Author: Paul A. Saso

Between A Rock and Hard Place: Twitter’s Back Now Against The Wall In Harris Case

That didn’t take long. A panel of the Appellate Division, First Department in People of the State of New York v. Harris, Index No. 080152/2011 has denied Twitter’s motion for a stay of enforcement of the Trial Court’s order requiring the production of Mr. Harris’s tweets. On Tuesday September 11, the Trial Court warned Twitter during a hearing on the District Attorney’s motion to hold Twitter in contempt that Twitter must produce the information in question by Friday September 14 or face a finding of contempt. Manhattan Criminal Court Judge Sciarrino further warned that he would review Twitter’s most recent quarterly financial statements in determining the appropriate financial penalty if Twitter does not obey the order. Denial of the stay and the Trial Court’s expected insistence on compliance puts Twitter in a difficult position as production of the tweets will effectively moot their appeal of Judge Sciarrino’s order. Twitter’s next move should be interesting. We will continue to keep you apprised.

Twitter Appeals Order to Produce Tweets

We previously reported on the New York District Attorney’s attempts to obtain tweets by a criminal defendant in People of the State of New York v. Harris, Index No. 080152/2011 and the corresponding challenges asserted by the individual user/defendant and Twitter itself on May 23 and June 7. Defendant is accused of disorderly conduct for allegedly having blocked traffic during an Occupy Wall Street protest. The District Attorney has sought defendant’s simultaneous tweets that allegedly will undermine his defense that he was forced onto the street by police officers. The trial court first denied defendant’s motion to quash the subpoena served on the social networking site Twitter and then denied Twitter’s own motion to quash.

Second Circuit Holds That a Post-Disclosure Stock Price Rebound Does Not Per Se Preclude Damages for Alleged Federal Securities Fraud

Recently, the Second Circuit vacated a District Court’s dismissal of a securities fraud action brought by Acticon AG, shareholder of China North East Petroleum Holdings Ltd. (“NEP”), for failure to plead economic loss—a necessary element to maintain a private damages action under § 10(b) of the Securities Exchange Act of 1934 (“§10(b)”). Acticon had multiple opportunities to, but did not, sell its NEP shares at a profit after NEP’s disclosure of the alleged fraud. The Court held that economic loss is not conclusively negated at the pleadings stage where the price of a security recovers shortly after a disclosure of alleged fraud. Significantly, in drawing all reasonable inferences in favor of the plaintiff under NEP’s 12(b)(6) motion, the Court explained that a rise in the price of a stock following a corrective disclosure requires an inquiry into whether the security rose for “reasons unrelated to [the] initial drop,” and thus introduces factual questions and competing theories of causation that would be inappropriate to resolve on a motion to dismiss.

NY Court Likens Tweeting to “Screaming Out a Window” and Denies Twitter’s Motion to Quash in Harris

We previously reported on the New York District Attorney’s attempts to obtain tweets by a criminal defendant in People of the State of New York v. Harris, Index No. 080152/2011 on May 23, 2012 and the corresponding challenges asserted by the individual user/defendant and Twitter itself on June 7, 2012. The Court first denied defendant’s motion to quash the subpoena served on the social networking site Twitter, ruling that the defendant, charged with disorderly conduct after allegedly marching onto the Brooklyn Bridge during an Occupy Wall Street protest, had no reasonable expectation of privacy in communications of this type and lacked standing to seek the protections of the Stored Communications Act. Seeing its user fail in his efforts to quash the subpoena, Twitter took the matter into its own hands, moving for the same relief as defendant and ultimately obtaining the same result. The more recent decision, which addressed Twitter’s challenges, raised considerable buzz in legal and social media circles as a case of first impression because it concerned (1) a criminal rather than a civil matter and (2) a motion by a social media site rather than an individual user.

Motion to Quash Part II: Twitter Seeks to Quash Subpoena Seeking Tweets in Harris Case

A few weeks ago, we reported on the recent decision of the People of the State of New York v. Harris, Index No. 080152/2011, (Crim. Ct. Apr. 20, 2012). There, the Court denied defendant Malcolm Harris’s motion to quash the District Attorney’s subpoena requiring the production of defendant’s user information, email addresses, as well as any Tweets posted for a four-month period from Twitter, Inc., all in connection with criminal charges pending against Mr. Harris due to his alleged involvement in an Occupy Wall Street protest. You can read our most recent blog post on this case from May 23. Twitter subsequently moved to quash the Court’s order on May 7, 2012, on the basis that the order imposes an undue burden upon it pursuant to Section 2703(d) of the Stored Communications Act (18 U.S.C. §§ 2701-2711) (the “SCA”), which provides that “[a] court issuing an order pursuant to this section, on a motion made promptly by the service provider, may quash or modify such order, if. . . compliance with such order otherwise would cause an undue burden on such provider.” Twitter argues that compliance with the Court’s order compelling the production of defendant’s Twitter user information imposes an undue burden for at least three reasons.

