Crary Buchanan shows support for Lyric’s Discovery Series

Partner Jim Bowdish showed the firm’s leadership in promoting arts and education at a recent performance of “Strega Nona: The Musical” at the Lyric Theatre.

Through a $25,000 grant, Crary Buchanan has a top role in the Lyric’s Arts and Education Program, which includes the presenting company’s Discovery series, artists-in-residence series and family programs.

As a marquee sponsor, Crary Buchanan is underwriting part of the cost of programming that gives Martin County students a superior education, plus performances for family audiences.

“Strega Nona: The Musical” is a fusion of three of Tomie dePaola’s children’s books: “Strega Nona,” “Strega Nona Her Story” and “Big Anthony and the Magic Ring.” The live theatrical performance is family fare and ideal for children ages four to nine.

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What Facebook and Twitter know can hurt your injury claim

If you’re wondering whether what you post online can affect your injury claim, read this article from the American Association for Justice. It’s reprinted here with permission from the association.

Is your client an online social butterfly?

By Karen Barth Menzies and Wesley K. Polischuk

Defense lawyers view online social networks like Facebook and Twitter as breeding grounds for damaging discoverable information. What you don’t know about how courts are shaping discovery of ‘wall’ postings, instant messages, and ‘tweets’ could be your client’s downfall.

Nearly everyone knows by now about these online social networking (OSN) sites. Each day, more and more people—including many of your clients, no doubt—are using these virtual confession booths to share information about all aspects of their lives. This presents a problem for litigators like you as you try to manage the universe of discoverable information in your clients’ cases.

In June 1995, about 15 percent of Americans used the Internet. By April 2009, that number had skyrocketed to almost 80 percent.1 Most adult Internet users go online almost every day.2

The share of adult Internet users who have a profile on an OSN site has more than quadrupled in the past four years, and older people are signing on in increasing numbers.

A 2009 finding that 75 percent of people age 18 to 24 have an OSN profile was not surprising, but that study also revealed that about a third of adults age 35 to 44 are active on OSNs, 19 percent of people age 45 to 54 have profiles, and 10 percent of people between the ages of 55 to 64 do too.3
These numbers translate to a concerning conclusion—the idea that OSN users are all 20-somethings is wrong. Your 25-year-old client with the car accident case probably has a Facebook account, but your 64-year-old client with the pharmacy negligence case might be twittering away in her free time too.

These numbers also mean that a great deal of potentially discoverable personal information about your clients is moving at high speed throughout the far reaches of cyberspace. The scary part is, this information can be uncovered with just the click of a button, without interrogatories or motions to compel.

OSN users can interact and share information in many ways: through chat, messaging, e-mail, video, file-sharing, blogging, discussion groups, and more.4

Facebook, which became host to a staggering 500 million active users last July, allows people to create a profile that contains information such as their birthday, hometown, relationship status, sexual orientation, e-mail address, current city, education and work, activities, interests, and favorite Web sites.5

Once users have created a profile, they can “friend” other users, post messages on their own profile “wall,” post messages on other users’ walls, and post pictures.

New developments in the law concerning the discoverability of OSN information have forced plaintiff lawyers to approach the issue with caution.6 You must keep up to date on these topics to limit what defense counsel can learn about your clients and key witnesses.7

Public v. private

Most OSN sites allow users to determine who can view their information and what information can be viewed. For example, Facebook users can manage the level of privacy on their profiles by either letting anyone view the information or limiting access to specific people, like “friends” or “friends of friends.”8

MySpace and Twitter warn in their user agreements that they may have to share user information to comply with the law, while Facebook states that it may share information should it be asked to do so pursuant to a subpoena.

Earlier this year, Facebook came under fire for changes in its privacy policy and the use of users’ personal data on third-party Web sites. The issue landed Facebook in hot water in Washington; in April, four Democratic senators called on the company to reconsider the latest changes in the settings and asked the Federal Trade Commission (FTC) to streamline guidelines regarding privacy on all social networks.9

Soon after, 15 online privacy groups filed a joint FTC complaint claiming Facebook had engaged in “unfair and deceptive trade practices.”10

Much of the criticism targeted a change in the way Facebook allows other Web sites to obtain information about its members.11 Members’ personal information—such as where they work, what music they like, and where they went to school—were made available, without notice, to companies that have a special relationship with Facebook.12

Facebook responded to this criticism by changing its permission settings so that companies are only able to access the public parts of profiles by default. If a company wants to access private information, it must obtain permission from the OSN user.13

Even when OSN sites don’t change their privacy policies, users can unwittingly reveal virtual bankers’ boxes of information about themselves through their online activity. Courts have begun looking at the discoverability of this information.

Although OSNs do not guarantee complete privacy regardless of the privacy settings, the act of making a profile “private” should suggest that a user does not intend to give up his or her right to privacy by posting information online.

Yet several decisions suggest that particularized relevance will outweigh privacy interests when it comes to OSN profile content.
One example is Ledbetter v. Walmart Stores, Inc. In that case, several electricians sued Walmart for work-related injuries.14 One of the electricians’ spouses brought a claim for loss of consortium.

Walmart sent subpoenas to Facebook, MySpace, and Meetup.com for information about the plaintiffs. The court denied the plaintiffs’ motion for a protective order based on physician-patient and spousal privileges, finding that the plaintiffs had waived the privileges by filing the lawsuit. The court found that the information sought was relevant and reasonably calculated to lead to the discovery of admissible evidence.

