but sometimes hard to identify or quantify.

In the majority of security breaches, the customers who have had their identity exposed have suffered no actual economic harm. The courts, therefore, are appropriately reluctant to give monetary damages to those injured customers and generally refuse to compensate for the time lost checking credit scores or otherwise dealing with the problems associated with the data breach.

The vendors and business associates, however, may incur substantially greater economic losses and more direct financial injury. Because this injury is exclusively economic loss, a question remains whether such loss is compensable under tort law or whether all remedies are limited entirely to contract claims.

In Lone Star Nat. Bank v. Heartland Payment Systems, No. 12-20648, 2013 WL 4728445 (5th Cir. Sept. 3, 2013), the Fifth Circuit reversed a dismissal of a tort claim based on the plaintiff bank’s assertion it suffered financial harm when it had to replace consumers’ compromised credit cards and to refund fraudulent charges as a result of the negligence of the defendant in securing against data breach. The case arose from a 2008 data breach of the defendant’s payment processor’s systems, exposing 130 million credit card numbers.

The Fifth Circuit focused on the law of New Jersey after establishing the jurisdictional basis for the claim. The court explained, “the economic loss doctrine generally limits a plaintiff seeking to recover purely economic losses, such as lost profits, to contractual remedies.” Economic losses are generally covered exclusively by contract remedies, unlike tort principles which “are better suited for resolving claims involving unanticipated physical injury, particularly those arising out of an accident.”

Contract may be better than tort, but such a limitation oversimplifies the scope of tort law. Tort injuries occur in inchoate interests such as defamation and assault. Not all tortious harms are physical.

The New Jersey Supreme Court had earlier held the tort remedy applied when a duty was breach. It explained that when “a defendant owes a duty of care to take reasonable measures to avoid the risk of causing economic damages, aside from physical injury, to particular plaintiffs or plaintiffs comprising an identifiable class with respect to whom defendant knows or has reason to know are likely to suffer such damages from its conduct. . . .” People Express Airlines, Inc. v. Consolidated Rail Corp., 495 A.2d 107 (N.J. 1985).

Based on this line of reasoning, the Fifth Circuit reinstated the claim. It acknowledged that New Jersey law generally did not permit the tort claim if there was a contract between the parties, since the terms of their express agreement should govern the allocation of risk. But third party beneficiary law often provides that parties not directly negotiating the agreement may still be affected by it, and so to might a group of readily identifiable tort victims who are not party to the contract but affected by the duties created.

Since the defendant, Heartland “would not be exposed to ‘boundless liability,’ but rather to the reasonable amount of loss from a limited number of entities [then] even absent physical harm, Heartland may owe the Issuer Banks a duty of care and may be liable for their purely economic losses.” The decision merely allows the case to proceed and a great many additional defenses will be addressed. Nonetheless, the decision is an important reminder on the creation of contracts and the scope of those contracts as they affect third parties contemplated but not direct parties to the agreements.

Upcoming CincyIP Program: Current Trends in Computer Security

CincyIP August Luncheon

“Current Trends in Computer Security”

The world has experienced quite a spectrum of computer security attacks in the last couple years and they have changed in interesting ways. While 99.9% of investigations deal with IP theft on some international basis, the issues very rarely make it to a courtroom. Understanding the technical approaches to rapid response, remediation and working with the business on damage assessments are key to helping clients deal with these issues since many of these incidents never see the inside of a courtroom.

A panel of experts, including Nick Hoffman, an incident responder at GE, Craig Hoffman, partner at Baker Hostetler, and Jon Garon, Director of NKU Chase Law + Informatics Institute, will discuss recent computer security attacks, how they have recently evolved, and how the immediate and long term responses to these attacks have developed to address the ever-changing threats. The panel will also address how attorneys can assist clients to prevent against an attack, and what to do when they are the victim of an attack.

When
Tuesday August 13, 2013 from 12:00 PM to 1:30 PM EDT
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Where: McCormick & Schmick’s Private Dining Room

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Register Now!

W. Bruce Lunsford contribution to create Academy for Law, Business + Technology

With apologies for posting a press release as a blog post, the news that W. Bruce Lunsford has pledged $1 million to Chase under the direction of the Law + Informatics Institute for the creation of the the W. Bruce Lunsford Academy for Law, Business + Technology is exciting enough for us to share our news.

