Search Articles By Category or Keyword

Magistrate Judge Rules on ESI Disputes in Twitter Securities Class Action

Posted on May 14th, 2018

Follow us on Facebook for regular blog updates

In Shenwick v. Twitter, Inc., No. 16-cv-05314-IST, (N.D. California, Feb. 7, 2018), a securities class action filed on behalf of certain persons who bought or acquired common stock of Twitter, Inc. (“Twitter”) in 2015, the magistrate judge resolved several ESI-related discovery disputes.

First, the parties disagreed regarding the scope of custodians. The parties agreed that Defendant would search and collect records from 25 custodians but disputed whether Defendant needed to include Jack Dorsey (“Dorsey”), a co-founder of Twitter, as an additional custodian. Defendants refused, stating that the 25 agreed-upon custodians would have all the relevant documents, and that it is unlikely that Dorsey will have any additional documents.  The Court did not agree, finding that Dorsey’s involvement in the decisions at hand was not limited. To the contrary, Dorsey was the Chair of the Board of Directors during the Class Period and became CEO during the Class Period; Dorsey also notified the public of the true state of affairs of Twitter’s metrics.  Accordingly, Defendant must include him as a custodian.

Second, Plaintiffs request that Defendant searches the Twitter direct messages that each custodian sent and received; direct messaging is a private form of messaging available through the Twitter platform.  Defendants agree to provide the direct messages for the two named Defendants but refuse to provide them for the other custodians, arguing that the Stored Communications Act (“SCA”) prevents disclosure of direct messages from anyone other than a named individual defendant. The Court agreed, noting that the parties did not contest that these were private communications falling under the SCA’s Remote Computing Services (“RCS”) rubric.  Because courts are prevented from enforcing a subpoena issued to a third party, the court extrapolates that it similarly cannot force production from the individual custodians (who are not named as parties to the suit).  For purposes of the analysis, the court treated Twitter as separate from the individuals and concludes that it cannot compel production from the non-party individuals (and the fact that Twitter provides the direct messaging service has no bearing on the analysis).

Third, the court considered whether litigation hold memoranda, prepared by counsel and directed to counsel’s client, were protected from production by the attorney client privilege. The court agreed with Defendant, holding that the actual memoranda were protected by attorney client privilege, although noted that Plaintiff could seek discovery regarding the actions taken by the employees who receiving the memoranda, including seeking to depose the person most knowledge regarding retention of ESI and the collection efforts undertaken.

Tagged with:

Leave a Reply

Your email address will not be published. Required fields are marked *