Court Case Update/Technology Updates
Court Case Updates
Creditors will not be able to use the theory of "deepening
insolvency" as a separate tort against lenders, for the reason that it
would be duplicative of other torts already established in Texas. In the case of
Official Committee of Unsecured Creditors of VarTec Telecom Inc., et al v.
Rural Telephone Finance Cooperative, pending before the Honorable Harlin D.
Hale, U.S. Bankruptcy Judge of Dallas, Judge Hale dismissed the Creditors
Committee’s deepening insolvency claim, but left its other claims pending
before the court. Judge Hale wrote "The willful and malicious lending of
money is not a tort in Texas and likely will not be recognized as one anytime
soon through a theory of deepening insolvency." The idea behind the theory
of "deepening insolvency" is that a defendant’s conduct fraudulently
prolonged a company’s life beyond insolvency, resulting in damage to the
company because of increasing debt.
Technology Updates
Confusion Reigns in the field of electronic data discovery ("EDD")
for 2006. There are now 300-500 vendors offering some form of EDD product or
service. These products and/or services may include search engines, archiving
tools, document management solutions, litigation support systems, just to name a
few. Some may offer licensed software, other sell EDD as a service.
The biggest issue facing firms when assessing their needs and looking to
implement EDD is "which part of the EDD process do we need to
address?" The confusion arises not just from which features to seek but how
to implement EDD. Whether to subcontract or license the software and do it
themselves. Other issues involve managing the costs of EDD. With the volume of
electronic data rising dramatically, clients have a powerful economic necessity
to reduce the amount of data to be processed and analyzed. The amendments to the
Federal Rules of Civil Procedure now give official standing to EDD in addition
to promulgating numerous rules regarding EDD. But even Rule 26(B)(2), which
stipulates date should be reasonably accessible, is unlikely to reduce volumes.
The top nine (9) popular EDD products are: Concordance, Summation, CaseMap,
Microsoft Access, Attenex, Encase, IConect, Introspect and LiveNote. However, no
single tool or service handles everything. Firms are usually left to piece
together multiple tools.
The search capabilities in most tools cover email and Microsoft Office file
formats and attachments. The more powerful tools also search relational
databases, images, instant messages, RSS fees, CAD/CAM files and more. However,
most firms are barely getting started with EDD basics.
With more and more plaintiffs starting to pursue electronic discovery issues,
most law firms and corporate legal departments are turning to outside companies
to help them manage and process portions of the data. Doing this can save time,
money and energy. However, it is important to establish a relationship with a
reliable vendor before taking on large cases. But, smaller cases that just
require looking through Microsoft Office, Word or Excel documents are easier to
handle in-house.
It is important to avoid disaster when dealing with EDD. In the case of Coleman
Parent Holdings, Inc. v. Morgan Stanley & Co., Inc., 2005 WL 674885,
Fla.Cir.Ct., March 23, 2005, Morgan Stanley, was fined millions of dollars for a
"willful and a gross abuse of its discovery obligations." The company
neglected to reveal and produce electronic discovery evidence, and the court
ruled that "many of these failings were done knowingly, deliberately, and
in bad faith." The cost of mismanaging electronic data can also be huge. In
the case of Laura Zubulake v. UBS Warburg LLC, et al, 217 F.R.D. 309, 312
(S.D.N.Y 2003), a New York jury awarded securities broker Laura Zubulake
$29-million in a sex discrimination suit after she claimed her employer, UBS,
failed to retain incriminating emails. In the Zubulake case, Judge
Scheindlin opined a "list of e-discovery action items," and other
points, including the new Federal Rules of Civil Procedure.
Legislative Updates
All current legislation is in committee and no committee is currently
meeting.
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