Similarly, in the consolidated cases of Beye v. Horizon15 and Foley v. Horizon,16 which involved an insurer refusing to pay health benefits for the plaintiffs’ children’s eating disorders, the court ordered the plaintiffs to turn over the children’s messages on OSN sites concerning their disorders.

In justifying discovery of this information, the defendants successfully argued that the children’s OSN messages would show that their eating disorders were due to emotional causes and were therefore not the insurer’s responsibility, since New Jersey law required coverage only for biological mental illness.17

Courts’ willingness to allow defendants access to plaintiffs’ OSN information is further reflected in Bass ex rel. Bass v. Miss Porter’s School. In that case, the defendants sought documents that were “related to [the plaintiff’s] alleged teasing and taunting through ‘text messages’ and ‘on Facebook.’”18

After performing an in camera review of the Facebook documents, the court stated that the plaintiff’s Facebook usage depicted a snapshot of the user’s relationships and state of mind at the time of the content’s posting.

Therefore, relevance of the content of the plaintiff’s Facebook usage as to both liability and damages in this case is more in the eye of the beholder than subject to strict legal demarcations, and production should not be limited to plaintiff’s own determination of what may be “reasonably calculated to lead to the discovery of admissible evidence.”19

In T.V. v. Union Township Board of Education, a student was sexually assaulted by another student and filed suit, claiming emotional distress damages. The school board sought access to the assault victim’s OSN profile to determine whether it confirmed or contradicted the emotional distress claim.20

The court held that the student’s privacy prevailed because the school board failed to make a particularized showing that the information sought was relevant, although the court left open the possibility of disclosure of the information if ongoing discovery provided an appropriate basis.

Courts also may view the act of posting information online as an acknowledgment that the information is not private. One example of this is Moreno v. Hanford Sentinel, Inc.21

In that case, the court addressed whether an individual could sue for invasion of privacy and intentional infliction of emotional distress when a newspaper published negative comments that she made on her MySpace page about her hometown. She alleged that the newspaper’s actions resulted in threats of physical violence toward her family that ultimately forced her father out of business.

The court of appeal affirmed the trial court’s dismissal of the invasion of privacy claim. In doing so, the court stated, “The facts contained in the article were not private. Rather, once posted on MySpace.com, this article was available to anyone with Internet access.”22

The court added, “[T]he fact that [the plaintiff] expected a limited audience does not change the above analysis. By posting the article on MySpace.com, [the plaintiff] opened the article to the public at large. Her potential audience was vast.”23

Although Moreno did not concern the discoverability of OSN profile information, it supports the view that the act of posting information on an OSN that can be seen by others, even if the information is restricted, undercuts the expectation of privacy. Such reasoning is consistent with Facebook’s privacy policy, which makes it clear that even if a user posts information on a private profile, that will not preclude a user’s “friend” from reposting the information elsewhere in cyberspace or prevent the information from showing up on another user’s OSN profile.24 If a user has minimal privacy protection or none, a court may be more inclined to grant a motion to compel the production of OSN profile data.

New direction?

A recent federal district court case in California is worth noting. Judge Margaret Morrow of the U.S. District Court for the Central District of California applied the Stored Communications Act (SCA) in Crispin v. Christian Audigier, Inc., to find that private Facebook and MySpace communications couldn’t be subpoenaed for use in civil lawsuits.25

The defendants had served subpoenas duces tecum on several third-party businesses, including Facebook and MySpace, and the plaintiff moved to quash them, citing the SCA.26

The court found that because OSNs qualify as electronic communication services (ECS) and remote computing services (RCS) under the SCA, they are barred from divulging private communications, like electronic messages, to certain parties.

Acknowledging that the act was passed in 1986, before the advent of the Web, Morrow nevertheless determined that an OSN could be characterized as an ECS because it provides users “the ability to send or receive wire or electronic communications” and as an RCS because it offers message storage services.

With respect to private messages, Morrow determined that “those forms of communications media are inherently private such that stored messages are not readily accessible to the general public.”27

With respect to wall postings and comments, the court stated that the discoverability of the information depends on the privacy settings of the OSN user and the extent of access allowed to the postings and comments. Interestingly, the court noted that the number of users who can view the stored message has no legal significance.

Although the decision is not binding on other courts, it is an important ruling regarding the discoverability of electronic communications, and it provides a conduit between the outdated SCA and today’s ever-changing technology.
Given the Crispin decision, plaintiffs may have a better chance warding off the volley of discovery requests for OSN information from defendants. But given the evolving technology landscape, it is still necessary to have an informed client when it comes to OSN use.

To protect your clients, tell them about the pitfalls of OSNs as soon as you accept representation. They must understand that social networking sites have the potential to do great harm to a case. Explain to them that although the courts are not entirely clear on the issue of discovery of OSN information, it is likely that the defendants will try to review every page of a plaintiff’s social networking site.

Online social networking is a fast-paced, ever-changing environment, and courts are struggling to keep pace. You must too. By staying aware of current trends and legal developments, you can minimize the disclosure of information that could cause harm to your clients and their cases.