HIGHLAND HEIGHTS, Ky. (May 15, 2013) — The Northern Kentucky University Chase College of Law has received a $1 million gift from W. Bruce Lunsford to establish and support the W. Bruce Lunsford Academy for Law, Business + Technology.

Lunsford, a 1974 graduate of Chase College of Law, is chairman and CEO of Lunsford Capital, LLC, a private investment company headquartered in Louisville, Ky.

The W. Bruce Lunsford Academy for Law, Business + Technology will be an honors immersion program operated by the NKU Chase Law + Informatics Institute. The focus of the program will be to develop “renaissance lawyers” for the Information Age. The Lunsford Academy will provide students with the technological, financial and professional skill sets essential to the modern practice of law.  Through the program’s technology-driven, skills-based curriculum, students will acquire the fundamental skills that will make them more productive for their clients, more attractive to employers and better prepared to practice law upon graduation.

For those interested in learning more about the details of the program, the most comprehensive vision is provided in my forthcoming article from Connecticut Law Review. An working draft of the paper may be found here: Jon M.Garon, Legal Education in Disruption: The Headwinds and Tailwinds of Technology, (Conn. L. Rev. forthcoming) at SSRN: http://ssrn.com/abstract=2040560.

In addition to taking the program’s required and elective law and informatics courses, Chase students participating in the Lunsford Academy will have the opportunity to participate in technology-focused semester-in-practice placements and study abroad programs; they will also be able to seek joint degrees.

Chase College of Law partners with the NKU College of Informatics to offer a Juris Doctor/Master of Business Informatics and Juris Doctor/Master of Health Informatics and with the NKU Haile/US Bank College of Business to offer a Juris Doctor/Master of Business Administration.

Professor Jon Garon, director of the Law + Informatics Institute, said the development of the Lunsford Academy is the next step in the evolution of legal education. “In addition to a solid foundation in legal doctrine, theory and practice, law students need business education, information technology and intellectual property knowledge, and law practice management experience,” he said. “These skills will enable students to compete in today’s highly networked, efficient and global business community. The generous donation by Bruce Lunsford enables Chase to meet this challenge and redefine the scope of legal education.”

In recognition of Lunsford’s gift, the academy will be named the W. Bruce Lunsford Academy for Law, Business + Technology, upon approval by the NKU Board of Regents.

“We are extremely honored and pleased that Bruce has made this significant investment in our Law + Informatics Institute,” said Dennis R. Honabach, dean of the College of Law. “The Lunsford Academy will provide our law students with invaluable opportunities to become uniquely prepared for the modern practice of law.”

Cyber Defense Strategies and Responsibilities for Industry Call for Papers Now Open

The Northern Kentucky Law Review and Salmon P. Chase College of Law seek submissions for the third annual Law + Informatics Symposium on February 27-28, 2014.

2014 Law + Informatics Symposium on

Cyber Defense Strategies and Responsibilities for Industry

 The focus of the conference is to provide an interdisciplinary review of issues involving business and industry responses to cyber threats from foreign governments, terrorists, and corporate espionage. The symposium will emphasize the role of the NIST Cybersecurity Framework and industries providing critical infrastructure.

The symposium is an opportunity for academics, practitioners, consultants, and students to exchange ideas and explore emerging issues cybersecurity and informatics law as it applies to corporate strategies and the obligations of business leaders. Interdisciplinary presentations are encouraged. Authors and presenters are invited to submit proposals on topics relating to the theme, such as the following:

Cyber Warfare

  • Rules of Engagement
  • Offensive and defensive approaches
  • Responses to state actors
  • Engagement of non-state actors
  • Distinguishing corporate espionage from national defense
  • Proportionality and critical infrastructure
  • Cyber diplomacy
  • Cold War footing and concerns of human rights implications

Front Lines for Industry

  • Role of regulators such as FERC
  • Legacy systems and modern threats
  • NIST guidelines
  • NIST Cybersecurity Framework
  • Engaging Dept. of Homeland Security
  • Implications on various industries (electric power,  telecommunications and transportation systems, chemical facilities)
  • Health and safety issues
Global Perspectives

