Are Legal Holds Protected by Privilege? Insights from the FTC's Battle with Amazon

Curious about whether legal holds are protected by privilege? You won't want to miss this week's breakdown of a landmark decision in the Federal Trade Commission versus Amazon case. We explore the intricacies of Amazon's legal battle, where Judge John Chun tackles whether Amazon must produce document preservation notices and instructions about the use of ephemeral messaging applications like Signal. Join Kelly Twigger, an experienced attorney with 25 years in the field, as she dissects the FTC's motion to compel and Amazon's privilege objections, offering keen insights that are crucial for anyone navigating the complex world of eDiscovery.

This episode is packed with essential takeaways on how this ruling could influence your litigation strategy and risk mitigation practices. We highlight the potential ramifications of this antitrust case, coinciding with Amazon Prime Day, and what it teaches us about the broader implications for consumers, merchants, and your everyday eDiscovery obligations. Tune in for blunt, actionable insights that promise to keep legal professionals ahead of the curve, armed with the knowledge needed to tackle future challenges in electronic discovery with confidence.

FTC v. Amazon.com, Inc. (July 9, 2024)
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Chapters

• 0:22 Introduction
• 1:44 eDiscovery Case Law Discussion
• 8:28 Kelly's Key Takeaways

Transcript

Kelly Twigger: 0:13

Welcome to the Case of the Week podcast, where each week, we break down a recent decision in electronic discovery case law and talk about the practical impact for you and your clients and keep you up to date on your obligations with electronically stored information as evidence. If you're a litigator, legal professional or you love the power of ESI as much as I do, this is the place to be. I'm Kelly Twigger, the CEO and founder of eDiscovery Assistant and the principal at ESI Attorneys, with more than 25 years of experience navigating the evolving landscape of litigation and eDiscovery. I'm a practicing attorney, author, speaker, entrepreneur and now podcaster who works as a discovery strategist and expert for clients at ESI Attorneys and to provide that knowledge to all legal professionals through our e-discovery assistant platform. In each episode, we'll tackle a new decision in e-discovery case law and how it shapes both your litigation strategy and planning for risk mitigation. If you're ready for blunt, actionable insights that keep you ahead of the curve, and maybe a few laughs along the way, this is your go-to podcast. Subscribe or follow now to start embracing's episode of our Case of the Week series brought to you by eDiscovery Assistant. My name is Kelly Twigger. I am the CEO and founder at eDiscovery Assistant and the principal at ESI Attorneys. Ediscovery Assistant is your GPS for eDiscovery knowledge and education. Thanks so much for joining me today.

Kelly Twigger: 1:48

As you know, each week on Case of the Week I choose a recent decision in eDiscovery and talk to you about the practical implications of what that decision means for your practice, your clients, how you need to be proceeding on a daily basis in eDiscovery. This week's decision is a very short one, but very compelling in that it touches again on the issue of whether the legal holds that counsel send to custodians are privileged and under what circumstances that privilege can be circumvented and those holds will have to be produced. This is the second time that this has come up in case of the week in 2024, and we'll get into that. Our decision this week comes to us from the Federal Trade Commission versus Amazoncom. This is a case that's pending in the Western District of Washington and this is a decision from United States District Judge John Chun dated July 9, 2024. Judge Chun has 24 decisions in our e-discovery assistant database. A decision in our database, as you know, is tagged with our proprietary issue tagging structure assistant database. A decision in our database, as you know, is tagged with our proprietary issue tagging structure, and this week's issues include signal ephemeral data 30B6 corporate designee bulliation, legal hold, attorney-client privilege, attorney work product and failure to produce.