Karen Barth Menzies is a partner in the law firm of Robinson, Calcagnie & Robinson in Newport Beach, California. She can be reached at kbmenzies@rcrlaw.net. Wesley K. Polischuk is an associate in the firm and can be reached at wpolischuk@rcrlaw.net.

Reprinted with permission of TRIAL (October 2010)

Copyright American Association for Justice, formerly Association of Trial Lawyers of America (ATLA®)

Notes

1. Pew Internet & Am. Life Project, Trend Data—Internet Adoption, www.pewinternet.org/Static-Pages/Trend-Data/Internet-Adoption.aspx.

2. Pew Internet & Am. Life Project, Trend Data—Online Activities, Daily, www.pewinternet.org/Trend-Data/Online-Activities-Daily.aspx.

3. Amanda Lenhart, Pew Internet & Am. Life Project, Adults and Social Network Websites (Jan. 14, 2009), www.pewinternet.org/Reports/2009/Adults-and-Social-Network-Websites.aspx?r=1.

4. Wikipedia, Social Network Service, http://en.wikipedia.org/wiki/Social_network_service.

5. Julianne Pepitone, Facebook Hits 500 Million Users, CNNMoney.com (July 21, 2010), www.money.cnn.com/2010/07/21/technology/facebook_500_million/index.htm.

6. See Karen Barth Menzies, Perils and Possibilities of Online Social Networks, Trial 58 (July 2008), www.justice.org/cps/rde/xchg/justice/hs.xsl/2091.htm.

7. Not only can an OSN profile reveal information about a client; it also can reveal potentially harmful information about you. Judge Susan Criss, a Facebooking member of the bench from Galveston, Texas, has used Facebook to monitor some of the attorneys appearing before her. She even caught a lawyer lying about why she needed a continuance—the lawyer stated that she needed additional time to mourn the death of her father, but her status updates on Facebook told a different story. Molly McDonough, Facebooking Judge Catches Lawyer in Lie, Sees Ethical Breaches, ABA J. (July 31, 2009), www.abajournal.com/news/facebooking_judge_catches_
lawyers_in_lies_crossing_ethical_lines_abachicago
.

8. Facebook Privacy Policy (last revised Apr. 22, 2010), www.facebook.com/policy.php.

9. Eric Kuhn, Senators Urge Facebook to Change Privacy Settings (Apr. 27, 2010), www.cnn.com/2010/POLITICS/04/27/senators.facebook/index.html.

10. Daniel Lyons, The High Price of Facebook, You Pay For It with Your Privacy, Newsweek (May 15, 2010), www.newsweek.com/2010/05/15/the-high-price-of-facebook.html.

11. John D. Sutter, Facebook Launches New Security Feature (May 25, 2010), www.cnn.com/2010/TECH/05/14/facebook.security.privacy/index.html.

12. Lyons, supra n. 10.

13. Geoffrey A. Fowler, Facebook Changes App Permissions, But Critics Say It’s Not Enough, Wall St. J. Digits Blog (June 30, 2010), http://blogs.wsj.com/digits/2010/06/30/facebook-changes-
app-permissions-but-critics-say-its-not-enough
.

14. 2009 WL 1067018 (D. Colo. Apr. 21, 2009).

15. No. 06-Civ.-5337 (D.N.J. filed Nov. 8, 2006).

16. No. 06-Civ.-6219 (D.N.J. filed Dec. 26, 2006).

17. Mary Pat Gallagher, MySpace, Facebook Pages Called Key to Dispute over Insurance Coverage for Eating Disorders, Law.com (Feb. 1, 2008), www.law.com/jsp/law/LawArticleFriendly.jsp?id=900005559933.

18. 2009 WL 3724968 at *1 (D. Conn. Oct. 27, 2009).

19. Id.

20. No. UNN-L-4479-04 (N.J. Super. filed Dec. 22, 2004).

21. 91 Cal. Rptr. 3d 858 (Cal. App. 2009).

22. Id. at 861.

23. Id. at 863.

24. Facebook Privacy Policy, supra n. 8.

25. No. 2:09-cv-09509 (C.D. Cal. filed Dec. 29, 2009).

26. Or. Granting Pl.’s Mot. Rev. of Mag. J.’s Dec. Re: Pl.’s Mot. to Quash Subp., 2010 WL 2293238 (May 26, 2010).

27. Id. at 16.

<!–[if !mso]> <! st1\:*{behavior:url(#ieooui) } –>

Is your client an online social butterfly?

Karen Barth Menzies and Wesley K. Polischuk

Defense lawyers view online social networks like Facebook and Twitter as breeding grounds for damaging discoverable information. What you don’t know about how courts are shaping discovery of ‘wall’ postings, instant messages, and ‘tweets’ could be your client’s downfall.

Nearly everyone knows by now about these online social networking (OSN) sites. Each day, more and more people—including many of your clients, no doubt—are using these virtual confession booths to share information about all aspects of their lives. This presents a problem for litigators like you as you try to manage the universe of discoverable information in your clients’ cases.