  • Concepts of cyber engagement in Europe
  • Perception of Internet and social media as threat to national soverignty
  • Rules of engagement outside U.S. and NATO
  • Implications for privacy and human rights
  • Stuxnet, Duqu, Gauss, Mahdi, Flame, Wiper, and Shamoon
  • Cyber engagement in lieu of kinetic attacks or as a component of kinetic engagement

 

Corporate Governance

  • Confidentiality and disclosure obligations
  • Responsibilities of the board of directors
  • Staffing, structures and responses
  • Data protection & obligations regarding data breaches
  • Corporate duty to stop phishing and other attacks for non-critical industries
  • Investment and threat assessment
  • Litigation and third party liability

 

Other Issues

  • Executive orders and legislative process
  • Lawyer responsibility in the face of potential threats
  • Practical implications of government notices
  • Perspective on the true nature of the threat

Submissions & Important Dates: 

  • Please submit materials to Nkylrsymposium@nku.edu
  • Submission Deadline for Abstracts: September 1, 2013
  • Submission Deadline for First Draft of Manuscripts: January 1, 2014
  • Submission Deadline for Completed Articles: February 1, 2014
  • Symposium Date: February 27-28, 2014

Law Review Published Article:  The Northern Kentucky Law Review will review, edit and publish papers from the symposium in the 2014 spring symposium issue.  Papers are invited from scholars and practitioners across all disciplines related to the program. Please submit a title and abstract (of 500-100 words) or draft paper for works in progress. Abstracts or drafts should be submitted by September 1, 2013. Submissions may be accepted on a rolling basis after that time until all speaking positions are filled.

Presentations (without publication) based on Abstracts:  For speakers interested in presenting without submitting a publishable article, please submit an abstract of the proposed presentation. Abstracts should be submitted by September 1, 2013. Submissions may be accepted on a rolling basis after that time until all speaking positions are filled.

Publication of Corporate Handbook on Cyber Defense: The Law + Informatics Institute may edit and publish a handbook for corporate counsel related to the topics addressed at the symposium. Scholars and practitioners interested in authoring book chapters are invited to submit their interest by September 1, 2013 which may be in addition to (or as an adaptation of) a submitted abstract for The Northern Kentucky Law Review. Submissions may be accepted on a rolling basis after that time until all chapter topics are filled.

About the Law and Informatics Institute:  The Law + Informatics Institute at Chase College of Law provides a critical interdisciplinary approach to the study, research, scholarship, and practical application of informatics, focusing on the regulation and utilization of information – including its creation, acquisition, aggregation, security, manipulation and exploitation – in the fields of intellectual property law, privacy law, evidence (regulating government and the police), business law, and international law.

Through courses, symposia, publications and workshops, the Law + Informatics Institute encourages thoughtful public discourse on the regulation and use of information systems, business innovation, and the development of best business practices regarding the exploitation and effectiveness of the information and data systems in business, health care, media, and entertainment, and the public sector.

For More Information Please Contact:

  • Professor Jon M. Garon, symposium faculty sponsor and book editor: garonj1@nku.edu or 859.572.5815
  • Lindsey Jaeger, executive director: JaegerL1@nku.edu or 859.572.7853
  • Aaren Meehan, symposium editor, meehana2@mymail.nku.edu or 859-912-1551

Untangling the web: Spider-Man lawsuit settlement highlights how to negotiate out of copyright collaboration agreements

The New York Times reports a final settlement in the long-running copyright and breach of contract battle between producers of “Spider-Man: Turn Off the Dark,” the musical’s original director Julie Taymor, which also involved composers, Bono and the Edge of U2 and Marvel Entertainment (which itself was acquired by Disney in 2009). The New York Times summarized the dispute as follows:

Ms. Taymor, the Tony Award-winning director of “The Lion King,” was fired from the $75-million “Spider-Man” production in March 2011 amid disputes over changes to the show’s script and staging. In November, Ms. Taymor filed a breach of contract suit against the musical’s lead producers, Michael Cohl and Jeremiah J. Harris, saying that they were continuing to profit from her creative contributions to the show without compensating her. Mr. Cohl and Mr. Harris filed a countersuit in January saying that she violated the terms of her contract and “could not and would not do the jobs” she was hired to do, and thus was not entitled to further royalties.

