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Federal Judge Issues Rare Default Judgment for Discovery Abuses Involving Chat Collaboration Tools

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September 13, 2022

UnitedLex Forensic and Data Experts Surface “Smoking Gun” in Trading Algorithm Theft Case

UnitedLex, a leading data and professional services company for legal, was instrumental in landing a significant court victory that reinforces the growing importance of digital forensic expertise in meeting discovery obligations when exporting and producing chat communications from popular messaging apps such as Slack, iMessage and Microsoft Teams.

Last week, Senior U.S. District Court Judge Mark L. Wolf entered a default judgment against the defendants and granted a second motion for sanctions in Red Wolf Energy Trading, LLC v. Jylkka, et al., C.A. No. 19-10119-MLW (D. Mass. Sept. 8, 2022). For litigants and their counsel, this case is a cautionary tale about the dangers of defying discovery obligations and court orders concerning the production of documents.

Despite repeated court orders and sanctions, the defendants failed to produce critical digital evidence, and in August 2022, the court ordered defendants to provide the plaintiff with a copy of a 2019 Slack Archive. Forensic analysis by UnitedLex revealed significant production deficiencies along with the proverbial “smoking gun”: a Slack exchange in which the defendants discussed how to create an algorithm derived from the plaintiff’s intellectual property. These findings served as a deciding factor in the judgment.

“The Court only allowed us five days to retain a forensic expert, analyze the Slack archive and file an Affidavit documenting the expert’s findings,” noted John Sten, Armstrong Teasdale Partner and Boston Office Managing Attorney, and Red Wolf’s counsel. “It was during this forensic analysis that UnitedLex expeditiously found evidence of repeated failures to produce required documents. These findings, together with their expert testimony, were pivotal to vindicating our client's position.”

According to Law.com, corporate communications are evolving at record speed with collaborative chat platforms, such as Slack and Teams, replacing email today. The proliferation of these platforms as a legitimate business tool has created new realities for e-discovery professionals, as evidenced by this case.

“This win highlights our successful collaboration with Armstrong Teasdale to secure a rare ruling from the bench,” said Colleen Freeman, Esq., CEDS, Senior Director, Litigation & Investigations at UnitedLex. “The exceptional lawyering by the firm combined with our expert consulting and forensic detection uncovered crucial hidden evidence resulting in a major legal victory for Red Wolf.”

“Meeting discovery obligations as they relate to emerging data sources like chat collaboration tools is now table stakes,” noted Derek Duarte, Esq., Senior Vice President, Litigation & Investigations at UnitedLex, and who provided expert testimony in the case. “Partnering with a credentialed EDI provider with in-house expertise in digital platforms and leveraging proper ESI protocols in litigation can make the difference between winning and losing.”

About UnitedLex

UnitedLex is a data and professional services company delivering outcomes that create value and competitive advantage for legal and the business. Founded in 2006 with a mission to push the boundaries of legal innovation, we provide solutions that enable measurable performance improvement, risk mitigation, revenue gain, cost reduction and digital business synergy. Our footprint spans 25 jurisdictions with major operation centers in 19 countries and a team of 3,000+ legal, data and technology professionals around the world.