Your Tweets May Be Held Against You in a Court of Law – #tweetsdiscoverable

In a recent case before the Criminal Court of the State of New York, the prosecution served a subpoena duces tecum on Twitter, Inc., seeking user information including the e-mail address and Tweets for a two-month period under the Twitter account, @destructuremal, which was believed to be that of the defendant Malcolm Harris. The People of the State of New York v. Harris, Index No. 080152/2011, (Crim. Ct. Apr. 20, 2012). Mr. Harris had been charged with disorderly conduct after allegedly marching on to the roadway of the Brooklyn Bridge during an Occupy Wall Street protest. The prosecution sought to refute Mr. Harris’s expected defense that the police led him into stepping on to the roadway of the Brooklyn Bridge, by examining his contradictory, contemporaneous Tweets.

Inadvertent Production of Two Privileged Pages Among Over Two Million May Waive the Attorney-Client Privilege

The burdens associated with a massive document review of electronically-stored information (“ESI”) will not, in and of themselves, preclude a court from finding that a party has waived the attorney-client privilege with respect to an inadvertently produced document. In Jacob v. Duane Reade, Inc., Magistrate Judge Katz of the United States District Court for the Southern District of New York held that a privileged, two-page email that was inadvertently produced during the review of over two million documents in less than one month did not have to be returned and that the privilege had been waived because the producing party, Duane Reade, had failed to timely request its return. Duane Reade had used an outside vendor and review team to conduct its review of this large volume of ESI. The document in question concerned a meeting among several individuals, including an in-house attorney at Duane Reade. Duane Reade argued that the email was inadvertently produced because it was neither from nor to an attorney, and only included advice received at a meeting from an in-house attorney, identified in the email only by the first name “Julie.”

Southern District of New York Implements Pilot Program to Require Early Identification & Resolution of E-Discovery Issues in Complex Cases

The Judicial Improvements Committee of the Southern District of New York issued a report announcing the initiation of a Pilot Project Regarding Case Management Techniques for Complex Civil Cases (the “JIC Report”) in October 2011. The pilot project, which became effective on November 1, 2011, is designed to run for 18 months and for now, applies only to specific matters designated as “complex cases.” The project, which seeks to enhance the caliber of judicial case management, arose out of recommendations from the May 2010 Duke Conference on Civil Procedure and E-Discovery. This blog posting focuses on that portion of the pilot program devoted to the discovery of electronically stored information (“ESI”).

FINRA Issues Regulatory Notice 11-39: Social Media Websites and the Use of Personal Devices for Business Communications

In August 2011, FINRA, the self-regulatory agency of the securities industry, issued Regulatory Notice 11-39, offering additional guidance concerning the use of social media and supplementing its first notice on the subject–Regulatory Notice 10-06, issued in January 2010. Notice 11-39 focuses on issues relating to FINRA members’ use of social media, including record-keeping, supervision and responding to third-party posts and links. The Notice includes 14 “Q&As,” which provide instruction on the practical application of a firm’s and “associated person’s” (i.e., FINRA members) obligations under applicable laws and regulations when it comes to social media. With respect to record-keeping requirements, social media websites raise new complications because member firms do not themselves typically sponsor or host the content on those websites. The Notice, however, clarifies that record retention requirements continue to apply to content on social media sites and that the controlling question is whether the communications on those sites relate to the firm’s “business as such.” Any business communication made via Facebook, for example, must be “retained, retrievable and supervised.”

Knockout Punch: Claims of Futility & Computer Crashes Not Enough to Prevent Key Word Searches Requested by Former Champ

Sports. Steroids. E-Discovery? Former middleweight champion Shane Mosley asserted claims of defamation against defendant Victor Conte, owner of Bay Area Laboratory Cooperative (BALCO), regarding Conte’s statements that Mosely allegedly used illegal steroids in his championship bout with Oscar De La Hoya. Mosely requested that a computer forensics expert be permitted to conduct key word searches on defendant’s computer hard drives and equipment. Defendant objected, claiming that all relevant documents had been disclosed and that a computer search would be futile. The New York Supreme Court disagreed. Mosley v. Conte, No. 110623/2008, 2010 N.Y. Misc. (Sup. Ct. New York Co. Aug. 17, 2010).