Last September, the parties “reached an agreement in principle,” according to a statement issued by the U.S. District Judge Katherine Forrest overseeing the trial. But the final agreement required an additional four months of negotiations. The delay likely comes from the conflicting nature of the parties’ interests and uncertainty over the value of the $75 million dollar property.

Although the stage musical has Spidermanachieved some weeks with grosses in excess of $1 million, it is unclear whether it is significantly profitable on most weeks. Assuming it is, at a profit of $150,000 per week (a considerable sum for Broadway), it would need to run over 9½ years to break even. For the investors, that is a monstrous timeline.

Royalty participants like Bono, the Edge earn income each week, so the length of the run matters more than its profitability, though complex formulae used in the Approved Production Contract for Musicals offsets some of this disparity.

More importantly, for the producers and investors, is the ability to restage and cut the musical so that its costs can be tamed and the production repackaged for other cities and for tours. The settlement of the copyright action by Ms. Taymor presumably allows the producers to use and to modify her material so that the show can be streamlined and packaged for other venues.

Despite the many accidents during development and the generally bad reviews, Spider-Man is reportedly a “fan favorite” according to the Times. Profitability will not likely come from Broadway, so the producers need this settlement to take their show on the road and lower their costs.

For other creators, seeking to learn from the settlement, what might such settlement negotiations entail?

1. Approval rights. A director may have approval rights over the use of various copyrighted elements in the production. A settlement agreement must terminate all future approvals.

2. Copyrighted elements. Generally a director does not contribute works that are protected by copyright. The Approved Production Contract provides very explicitly that the playwright (including the composer and lyricist for musicals) solely owns the copyright. General staging is not copyright protected, though choreography is protectable by copyright. All choreography and any staging should be licensed to the production to make the settlement effective.

The license must include both the right to publicly perform so that the productions can continue to be shown on stage; to reproduce so that any DVDs of the production can be sold; and to modify, so that the work can be changed as needed to accommodate new venues and new performers.

3. Contractually protected elements. The director of a play or musical will have protections provided by contract that go beyond copyright. Ideas on staging, conceptual approaches to the material and other elements that fall outside of copyright may still be covered by contract. The production contract should be superseded by the settlement agreement; all rights protected by the contract should be transferred; and any other claims waived.

4. Non-disparagement and credit.  There are two sides to every break up. Both parties are likely at fault and neither side is completely true. As such, the settlement agreement must protect both sides – particularly the individuals – from negative statements or efforts to paint the other side as unprofessional or wrong. A key component of this is affording credit to everyone involved. There may be an additional wrinkle because new participants have been hired to complete work started by those leaving the production. In some cases, the amounts of relative contribution are balanced by the applicable union and credit is arbitrated through the union agreement. In most cases, however, the settlement should itself provide some credit for everyone – with an effort to be generous to the leaving parties.

5. Payment. Ideally, the settlement of any creative dispute will include a payment of a fixed sum, so that the parties can be done interacting and so all future accounting obligations are avoided. If the future revenues (or profitability) are too uncertain, then future participation may be necessary. Even if the settlement provides for payments based on future revenues, the parties are better off with a royalty based on weeks performed or grosses earned than the more subjective definition of profits. Nothing will guarantee a return to the courtroom faster than a net profits settlement provision and a very successful run.

The actual settlement involving Spider-Man has not been disclosed. Still, these five key provisions are likely the topics identified by all the parties. Participants like Marvel needed to be sure the settlement did not change the producer’s obligations or harm its interests, while the producers and Ms. Taymor had a great deal of economic, professional and emotional issues to address. Does this mean Spider-Man will soon be coming to a town near you? It opens the possibility. Now the producers need to translate their $75 million enterprise into a smaller, simpler but audience-thrilling experience.

Like any creative endeavor, these projects always take time.

NKU Chase Law + Informatics Institute to Exhibit at the ABA TECHSHOW

NKU Chase Law + Informatics Institute will have a booth (No. 803) at the ABA TECHSHOW on April 4-6 in Chicago. As the Law + Informatics Institute continues to develop its national leadership in research and coursework integrating the regulation of information and use of technology into legal education, its participation in the expo will be an opportunity to showcase Chase and explore partnerships with cutting-edge legal technology vendors.  When registering, mention EP1315 to receive discounted registration.

ABA TECHSHOW