In June 1995, about 15 percent of Americans used the Internet. By April 2009, that number had skyrocketed to almost 80 percent.1 Most adult Internet users go online almost every day.2

The share of adult Internet users who have a profile on an OSN site has more than quadrupled in the past four years, and older people are signing on in increasing numbers. A 2009 finding that 75 percent of people age 18 to 24 have an OSN profile was not surprising, but that study also revealed that about a third of adults age 35 to 44 are active on OSNs, 19 percent of people age 45 to 54 have profiles, and 10 percent of people between the ages of 55 to 64 do too.3

These numbers translate to a concerning conclusion—the idea that OSN users are all 20-somethings is wrong. Your 25-year-old client with the car accident case probably has a Facebook account, but your 64-year-old client with the pharmacy negligence case might be twittering away in her free time too.

These numbers also mean that a great deal of potentially discoverable personal information about your clients is moving at high speed throughout the far reaches of cyberspace. The scary part is, this information can be uncovered with just the click of a button, without interrogatories or motions to compel.

OSN users can interact and share information in many ways: through chat, messaging, e-mail, video, file-sharing, blogging, discussion groups, and more.4 Facebook, which became host to a staggering 500 million active users last July, allows people to create a profile that contains information such as their birthday, hometown, relationship status, sexual orientation, e-mail address, current city, education and work, activities, interests, and favorite Web sites.5 Once users have created a profile, they can “friend” other users, post messages on their own profile “wall,” post messages on other users’ walls, and post pictures.

New developments in the law concerning the discoverability of OSN information have forced plaintiff lawyers to approach the issue with caution.6 You must keep up to date on these topics to limit what defense counsel can learn about your clients and key witnesses.7

Public v. private

Most OSN sites allow users to determine who can view their information and what information can be viewed. For example, Facebook users can manage the level of privacy on their profiles by either letting anyone view the information or limiting access to specific people, like “friends” or “friends of friends.”8 MySpace and Twitter warn in their user agreements that they may have to share user information to comply with the law, while Facebook states that it may share information should it be asked to do so pursuant to a subpoena.

Earlier this year, Facebook came under fire for changes in its privacy policy and the use of users’ personal data on third-party Web sites. The issue landed Facebook in hot water in Washington; in April, four Democratic senators called on the company to reconsider the latest changes in the settings and asked the Federal Trade Commission (FTC) to streamline guidelines regarding privacy on all social networks.9 Soon after, 15 online privacy groups filed a joint FTC complaint claiming Facebook had engaged in “unfair and deceptive trade practices.”10

Much of the criticism targeted a change in the way Facebook allows other Web sites to obtain information about its members.11 Members’ personal information—such as where they work, what music they like, and where they went to school—were made available, without notice, to companies that have a special relationship with Facebook.12

Facebook responded to this criticism by changing its permission settings so that companies are only able to access the public parts of profiles by default. If a company wants to access private information, it must obtain permission from the OSN user.13

Even when OSN sites don’t change their privacy policies, users can unwittingly reveal virtual bankers’ boxes of information about themselves through their online activity. Courts have begun looking at the discoverability of this information.

Although OSNs do not guarantee complete privacy regardless of the privacy settings, the act of making a profile “private” should suggest that a user does not intend to give up his or her right to privacy by posting information online. Yet several decisions suggest that particularized relevance will outweigh privacy interests when it comes to OSN profile content.

One example is Ledbetter v. Walmart Stores, Inc. In that case, several electricians sued Walmart for work-related injuries.14 One of the electricians’ spouses brought a claim for loss of consortium.

Walmart sent subpoenas to Facebook, MySpace, and Meetup.com for information about the plaintiffs. The court denied the plaintiffs’ motion for a protective order based on physician-patient and spousal privileges, finding that the plaintiffs had waived the privileges by filing the lawsuit. The court found that the information sought was relevant and reasonably calculated to lead to the discovery of admissible evidence.

Similarly, in the consolidated cases of Beye v. Horizon15 and Foley v. Horizon,16 which involved an insurer refusing to pay health benefits for the plaintiffs’ children’s eating disorders, the court ordered the plaintiffs to turn over the children’s messages on OSN sites concerning their disorders. In justifying discovery of this information, the defendants successfully argued that the children’s OSN messages would show that their eating disorders were due to emotional causes and were therefore not the insurer’s responsibility, since New Jersey law required coverage only for biological mental illness.17

Courts’ willingness to allow defendants access to plaintiffs’ OSN information is further reflected in Bass ex rel. Bass v. Miss Porter’s School. In that case, the defendants sought documents that were “related to [the plaintiff’s] alleged teasing and taunting through ‘text messages’ and ‘on Facebook.’”18 After performing an in camera review of the Facebook documents, the court stated that the plaintiff’s Facebook usage depicted a snapshot of the user’s relationships and state of mind at the time of the content’s posting. Therefore, relevance of the content of the plaintiff’s

Facebook usage as to both liability and damages in this case is more in the eye of the beholder than subject to strict legal demarcations, and production should not be limited to plaintiff’s own determination of what may be “reasonably calculated to lead to the discovery of admissible evidence.”19

In T.V. v. Union Township Board of Education, a student was sexually assaulted by another student and filed suit, claiming emotional distress damages. The school board sought access to the assault victim’s OSN profile to determine whether it confirmed or contradicted the emotional distress claim.20 The court held that the student’s privacy prevailed because the school board failed to make a particularized showing that the information sought was relevant, although the court left open the possibility of disclosure of the information if ongoing discovery provided an appropriate basis.