Kelly Twigger: 2:58

We are before the court on a matter that is brought by the FTC alleging that Amazon is a monopolist that uses a set of interlocking, anti-competitive and unfair strategies to illegally maintain its monopoly power. The FTC and its state attorney general partners say that Amazon's actions allow it to stop rivals and sellers from lowering prices, degrade quality for shoppers, overcharge sellers, stifle innovation and prevent rivals from fairly competing against Amazon. I hadn't really thought about it, but given that today is the first day of Amazon Prime, this case is fairly timely. This is an enormous antitrust case with sufficient significant implications for consumers and merchants who sell their products through Amazon. We are before the court today on the FTC's motion to compel the production of quote document, preservation notices and its instructions about the use of ephemeral messaging applications, including Signal. Close quote. Plaintiffs sought the documents as relevant to their assessment of defendants' potential spoliation from two ephemeral messaging applications, signal and Wicker. The FTC's RFPs sought quote. All litigation holds preservation notices or similar documents sent by Amazon in connection with the June 17, 2019 preservation letters. August 5, 2019. Voluntary access letter. February 20, 2020, civil investigative demand and or September 26, 2023, complaints in this matter. Close quote as well as instructions or advice given to employees about the use of ephemeral messaging, including, but not limited to, signal and Wicker.

Kelly Twigger: 4:40

Now, defendants objected to these requests as privileged and did not produce them. From a timeline perspective, think about the dates that I just gave you on the specific things that the FTC is requesting. They're saying to Amazon we know that you sent out notices as early as June 2019, again in August of 2019, again in February 2020, and again in September 2023, all of which were likely triggered by the duty to preserve information as a result of the FTC's investigation. Now, this case was not filed by the FTC until September 2023, but the FTC was working with Amazon on an investigation for four years prior to the filing of the complaint and, according to these requests for production asking for these legal hold notices, they want data that goes back as far as that early stages of that investigation in 2019. All right, so what is the court's analysis here? It's a pretty simple fact pattern.

Kelly Twigger: 5:37

The court began its analysis by agreeing that the documents that plaintiffs are asking for may be relevant to spoliation, but the court also acknowledged that black letter law that quote litigation hold notices are not discoverable, particularly when a party has made an adequate showing that the letters include material protected under the attorney client privilege or the attorney work product doctrine. Close quote showing of spoliation overcomes the protections against disclosure that might otherwise apply to document preservation notices and attorney-client privilege communications about litigation holds or spoliation. In response, the defendants made multiple arguments, but the court really latched on to one from the defendants, which asserted that the appropriate response in this situation is to order a 30B6 deposition of the party seeking the privilege. So in this case, the court the defendants are asking the court to order the FTC to take a 30B6 deposition of an Amazon employee, and the court then looked to similar cases in which courts have granted 30B6 depositions and testimony that then provided a sufficient basis for requiring production of the legal hold notices. So essentially, case law gives us a basis, in fact, for using the 30b6 notice as the next procedural step before compelling production of the preservation notices.

Kelly Twigger: 7:03

Now the plaintiffs came back and argued that they'd already sought corporate testimony on Amazon's preservation efforts, citing excerpts from testimony that was given by Amazon's corporate representative at an investigational hearing taken during the pre-complaint investigation and that an additional deposition would be fruitless. During that testimony, plaintiffs asked about the document preservation notices that Amazon had circulated, and Amazon's counsel stated that the witness had not viewed specific hold notices and that Amazon viewed those as privileged communications. So they'd already asked the question once and Amazon had refused to answer it. Now Amazon is saying well, ask us again. And the plaintiffs are saying what is the point of that? The court disagreed with plaintiffs and ordered Amazon to provide a 30B6 witness within 30 days and allowed plaintiff to ask about one when and to whom the litigation notices were given. Two, what kinds of categories of information and data defendant's employees were instructed to preserve and collect. And three, what specific actions they were instructed to take to that end. The court then permitted plaintiffs to renew their motion if the deposition did not provide the information necessary to analyze the full extent of the possible spoliation, and with that ruling, the court then denied the motion without prejudice. So we're essentially left with Amazon will now be required to provide a 30B6 witness who will be able to provide those three categories of information.

