Author: Scott J. Etish

Data Breach Victims Grounded: Third Circuit Affirms Dismissal of Putative Class Action Based on Economic-Loss Doctrine and Absence of Explicit Contractual Obligations

The Third Circuit’s recent decision affirming the district court’s dismissal of a proposed class action in its entirety highlights the difficulties faced by Plaintiffs pursuing data-security class actions in situations where the claims are not based upon explicit contractual language. This is an important decision for defense counsel to keep in mind in considering options to get rid of a class action before it takes off.

Signs of Life? – Judge Francis Opines that “Inherent Authority” to Sanction Spoliation Related Conduct Survives Amended Rule 37(e)

In perhaps the first published decision since the amended Federal Rules took effect on December 6, 2015, United States Magistrate Judge James C. Francis IV, a preeminent judicial e-discovery authority, relied upon amended Rule 37(e) and, somewhat controversially, his inherent authority, to sanction a litigant for evidence tampering and spoliation. The opinion is significant, not solely because it invokes the newly-minted rule, but because it interprets amended Rule 37(e) as not foreclosing the court’s inherent authority as a viable alternative to sanction spoliation-related conduct that may not strictly satisfy the new Rule’s elements.

Third Circuit Holds Non-Signatories May Be Bound By Forum Selection Clause

In Carlyle Investment Management LLC v. Moonmouth Co., the United States Court of Appeals for the Third Circuit concluded that a non-signatory to an agreement can be bound by a forum selection clause where the forum selection clause is valid, the non-signatory is a third-party beneficiary of the agreement or closely related to the agreement, and the claim arises from the non-signatory’s status related to the agreement.

Adverse Inference Instruction Warranted For Insurer’s Breach of Retention Policy

It should come as no surprise that litigants continue to ignore such basic discovery obligations as the duty to preserve potentially relevant documents once litigation is reasonably anticipated. A recent case out of the Northern District of New York exemplifies the importance of patience in establishing a record of discovery abuses, including data deletion, before seeking sanctions to address such situations.

Pennsylvania Supreme Court Concludes That Dissenting Shareholders’ Post-Merger Recourse Is Limited to Judicial Appraisal

As discussed in a previous post, the Third Circuit’s August 2012 ruling in Mitchell Partners, L.P. v. Irex Corp. predicted that the Pennsylvania Supreme Court would “permit a post-merger suit for damages based on the majority shareholders’ breach of their fiduciary duties.” As a result, the Third Circuit concluded that Pennsylvania’s appraisal statute did not preclude dissenting minority shareholders who are “squeezed out” in a merger from seeking remedies beyond the appraisal remedies provided in the statute. However, on certification, the Pennsylvania Supreme Court concluded that minority shareholders who oppose a merger have no recourse — in the absence of fraud or fundamental unfairness — other than to seek judicial appraisal of the value of their post-merger shares.

New Jersey District Judge Upholds Sanctions for Camden County’s Grossly Negligent Litigation Hold Procedures

On March 21, 2012, New Jersey District Judge Noel Hillman upheld Magistrate Judge Ann Marie Donio’s ruling against Camden County, New Jersey (the “County”) for spoliation of evidence in an insurance dispute arising out of injuries to a motorist on a county road. State National Insurance Co. v. County of Camden, 08-cv-5128 (D.N.J. March 21, 2012). Judge Hillman’s March 21, 2012, decision addresses the County’s appeal of a June 30, 2011, decision of Judge Donio granting State National Insurance Company’s (“State National”) motion regarding the County’s failure to preserve electronically stored information (“ESI”). Specifically, the County failed to institute a litigation hold, to disable its automatic email deletion program, and to preserve copies of its backup tapes after litigation was commenced.

In re Facebook Privacy Litigation – Uphill Battle for Plaintiffs

In a recent case in California, Facebook account holders filed a putative class action lawsuit against Facebook, alleging that Facebook knowingly forwarded personal information to online advertisers without its users’ consent. In In re Facebook Privacy Litigation, Plantiffs asserted eight causes of action against Facebook, including violations of the Electronic Communications Privacy Act, 18 U.S.C. §§ 2510, et seq. and various California laws (both statutory and common law), and all were dismissed.

Minority Shareholders Not Precluded From Seeking Damages for Majority Shareholders’ Post-Merger Breaches of Fiduciary Duty

In Mitchell Partners, L.P. v. Irex Corporation, et al., the Third Circuit concluded that Pennsylvania’s appraisal statute does not preclude dissenting minority shareholders who are “squeezed out” in a merger from seeking remedies beyond the appraisal remedies provided in the statute. In the precedential ruling, the Third Circuit predicted that the Supreme Court of Pennsylvania would “permit a post-merger suit for damages based on the majority shareholders’ breach of their fiduciary duties.”

Caution to Anonymous Internet Posters – Your Cover Might Be Blown

Next time you consider posting something on the Internet, think again as your identity could be revealed! Under the presumed cloak of anonymity, individuals often throw caution to the wind and voice controversial and unfiltered views on the Internet. Based upon a recent ruling by an Indiana State Court in a defamation case, however, the rules of engagement on the Internet may have changed.

Blind CCs and “Replies to All” – An Email Trap for the Unwary Attorney

Some traditional practices from the paper era don’t translate well to the world of e-communication. And some are downright dangerous. Back in the day, attorneys would often “bcc” their clients on correspondence to adversaries, an efficient and relatively safe means of keeping the client apprised. No longer in the age of email, where the ability to instantly respond invites quick, at times reactionary, replies that can easily fall into the wrong hands, with potentially devastating consequences.