SPRING 2017

06FIGHTING TO KEEP

LOUISIANA INDUSTRY COMPETITIVE

08PEOPLE OF PURPOSE

11BUSINESS BRIEF:

DIGITAL LEGAL UPDATE

A MAGA ZINE FROM THE L AW OFFICES OF KE AN MILLER LLP.

COUNSELORthe

05COMMUNITY

CONNECT

04MANAGING PARTNER

MESSAGE

06FIGHTING TO KEEP

LOUISIANA INDUSTRY COMPETITIVE

08PEOPLE OF PURPOSE

10KEAN MILLER

KITCHEN

11IF YOU BUILD IT, THEY MAY HACK

14COURT HOLDS THAT TEXT

MESSAGES ARE SUBJECT TO DUTY TO PRESERVE ESI

15SOCIAL MEDIA IS DISCOVERABLE IN LOUISIANA

Welcome to The Counselor, a magazine featuring our clients’

success stories, opportunities to contribute to the communities

we seek to enhance, business briefs to help you grow and

succeed, and profiles of the people in our firm who strive to

make Louisiana a better place to live and work.

SPRING 2017

COUNSELORthe

Kean Miller LLP provides this magazine as a public service for general information only. The materials contained herein may not reflect the most current legal developments. Such material does not constitute legal advice, and no person should act or refrain from acting on the basis of any information contained in this magazine without seeking appropriate legal or other professional advice on that person’s particular circumstances. Kean Miller LLP and all contributing authors expressly disclaim all liability to any person with respect to the contents of this magazine, and with respect to any act or failure to act made in reliance on any material contained herein.

Practice Certification: The listing of areas of practice does not represent any official certification of expertise in any such areas. Unless otherwise indicated in an individual attorney’s biography, Kean Miller’s attorneys are not certified in any area of legal specialty.

The attorney primarily responsible for this magazine is G. Blane Clark, Jr.

©2017 Kean Miller LLP.

Trippe HawthorneLitigator and Construction Attorney

I AM A

People First

BATON ROUGE | NEW ORLEANS | SHREVEPORT

LAKE CHARLES | KEANMILLER.COM KEANMILLERPEOPLEFIRST.COM

Trippe Hawthorne is a bike mechanic. He knows that being a well-rounded attorney means giving back to our community. That’s why you can find him repairing bicycles for the homeless of Baton Rouge every week.

Trippe brings that same commitment to his clients as a construction attorney.

When our clients need to gear up for legal challenges, they turn to people like Trippe.

I AM AN

4 5THE COUNSELOR COMMUNITY CONNECTTHE COUNSELOR MANAGING PARTNER MESSAGE

Managing Partner Message

Community Connect

President John F. Kennedy once said, “Change is the law of life. And those who look only to the past or present are certain to miss the future.” This quote certainly has new meaning today with a new presidential administration, a new calendar year, and as we, as attorneys, face unprecedented change in the practice of law. In 2016, I attended an important conference on the changes coming to the legal profession. Those changes revolve around how law firms price and provide legal services, how process improvement and project management can demonstrate value and improve the client experience, and how we as attorneys can become better. I am pleased to report that Kean Miller is on the leading edge of this change and that our strategic plan incorporates these concepts for the benefit of our clients and each other.

G. Blane Clark, Jr.Managing Partner

Dancing for Big BuddyAPRIL 29, 2017

Zoo-To-DoMAY 5, 2017

Crawfish King Cook-OffMAY 12, 2017

Influential Women in BusinessMAY 17, 2017

Run with the Angels 5K

MAY 20, 2017

Live After 5 - Flow TribeMAY 26, 2017

Please join us in supporting the civic, charitable, and community events that make Louisiana a special place to live and do business.

Download Kean Miller Connect to discover events near you

At the intersection of Louisiana industry, global competition, and electric power, you’ll find the Louisiana Energy Users Group and Kean Miller.