Courts also may view the act of posting information online as an acknowledgment that the information is not private. One example of this is Moreno v. Hanford Sentinel, Inc.21 In that case, the court addressed whether an individual could sue for invasion of privacy and intentional infliction of emotional distress when a newspaper published negative comments that she made on her MySpace page about her hometown. She alleged that the newspaper’s actions resulted in threats of physical violence toward her family that ultimately forced her father out of business.

The court of appeal affirmed the trial court’s dismissal of the invasion of privacy claim. In doing so, the court stated, “The facts contained in the article were not private. Rather, once posted on MySpace.com, this article was available to anyone with Internet access.”22 The court added, “[T]he fact that [the plaintiff] expected a limited audience does not change the above analysis. By posting the article on MySpace.com, [the plaintiff] opened the article to the public at large. Her potential audience was vast.”23

Although Moreno did not concern the discoverability of OSN profile information, it supports the view that the act of posting information on an OSN that can be seen by others, even if the information is restricted, undercuts the expectation of privacy. Such reasoning is consistent with Facebook’s privacy policy, which makes it clear that even if a user posts information on a private profile, that will not preclude a user’s “friend” from reposting the information elsewhere in cyberspace or prevent the information from showing up on another user’s OSN profile.24 If a user has minimal privacy protection or none, a court may be more inclined to grant a motion to compel the production of OSN profile data.

New direction?

A recent federal district court case in California is worth noting. Judge Margaret Morrow of the U.S. District Court for the Central District of California applied the Stored Communications Act (SCA) in Crispin v. Christian Audigier, Inc., to find that private Facebook and MySpace communications couldn’t be subpoenaed for use in civil lawsuits.25

The defendants had served subpoenas duces tecum on several third-party businesses, including Facebook and MySpace, and the plaintiff moved to quash them, citing the SCA.26 The court found that because OSNs qualify as electronic communication services (ECS) and remote computing services (RCS) under the SCA, they are barred from divulging private communications, like electronic messages, to certain parties.

Acknowledging that the act was passed in 1986, before the advent of the Web, Morrow nevertheless determined that an OSN could be characterized as an ECS because it provides users “the ability to send or receive wire or electronic communications” and as an RCS because it offers message storage services.

With respect to private messages, Morrow determined that “those forms of communications media are inherently private such that stored messages are not readily accessible to the general public.”27 With respect to wall postings and comments, the court stated that the discoverability of the information depends on the privacy settings of the OSN user and the extent of access allowed to the postings and comments. Interestingly, the court noted that the number of users who can view the stored message has no legal significance.

Although the decision is not binding on other courts, it is an important ruling regarding the discoverability of electronic communications, and it provides a conduit between the outdated SCA and today’s ever-changing technology.

Given the Crispin decision, plaintiffs may have a better chance warding off the volley of discovery requests for OSN information from defendants. But given the evolving technology landscape, it is still necessary to have an informed client when it comes to OSN use.

To protect your clients, tell them about the pitfalls of OSNs as soon as you accept representation. They must understand that social networking sites have the potential to do great harm to a case. Explain to them that although the courts are not entirely clear on the issue of discovery of OSN information, it is likely that the defendants will try to review every page of a plaintiff’s social networking site.

Online social networking is a fast-paced, ever-changing environment, and courts are struggling to keep pace. You must too. By staying aware of current trends and legal developments, you can minimize the disclosure of information that could cause harm to your clients and their cases.

Karen Barth Menzies is a partner in the law firm of Robinson, Calcagnie & Robinson in Newport Beach, California. She can be reached at kbmenzies@rcrlaw.netWesley K. Polischuk is an associate in the firm and can be reached at wpolischuk@rcrlaw.net.

Notes

1. Pew Internet & Am. Life Project, Trend Data—Internet Adoption, www.pewinternet.org/Static-Pages/Trend-Data/Internet-Adoption.aspx.

2. Pew Internet & Am. Life Project, Trend Data—Online Activities, Daily, www.pewinternet.org/Trend-Data/Online-Activities-Daily.aspx.

3. Amanda Lenhart, Pew Internet & Am. Life Project, Adults and Social Network Websites (Jan. 14, 2009), www.pewinternet.org/Reports/2009/Adults-and-Social-Network-Websites.aspx?r=1.

4. Wikipedia, Social Network Service, http://en.wikipedia.org/wiki/Social_network_service.

5. Julianne Pepitone, Facebook Hits 500 Million Users, CNNMoney.com (July 21, 2010), www.money.cnn.com/2010/07/21/technology/facebook_500_million/index.htm.

6. See Karen Barth Menzies, Perils and Possibilities of Online Social Networks, Trial 58 (July 2008), www.justice.org/cps/rde/xchg/justice/hs.xsl/2091.htm.

7. Not only can an OSN profile reveal information about a client; it also can reveal potentially harmful information about you. Judge Susan Criss, a Facebooking member of the bench from Galveston, Texas, has used Facebook to monitor some of the attorneys appearing before her. She even caught a lawyer lying about why she needed a continuance—the lawyer stated that she needed additional time to mourn the death of her father, but her status updates on Facebook told a different story. Molly McDonough, Facebooking Judge Catches Lawyer in Lie, Sees Ethical Breaches, ABA J. (July 31, 2009), www.abajournal.com/news/facebooking_judge_catches_
lawyers_in_lies_crossing_ethical_lines_abachicago
.