Kelly Twigger: 8:28

All right, what are our takeaways from this case? Well, we're seeing a lot more decisions this year in which parties are working to compel the production of legal holds documents that have been consistently protected as privilege. But, as we discussed in episode 138 on Case of the Week, which was the UberTex case, there are certain circumstances where the courts will order the production of information around the legal holds, ie information about the sources of ESI preserved, what sources of ESI preserved, when each source was preserved, when each ESI source was used, what each source was used for and the general types of information housed in each source. In the UberTex case, uber was also required to provide names and roles of folks who received the actual litigation hold, so very similar to the information that the court has ordered here. There's no information in this decision about what the alleged spoliation is to this point from the FTC, so we don't have a real basis to sort of think strategically about what's happening here. But given the subset of information in the request for production that they're asking for Signal and Wicker data, we can absolutely consider that those ephemeral messaging applications are likely the sources of that potential spoliation.

Kelly Twigger: 9:43

Now, in the case before us, the FTC wants the actual legal hold notices to know what Amazon told its custodians regarding the preservation of data from Signal or Wicker to ephemeral messaging applications. If you've read our 2023 annual case law report, we walked through how a user can change their settings in Signal to have messages auto-delete or become ephemeral. Signal can be an ephemeral messaging application, but its default settings are to keep messages on the device that they're sent from and to. Because of that, it's important to know what instructions, if any, amazon gave to its custodians about preservation of data for the application. Now as to Wicker, interestingly, amazon bought Wicker in 2021, stopped allowing new users on the app on December 31st 2022, and discontinued the use of Wicker on December 31st 2023.

Kelly Twigger: 10:37

Remember that the investigation from the FTC started in 2019, so two full years before Amazon bought Wicker. So the question of what data was retained for purposes of this litigation is important, especially when it appears that plaintiffs know that Wicker was used to communicate information that may be relevant to the litigation. The FTC again filed this case in September 2023, after those four years of investigation into Amazon's practices, during which time, according to news reports, they sought documents from more than 130 current and former Amazon employees. So pretty good bet that the FTC had a good source, good knowledge base of information of what was available and what sources were used to communicate as a result of that years-long investigation. Now, context here is key and it seems likely that we'll see a revisit of this foliation here, given the amount of evidence that the FTC already had prior to filing suit. It will be an interesting analysis in that it appears Amazon's duty to preserve Wicker will have arisen well before it shut the platform down in December of 2023.

Kelly Twigger: 11:42

Now, practically speaking, the key takeaway from this case is that the privileged protections of a legal hold may be overcome by a preliminary showing of spoliation. This analysis adds a level of complexity to how counsel leverage legal hold notices to communicate to custodians and liaisons for specific data sources. In my view, it really ratchets up the need for early and direct conversations with custodians and the liaisons of those data sources. The more we get into these complex data sources mobile devices, collaboration tools, things that are not our standard email that are kept forever and ever it's more important than ever to have those conversations early. A notice that's sent via email without a follow-up conversation following shortly thereafter that ensures that a custodian knows and fully understands their obligations, is really important, as well as the proactive collection of data in order to mitigate risk. So keep that in mind, as you're moving forward, that those legal hold notices now are being challenged more and more regularly. Yes, they are in these large MDL and significant litigations against technology companies, but that doesn't mean that the principles won't filter down into other litigation. So be aware of the potential prescription on the privilege of litigation holds if there is an allegation of spoliation to which those legal holds could become relevant, and be prepared to provide a 30B6 witness to answer the questions that are outlined both in the UberTax case and in this decision from FTC versus Amazon.

Kelly Twigger: 13:18

All right, that's our case of the week this week. Thanks so much to all of you who've been tuning in for the last few years to watch our series and we look forward to talking again on the 150th episode. Thanks, and have a great week. Thanks for joining me on the Case of the Week podcast. Tune in next episode as I discuss a new decision in the discovery case law and identify the issues you need to be paying attention to and how they can help you do better discovery for your clients and leverage the power of ESI. Be sure to subscribe and leave a review to help others discover the show and be kept in the know on all things electronic discovery. I'm Kelly Twigger. See you next time.