In the global marketplace for energy and petrochemical products, staying competitive in the face of increasing costs at home is crucial. Kean Miller’s Utilities Regulation team has been fighting to keep electric power costs for industry reasonable for over 30 years, providing real value to industrial consumers of power, and helping our state’s manufacturing sector remain competitive with domestic and foreign competitors.

Leading that effort is the work of the Louisiana Energy Users Group (LEUG), initially formed by one of our founding partners, Gordon Kean, and represented by the team of Katherine King, Randy Young, Carrie Tournillon, and Mallory McKnight-Fuller. LEUG is a group of industrial consumers of electricity in Louisiana and supports the efficient use of resources to achieve a reliable, low-cost energy supply. LEUG supports regulatory policies that promote utility use of efficient generation resources that reduce electricity costs for all ratepayers. LEUG also supports regulatory policies that promote the development of a robust transmission grid that reduces electricity costs through utility access to lower cost suppliers. LEUG members collectively employ over 36,000 Louisianans, support annual payrolls totaling $1.9 billion, and spend over $6.7 billion in Louisiana on electricity, goods, and services.

In December 2016, Kean Miller efforts contributed to accomplishing a $70 million refund and a $9 million rate reduction for utility ratepayers that was approved by the Louisiana Public Service Commission (LPSC). Kean Miller serves as counsel to LEUG in regulatory proceedings before the LPSC and helps industrial clients and companies with contract negotiations, generation projects, and other individual challenges and opportunities. For more information on LEUG, visit http://www.laenergyusersgroup.org/

Fighting to Keep Louisiana Industry Competitive

Katherine KingPartner

Randy YoungPartner

Carrie TournillonPartner

The LEUG Team

Mallory McKnight-FullerAssociate

6 THE COUNSELOR

8 THE COUNSELOR PEOPLE OF PURPOSE

People of Purpose

Melissa Caruso elected to the board of directors of the Capital Area Law Enforcement Foundation (CALEF).

CALEF is a nonprofit foundation assisting area law enforcement in purchasing safety equipment to protect themselves while protecting the public. It also assists the families of law enforcement in times of crisis.

Victor Gregoire elected second vice-president of the Louisiana Association of Defense Counsel (LADC).

LADC is a statewide organization for lawyers devoting a substantial amount of their professional time to the defense of civil litigation.

Karli Johnson elected the 88th president of the Baton Rouge Bar Association.

The Baton Rouge Bar Association has been serving the legal profession and the public for more than 85 years. It is one of the largest voluntary bar associations in the State of Louisiana, with a membership of over 2500 lawyers, and is considered one of the most active and innovative bar associations in the United States.

Ed Hardin receives the Volunteer of the Year Award for his decade of service to Alzheimer’s Services of the Capital Area.

Kean Miller is pleased to announce that Brittany Salup, Sarah Anderson, and Tod Everage have been elected to the partnership, effective January 1, 2017.

Jaye Calhoun joins the firm as a partner in New Orleans, and William Kolarik joins the firm as special counsel in Baton Rouge.

Jaye and Willie bring extensive state and local tax (SALT) and multistate taxation experience and provide full-service tax representation covering federal, state, and local issues and tax controversy representation.

Tara Madison elected to the board of directors of Alzheimer’s Services of the Capital Area.

Alzheimer’s Services of the Capital Area is a local non-profit organization serving the Greater Baton Rouge area by providing education and support programs to those affected by Alzheimer’s disease or dementia.

Hannah Robinson elected to the board of directors of the Louisiana Land Title Association (LLTA).

The Louisiana Land Title Association is a private, non-profit trade association that operates for the benefit of people associated with the land title industry.

Michael O’Brien named to the New Orleans CityBusiness Leadership in Law Class for 2017.

Michael joins fellow Kean Miller recipients of the award, David Halpern (2016), Brett Fenasci (2015), Chuck Talley (2014), Anthony Williams (2013), Stephen Hanemann (2012), Karen Shipman (2011), Brad Schlotterer (2010), Glenn Orgeron (2008), Mike McGlone (2006), and Chris Dicharry (2005).