8. Facebook Privacy Policy (last revised Apr. 22, 2010), www.facebook.com/policy.php.

9. Eric Kuhn, Senators Urge Facebook to Change Privacy Settings (Apr. 27, 2010), www.cnn.com/2010/POLITICS/04/27/senators.facebook/index.html.

10. Daniel Lyons, The High Price of Facebook, You Pay For It with Your Privacy, Newsweek (May 15, 2010), www.newsweek.com/2010/05/15/the-high-price-of-facebook.html.

11. John D. Sutter, Facebook Launches New Security Feature (May 25, 2010), www.cnn.com/2010/TECH/05/14/facebook.security.privacy/index.html.

12. Lyons, supra n. 10.

13. Geoffrey A. Fowler, Facebook Changes App Permissions, But Critics Say It’s Not Enough, Wall St. J. Digits Blog (June 30, 2010), http://blogs.wsj.com/digits/2010/06/30/facebook-changes-
app-permissions-but-critics-say-its-not-enough
.

14. 2009 WL 1067018 (D. Colo. Apr. 21, 2009).

15. No. 06-Civ.-5337 (D.N.J. filed Nov. 8, 2006).

16. No. 06-Civ.-6219 (D.N.J. filed Dec. 26, 2006).

17. Mary Pat Gallagher, MySpace, Facebook Pages Called Key to Dispute over Insurance Coverage for Eating Disorders, Law.com (Feb. 1, 2008), www.law.com/jsp/law/LawArticleFriendly.jsp?id=900005559933.

18. 2009 WL 3724968 at *1 (D. Conn. Oct. 27, 2009).

19. Id.

20. No. UNN-L-4479-04 (N.J. Super. filed Dec. 22, 2004).

21. 91 Cal. Rptr. 3d 858 (Cal. App. 2009).

22. Id. at 861.

23. Id. at 863.

24. Facebook Privacy Policy, supra n. 8.

25. No. 2:09-cv-09509 (C.D. Cal. filed Dec. 29, 2009).

26. Or. Granting Pl.’s Mot. Rev. of Mag. J.’s Dec. Re: Pl.’s Mot. to Quash Subp., 2010 WL 2293238 (May 26, 2010).

27. Id. at 16.

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National Teen Driver Safety Week 2010 – Reducing Distractions

National Teen Driver Safety Week (NTDSW), October 17-23, 2010, is dedicated to raising awareness and seeking solutions to unnecessary teen deaths on the road. Established by Congress in 2007 and held annually on the third week of October each year, Teen Driver Safety Week provides the perfect opportunity for communities to address this issue and better educate young drivers about potential dangers when they are behind the wheel.

This year’s theme is ‘Reducing Distractions’. Secondary activities have become an everyday occurrence behind the wheel of American motorists—text messaging, talking on a cell phone, styling hair, shaving, watching a movie, writing a grocery list, or putting in contact lenses, etc. A growing shift in focus from the roadway to a multitude of other tasks impairs the ability of modern drivers, and the U. S. traffic statistics mark this drastic change.

We encourage parents, families and schools to get involved locally by adopting materials and safe-driving practices into discussions and curriculums. For more information, please call us at    772-287-2600 if you would like to discuss this important issue.

Posted in Mike Crary, Personal Injury | Leave a comment

Bonds or Bond Funds

A common misunderstanding about investing in bonds or bond mutual funds is that there is no risk to principal. This is not the case.

Interest rates are currently at historically low levels. If interest rates rise, bond prices would fall, and so too could the net asset values of some bond mutual funds. Returns can also decline if investors choose to move their money elsewhere and force fund managers to sell the bond holdings at a loss to pay redemptions.

Individual bonds and bond funds are two very different animals. Understanding how bond funds and individual bonds differ will help you assess which is the best investment option for you. Here are four factors you should consider:

Return of Principal. Unless there is a default, when an individual bond matures or is called, your principal is returned. That is not true with bond funds. Bond funds have no obligation to return your principal. Generally, bonds funds do not have a maturity date. With a bond fund, the value of the investment changes from day to day. The value of Individual bonds trading in the secondary market also change from day to day, but if the price of a bond declines below par, investors can hold the bond until it matures and collecting the principal, unless there is a default by the issuer.

Diversification. Generally, investors obtain greater diversification through a bond fund. This diversification can be obtained at lower investment of capital and lower costs than buying individual bonds. To create a diversified portfolio of individual bonds, investors need to purchase several bonds, and that might cost you tens of thousands of dollars. Most mutual funds only require a minimum investment of a few thousand dollars.

Income. With most fixed-rate individual bonds, the interest amount to be paid is stated in the bond offering. With bond funds, the interest amount distributed will fluctuate with changes to the underlying bond portfolio. Bond funds tend to pay interest monthly whereas most individual bonds pay interest semiannually.

Liquidity. Generally, all bond funds can be sold easily at anytime at the current net asset value of the fund. The liquidity of individual bonds, on the other hand, can vary considerably depending on the bond. In addition to taking longer to sell, illiquid bonds may also be more expensive to sell.

