By Alan J. Bozer and Erin C. Borek, originally published in The Daily Record on Wednesday, November 8, 2017.
White Collar Corner
Hold the phone: the duty to preserve cellular phone data
With the proliferation and technological advances of cellular phones, the role of these devices in the workplace has evolved at a rapid pace. While five years ago it was common for employers to provide employees with a “work phone,” now many companies instead offer to pay part or all of their employees’ data plans, leaving the employees to buy personal phones that can be used for work (otherwise known as “Bring Your Own Device” or BYOD).
A question arises, however, as to whether an employee’s personal device is subject to subpoenas and litigation holds directed to his employer. Can a subpoena issued from the government naming the employer and requesting all electronically stored information (ESI) concerning a subject matter reach the work-related contents of an employee’s personal cellular phone? Is an employee’s personal cellular phone subject to a litigation hold so that the employee must continuously backup (and not delete) data on his phones in case it could be related to reasonably foreseeable litigation?
Practically speaking, this issue mainly arises with text messages and voicemails because it is likely that if an employee’s personal cellular phone is linked to his employer’s email server, the employer’s backup protocol retains those emails without the need of a separate backup of the phone.
While it seems easy enough to argue that an employer does not have “possession, cus- tody, or control” over an employee’s personal cellular phone under Federal Rule of Civil Procedure 34, employees in today’s world typically only have personally owned cellular phones and use, if not depend on, those devices to conduct business. Thus, courts are split on whether or not text messages, voicemails and other data stored on employee-owned devices that are used for company business are within the “control” of the company such that the work-related data on employees’ personal phones are subject to litigation holds or a subpoenas.
For example, in Alter v. Rocky Point School District, the plaintiff moved to compel discovery and for sanctions arguing that her former employer, a school district, had failed to preserve ESI and to issue a litigation hold to certain “key players.” No. 13-1100, 2014 WL 4966119, at *1 (E.D.N.Y. Sept. 30, 2014). In granting in part plaintiff’s motion, the court held that the employer was obliged to preserve work-related ESI on employees’ personal devices, stating “to the extent that the School District employees had documents related to this matter, the information should have been preserved on whatever devices contained the information (e.g., laptops, cellphones, and any personal digital devices capable of ESI storage).” Id. at *10.
The court in In re Pradaxa (Dabigatran Etexilate) Products Liability Litigation, a multi-district litigation, took a very hard stance on the obligation of employers to preserve and to produce data on employees’ personal devices. The court granted the Plaintiffs’ Steering Committee’s (PSC) motion for sanctions for various discovery abuses, including for the defendants’ failure to preserve and produce text messages stored on employees’ personally owned cellular phones. See In re Pradaxa (Dabigatran Etexilate) Prod. Liab. Litig., No. 3:12-md-02385-DRH-SCW, 2013 WL 6486921, at *16-18 (S.D. Ill. Dec. 9, 2013), rescinded in part sub nom. In re Petition of Boehringer Ingelheim Pharm., Inc., & Boehringer Ingelheim Int’l GmbH, in Pradaxa (Dabigatran Etexilate) Prod. Liab. Litig., 745 F.3d 216 (7th Cir. 2014).
The defendants provided several excuses for their shortcomings, including claiming they were not initially aware that employees used texting for business, and pointing to a company policy prohibiting substantive text messaging with physicians. Id. at *16, *18. The defendants admitted, however, that “some employees use their personal cellular phones while on business and utilize the texting feature of those phones for business purposes.” Id. at *18. The court found that the defendants were obliged to preserve and to produce all text messages related to the litigation, whether on company owned or personally owned phones, because “[t] he litigation hold and the requirement to produce relevant text messages, without question, applies to that space on employees cell phones dedicated to the business which is relevant to this litigation.” Id.
The court further found that the PSC was “not required to simply accept as true the assumption that all employees followed the ‘no substantive communications with physicians’ policy.” Id. The court went on to state that “[a]ny employee who refuses … to turn over his or her phone for the examination of the relevant space on that phone will be subject to a show cause order of this Court to appear personally in order to demonstrate why he or she should not be held in contempt of Court.” Id.
Other courts have taken a contrary view, holding that employers do not have “possession, custody, or control” over personally owned phones and therefore, are not obligated to preserve data stored on such devices. For example, in Cotton v. Costco Wholesale Corp., the court denied plaintiff’s request for text messages sent or received by two of his former co-employees, explaining that “[d]ocuments are deemed to be within the possession, custody, or control if the party has actual possession, custody, or control or has the legal right to obtain the documents on demand.” No. 12-2731, 2013 WL 3819974, at *6 (D. Kan. July 24, 2013) (citation omitted). Because the plaintiff did not contend that the employer issued the cellular phones to the employees, that the employees used the cellular phones for any work-related purposes, or that the employer had a legal right to obtain the text messages, “it appear[ed] to the court that [the employer] does not likely have within its possession, custody, or control text messages sent or received by these individuals on their personal cell phones.” Id.
Similarly, but in the context of personal email, in Matthew Enterprise., Inc. v. Chrysler Group. LLC, the defendant moved to com- pel the plaintiff to produce emails from the personal accounts of plaintiff’s employees. No. 13-cv-04236-BLF, 2015 WL 8482256, at *3 (N.D. Cal. Dec. 10, 2015). In this case, the plaintiff did not furnish employees with email accounts so many of them used their personal accounts for business purposes. Id. In denying the request, the court found that for a party to have control over data, it must have the “legal right to obtain documents upon demand.” Id. (citations omitted). Thus, “[d] ocuments are not discoverable under Rule 34 if the entity that holds them ‘could legally — and without breaching any contract — continue to refuse to turn over such documents.’” Id. (citation omitted). Because the defendant had not identified any authority under which the plaintiff could force employees to turn over emails in their personal accounts, the court denied the motion to compel. Id. at *4
Given the uncertainty of whether or not cellular phones and personal devices are subject to subpoenas and litigation holds, the best steps for an employer to take now to avoid struggling with these issues in the future is to implement a personal device policy whereby employees cannot send texts or make phone calls for company business on their personal devices. While the court in In re Pradaxa did not accept that type of a policy as a shield against discovery demands, it may help provide the employer with more solid ground in objecting to a request to retrieve data stored on its employees’ personal devices.
Alan J. Bozer is a partner with Phillips Lytle LLP and is chair of the firm’s White Collar Criminal Defense and Government Investigations Practice Team. He is active in trying criminal and civil cases, and handles appellate and arbitration work as well. He can be reached at firstname.lastname@example.org or (716) 504-5700.
Erin. C. Borek is an attorney with Phillips Lytle LLP where she focuses her practice on White Collar Criminal Defense & Government Investigations as well as Business Litigation. She can be reached at (716) 847-7048 or email@example.com.