Electronic Discovery Institute Class 30: eDiscovery Challenges in Specific Practice Areas: Antitrust
Here's a continuation of my postings about the Electronic Discovery Institute's online e-discovery certification program, that you can subscribe to for just $1. I last blogged about this program on August 19, 2018. Go to https://www.lawinstitute.org/ to sign up for it.
The course entitled, eDiscovery Challenges in Specific Practice Areas: Antitrust, is taught by Robert Keeling, a partner with Sidley Austin; Dave Shonka, a partner with Redgrave LLP; and Rishi Chhatwal, a senior legal counsel for AT&T.
What is Antitrust?
Antitrust Law is a way for the government to act against anti-competitive and anti-consumer business practices.
Criminal vs. Civil vs. Regulatory Antitrust Criminal antitrust law is conduct based. Civil actions may be brought against companies or a whole industry. The regulatory filing is the merger notification filing under the Hart-Scott-Rodino Act.
Price fixing is an example of a particularly egregious and criminal activity. The focus is often on mergers and acquisitions and possible collusive conduct.
The Pre-Merger Notification Act was codified as part of the Clayton Act. The DOJ and the FTC must receive notices in advance of mergers. These government agencies may request data from the companies contemplating a merger. The companies cannot complete the merger until the agencies have decided if they want to challenge it.
The Merger Process
A HSR form is filed as part of pre-merger notification. The companies must describe why the merger is advantageous for them. The form is filed with both the DOJ and the FTC, which have 30 days to respond. They may choose to close their investigation, or issue a voluntary access letter or a second request subpoena which will request additional documentation about the merger. This request may take between 30 and 180 days.
Either the FTC or the DOJ may choose to pursue an investigation. The agencies may interview customers and competitors about the investigation.
Data Volumes in Antitrust eDiscovery
An antitrust case requires that a company's actions have an effect on competition in a market. Huge volumes of data may be reviewed. There will be a wide range of requests pursuant to the HSR Second Request. They are typically very broad and cut across departments. They will not just involve email or network data, but will also concern information from databases. Company databases are often designed for corporate reasons. They are not necessarily designed to facilitate the export of data.
Scope of Discovery in a Second Request vs. Civil Litigation The scope and length of a HSR second request varies greatly from those for discovery requests in civil litigation. The new FRCP rules limit discovery based on proportionality concerns. HSR second requests may be more burdensome. Whereas as in civil litigation discovery can last a year or more, in HSR second requests productions may have to be made in only 30 days.
Sales data, bid data, and customer data have to be collected and produced to the DOJ and FTC in forms which these agencies can review. In civil litigation, discovery deadlines are often extended. This is less likely in investigations conducted pursuant to antitrust law.
Useful Technologies for Antitrust eDiscovery The volume of data is usually so high that it necessitates the use of variety of tools. Data should be clustered into groups and email threading should be performed to avoid unnecessary review by contract attorneys of the same emails.
Technology Assisted Review is often employed in antitrust investigations. The DOJ and FTC are comfortable with the use of predictive coding. It allows companies to reduce the amount of data that they need to review.
Cross-Border eDiscovery in Antitrust Cases A U.S. based company may have relevant data on servers located in foreign countries. Sales data may have customer information that is covered by data privacy laws of the European Union. Blocking statutes and data privacy statues may prevent the transfer of data.
A multinational corporation may store data on cloud servers in several different locations. Structured data may be difficult to produce because it may contain a lot of personal data.
Early Case Assessment in Antitrust Cases
When responding to second requests, it's important to use ECA tools. A company must be able to quickly assess the type of data that it has, and see up front if there are any issues that needs to address. A company considering entering into a merger should use ECA tools to evaluate their potential exposure. It's important to quickly find harmful documents that may complicate the approval of data.
Challenges of DOJ & FTC Antitrust Requests The DOJ and FTC are very savvy about electronic discovery. They will understand the kind of data that is most helpful for their review. They will expect to receive instant messaging data and sales data. The DOJ antitrust division is particularly sophisticated. It employs experts in electronic discovery.
Model Second Request
The DOJ and FTC have posted model Second Requests on their web sites. Parties can use these guidelines to anticipate the types of requests that they will receive. The DOJ will typically ask for organizational charts and sales data over 2 or 3 years. The model is not specific to a particular industry. It is not necessarily a good idea to rely on the models. The guidelines limit the number of documents in any one volume to 100,000.
The Duty to Preserve in Antitrust Cases
The trigger for the duty to preserve is difficult to determine because most contemplated mergers never actually move forward Even for those mergers that do actually occur, second requests are often not necessary. It hard to identify which mergers will be executed and which of those will lead to an investigation. It's possible that after a HSR form is filed, a merger will be given early approval. It may not be necessary to preserve data until a second request is made. Best practices may be industry specific. The standard requirement for preservation is still when litigation is reasonably foreseeable.
Antitrust Case Law In re Intel Corp. Microprocessor Antitrust Litig, 258 F.R.D. 280 (D. Del. 2008) is a landmark case that addressed the preservation of data for antitrust cases. Intel did not turn off automatic systems for the deletion of data and did not have perfect compliance by custodians to data requests. Opposing counsel attempted to obtain Intel's custodial interviews and the court allowed the disclosure of certain information from these interviews.
It's important to determine who the key custodians are and that they follow instructions for the preservation of data. There should documentation to support the fact that the preservation takes place.
In re Delta/Airtran Baggage Fee Anti-Trust Litig., 770 F. Supp. 2d 1299 (N.D. Ga. 2011) addressed when preservation duties arose in response to a request from the government. Delta failed to pull data from back-up drives but the court declined to impose spoliation sanctions.
Preservation of Mobile Devices in Antitrust Cases Mobile devices present unique challenges. A company with a BYOD policy will not actually possess the devices from which data must be collected. Data may be accessed through apps which store data in the Cloud.
Private Antitrust Suits
After a government investigation has closed, a company may still face the threat of private litigation. Preservation may necessary until the statute of limitations has run. Private litigants may request all documents produced to the DOJ or FTC. Third parties who get requests in CIDs (civil investigation demands) may have data subject to these requests that will have to be preserved for future litigation.
A joint defense agreement may be advisable when two companies contemplating a merger have a unity of interest. Their counsel can share information and better prepare the defenses that need to be made. It's important to confirm that both companies' data support the new efficiencies expected by their mergers.
The Role of Service Providers in Antitrust Cases
Service providers can ensure that data is reviewed in an efficient manner and produced correctly. In an antitrust investigation the location of an ediscovery vendor may be an important consideration. It's important to be able to meet with vendors very quickly given the tight deadlines.
Production Format Requirements
Second requests are almost always accompanied with instructions for production and how the investigating agencies are to receive data. The agencies are usually prepared to discuss the format with the producing parties. Second request have production format requirements which can be burdensome for ediscovery vendors. It may be necessary to normalize time zones. The DOJ tends to be more reasonable than a private party would be.
The Burdens of Antitrust
An enormous amount of time must be invested by company employees to obtain data. The DOJ will have specific questions for individual custodians. The business of the company may have to be put on hold while the merger investigation takes place. For every day that a merger investigation is not completed, the savings from the efficiencies that a merger will create are postponed.