Investing in fixed income oriented investments, like individual bonds or bond funds, has risks that should be explained to the investor. Just because an account or an individual investment has decreased in value does not necessarily mean that a financial adviser has acted inappropriately. At Crary Buchanan, we provide consultations concerning negligence arising from improper financial advice. We invite you to call us to discuss your rights and remedies under the law.

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Is your automobile insurance coverage at risk?

As a personal injury attorney in Stuart and Port St. Lucie, Florida, for the past 17 years, I have read hundreds of cases concerning automobile accidents and insurance issues. One recent case demonstrated the lengths insurance companies will go to deny coverage to a policyholder.

In the case of Mercury Insurance v. Markham, Mr. Markham filled out an insurance coverage application that asked if the vehicle was “rebuilt, salvaged, modified, altered or specifically customized.” Mr. Markham answered “No” even though he had put bigger tires and a “lift-kit” on his truck.

After Mr. Markham injured another person in an accident while driving the truck, Mercury rescinded his policy and refused to defend the claim. Mercury’s position was that Mr. Markham made a material misrepresentation in his application.

Florida Statute 627.409 allows an insurance company to deny coverage if a misrepresentation is: (1) fraudulent; (2) material to the risk being assumed; or (3) the insurer in good faith either would not have issued the policy or would have done so only on different terms had the insurer known the true facts.

The question in this case was what type of change or alteration of the truck amounted to a modification. Mr. Markham’s attorney argued before the court that the term “modify” was ambiguous and subject to more than one interpretation so that he could not tell from the application what he was required to disclose.

Mercury’s attorney responded that the bigger tires and lift kit should have been disclosed; that information would have affected the company’s decision to insure the truck.

The trial ended in favor of Mr. Markham, but a state appeals court reversed that decision. The higher court concluded that the bigger tires and lift-kit were significant enough modifications that Mr. Markham should have disclosed them to Mercury.

As I look at this case, I think a more prudent approach for Mr. Markham would have been to ask Mercury if the modifications to his truck required disclosure on the application. It’s risky not to disclose information to an insurance company when you are applying for coverage.

So what amounts to a modification? A trailer hitch? Running boards? Different headlights? I suggest anytime you do anything that changes your car or truck from its factory configuration, you should notify your insurance company, — in writing. That way, if something happens, you have written proof you informed your insurance company.

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Check car rental policy to avoid problems from auto accident

As a personal injury attorney in Stuart and Port St. Lucie for the past 17 years, I have read hundreds of lawsuits concerning automobile accident insurance. One recent case involved an expensive mistake with a rental car.

Have you ever rented a car and then let someone else drive?  Unless you inform the rental car company in advance, your automobile insurance may not cover damages to the car if that other driver is involved in a crash.

That’s what happened in the case of Geico vs. Shazier. Ms. Shazier’s insurance policy with Geico had what’s called a “temporary substitute auto” provision that insured Ms. Shazier if she rented a car.  When she rented the car, the rental company asked her if there would be any other drivers. She said “no”.

Ms. Shazier then loaned the rented car to a friend and did not obtain the car rental company’s permission to let her friend drive. Her friend got into an accident and damaged the rental car.

Ms. Shazier filed a repair claim with Geico. When the insurance company investigated the accident, it discovered that Ms. Shazier’s friend did not have the car rental company’s permission. Therefore, Geico denied the claim.

Ms. Shazier sued Geico to cover the claim and she lost. Why? Ms. Shazier was the renter, not the owner and she could not grant permission for someone else to drive.  She ended up having to pay for repairs out of her own pocket.

This was a very costly error.  If Ms. Shazier had told the car rental company there would be another driver, she would have been covered.  If she had carefully read her Geico policy, she would have known that in Florida, you can loan your car to someone else and the vehicle will be covered under your policy. But when you rent a car, you must obtain the rental car company’s permission for another person to drive in order for that same coverage to apply.

If you plan to loan a rented car to someone, make sure you first have the car rental company’s permission. Insurance policies have a lot of fine print and you may think you’re covered.  If you’re unsure, read your policy and call your insurance company or agent to address any concerns.

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Does Financial Regulation Equal Greater Investor Protection?

The Dodd-Frank financial overhaul legislation was passed by Congress and signed into law by the President. What impact does it have for individual retail investors? The consensus among the experts is that it has no immediate benefit for retail investors but could result in significant changes down the road.

Office of the Investor Advocate and the Investor Advisory Committee

For example, the law establishes the Office of the Investor Advocate and the Investor Advisory Committee within the Securities and Exchange Commission (SEC). The mandate for these entities is to protect investor’s interests and assist investors but that will largely depend upon how they are funded and staffed. What voice will they have in decision and policy making at the SEC? What services will they provide to investors and how can they assist investors? We will have to watch and see how this unfolds.

Fiduciary Duty Standard of Care

Traditionally, stockbrokers do not owe their clients a fiduciary duty. A fiduciary duty is generally defined as a duty of loyalty, duty of care, a duty to avoid conflicts of interest and put the client’s interests first. Registered investment advisors have these fiduciary duties under federal law.

Stockbrokers generally have transactional duties such as duty to perform the customer’s orders promptly after receiving the customer’s approval. They also have the duty to recommend investments only after studying it, to inform the customer of the risks, and to not misrepresent any material facts to the transaction. Finally, they also have a duty to recommend investments that are suitable for the investor.

Under the new legislation, the SEC has the authority to impose the fiduciary duty standard on brokers. SEC must first study the issue and deliver a report to Congress. This will be a heavily lobbied report and review by Congress as brokers have historically fought hard to avoid the duties of being a fiduciary.

Also of note in the law is the power of the SEC to limit or prohibit mandatory predispute arbitration clauses in brokerage account agreements. Some advocates argue that mandatory arbitration is not fair for retail investors. They argue that biased industry arbitrators and unfair arbitration rules favor brokers and their firms. Conversely, the cost and efficiency of the arbitration process generally benefits retail investors over traditional state and federal courts. It will be interesting to whether the SEC will limit or give retail investors the choice to arbitrate or go to court.

Just because an account or an individual investment has decreased in value does not necessarily mean that a broker or financial adviser has acted inappropriately. At Crary Buchanan, we provide consultations concerning negligence arising from improper financial advice. If you have questions regarding your account or the duties owed by your broker, we invite you to call us to discuss your rights and remedies under the law.

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Where do you find legal care for auto accident injury claim?

As an automobile accident personal injury lawyer in Stuart and Port St. Lucie, Florida, for the past 21 years, I have watched as the legal landscape has change dramatically both in terms of the law and lawyers. I want to address how lawyers have changed over this time.

Historically, lawyers have confined their law practices to geographic areas with which they were familiar. There was a reason for this: The lawyer knew the “landscape” of the area and could guide a client through the steps necessary to successfully pursue a claim for injuries. This local knowledge was beneficial in the acquisition of quality medical care and services. There were always a couple of lawyers who covered large areas such as an entire state, but this was rare.

Now, more and more sole practitioners and small law firms are advertising that they maintain multiple offices covering large geographic areas. This is a natural consequence of there being more lawyers, aggressive advertising and a limited number of cases.

But are there any disadvantages to an injured client hiring a lawyer who is “not really from here?” I think the answer is “yes”.

If the lawyer you hire isn’t familiar with the local community of medical providers, then the care you receive for your accident-related injuries may actually hurt your case. Believe it or not, there are actually providers out there who dislike accident cases, and if you happen to come under their care, the medical records they keep on you may minimize your injury.

The other problem is a lot of these out-of-town lawyers either have their clients travel long distances to receive medical care, or they “import” doctors from other counties to treat their clients.

Is there a problem with this? Yes, there is. Insurance companies know where doctors are from and how much of their practice involves traveling around to treat patients involved in accidents outside the provider’s region. This is a red flag for insurance companies.

So, what your best course of action? If you get injured in an automobile accident, hire a local law firm like ours and obtain treatment from local medical providers who are well known in the community. This will give you your best chance to make a full recovery in your case, both medically and financially.

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Crary Buchanan moving Stuart law office to nearby location on Federal Highway

Crary Buchanan is moving its office from downtown Stuart to the nearby Construction Journal office building on Federal Highway.

“We have been in our current location for more than 30 years and the new location will provide us with equally high visibility and a central location to serve our clients,” said managing partner Mike Crary.

The new office will be designed to meet the law firm’s current and future space and technology needs, Crary said.

Crary Buchanan will stay open during the relocation, which is scheduled for August, Crary said. The law firm’s phone lines, whose numbers will remain the same, and e-mail will operate as usual. The Port St. Lucie office will be unaffected.

Crary Buchanan will occupy one-half of the first floor of the Royal Palm Financial Center Building III building at 759 U.S. 1 South, with offices for all attorneys, work areas for staff and five conference rooms.

The new space, which is one-half mile away from the current office, will also accommodate the law firm’s recent growth. Scott Turnbull joined Crary Buchanan as a partner in February. Elysse A. Elder and Karen Dobbins joined the firm as of counsel during 2009.

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Did you incur losses on preferred stock?

Fannie Mae and Freddie Mac common stock was delisted from the New York Stock Exchange today. This brought back memories regarding preferred stock losses that continue to weigh down investment accounts. Many investors sustained significant financial losses as a result of holding large, concentrated positions in a single preferred stock such as Fannie Mae, Freddie Mac and Lehman Brothers. Additionally, many investors sustained significant financial losses as a result of large concentrated positions in a single sector such as banking.

Preferred stocks are a class of ownership in a corporation that has a higher claim on the assets and earnings than common stock. Preferred stock generally has a dividend that must be paid out before dividends to common stockholders and the shares usually do not have voting rights. Technically, they are equity securities, but they share many characteristics with debt instruments. There are different types of preferred stocks such as preferred trusts, cumulative preferred stocks, callable preferred stocks, and others. As with any securities, there are advantages and disadvantages and differing types of risk associated with preferred stocks.

Many times preferred stocks are sold as a safe, stable fixed-income investment. For example, Fannie Mae and Freddie Mac preferred shares were touted as suitable for retired individuals who wanted an investment designed to generate income. However, the risks associated with preferred shares were not disclosed or understood by many retired investors.

Just because an account or an individual investment has decreased in value does not necessarily mean that a financial adviser has acted inappropriately. At Crary Buchanan, we provide consultations concerning negligence arising from improper financial advice. If you experienced substantial losses as a result of overconcentration in a preferred stock such as Fannie Mae or Freddie Mac or were not advised about the risks of investing in preferred shares, we invite you to call us to discuss your rights and remedies under the law.

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