David Hamm Jr. joins the firm as special counsel in Shreveport.

David will practice with the real estate, business and corporate, and estate planning teams from our North Louisiana office.

THE COUNSELOR PEOPLE OF PURPOSE 9

Continuing the trend from 2015, 2016 has seen a significant number of large, public data breaches. Many of these breaches involved high-profile companies such as the Democratic National Convention, Internal Revenue Service, MySpace, Yahoo!, and Anthem. Since large corporate and government breaches typically get the most attention, many smaller, local businesses can be lulled into a false sense of security, believing that those who do hack and steal data are not interested in their business. However, in 2016, hacker targeting of small businesses increased from 34 percent to 43 percent.[1] Small businesses, including the construction industry, are at risk.

The construction industry is becoming increasingly more connected. In addition to storage of confidential data on computers, many design and construction software systems—like BIM, Revit, Procore, and Aconex—have remote access controls or Internet-connected capabilities. As a company grows more technologically-savvy, the risk of breaches becomes more inherent. This memorandum will answer some basic questions for construction companies regarding data privacy issues. For specific advice regarding individual, company-specific questions, inquirers should seek the assistance of an attorney experienced in data privacy.

I am not MySpace or the IRS—why would a hacker be interested in my business?

Construction companies are often just as reliant on IT and computers as any other business. Construction companies—especially smaller

ones—often do not think they are a target, so any protective measures currently in place may be easier to permeate. Several reasons why a hacker may be interested in you include:

1. Valuable Personally Identifiable Information Data: The vast majority of hacks are made for financial gain. If you use computers at all in your business, it is likely that you have confidential data stored on that computer that would be valuable to a hacker. Though you may not have as much personally identifiable information as a financial institution, you likely still have employee information (e.g., Social Security numbers, bank accounts for payroll, healthcare information, etc.) that could be worth money.

2. Valuable Non-Personal Data: Construction companies often have access to certain proprietary client documents including project bid data, architectural designs, trade secrets, and other intellectual property. A hacker may also target general information about the company’s banking, accounting data, and policies in order to orchestrate social engineering or phishing schemes to have an employee send the hacker valuable data or unwittingly transfer corporate funds/assets.

3. Access to Private Client Information: At times, the hacker is interested in accessing a client of the company, rather than the company itself. In 2013, approximately 70 million customers’ data was released by retail giant Target through malware installed

If You Build It, They May Hack: Data Privacy & Cybersecurity FAQs for the Construction Industry

By Jessica Engler, Associate

1110 THE COUNSELOR KEAN MILLER KITCHEN

INGREDIENTS:

Grits

Whipping cream

1-1½ lbs. shrimp

¼ lb. (1 stick) plus 5 Tbsp. butter

1½ tsp. minced garlic

1 tsp. Worcestershire sauce

½ tsp. cayenne pepper

1 tsp. black pepper

½ tsp. salt

½ tsp. thyme leaves

½ tsp. dried rosemary leaves, crushed

tsp. oregano

¼-½ c. seafood or fish bouillon

Serving Size:

4

Cooking Time:

30 Minutes

BBQ Shrimp and Grits

From the Kitchen of: Chuck Talley, Partner

DIRECTIONS:

1. Prepare your favorite grits just before you start

the actual cooking of the shrimp. Follow the recipe

on the box, except replace ¼ of the water with

whipping cream.

2. Peel shrimp. Melt 1 stick of butter over medium

heat.

3. Add garlic, Worcestershire sauce, and seasonings.

Simmer for 1-2 minutes.

4. Add shrimp and cook for 2 minutes. Shake the pan,

rather than stirring, if possible. Flip shrimp with a

spoon if necessary.

5. Add remaining butter and bouillon. Cook and shake

pan for 2 more minutes.

6. If sauce is thick and buttery, serve. If sauce is thin,

cook for 1-2 minutes longer, but don’t overcook the

shrimp. Serve over grits.

THE COUNSELOR BUSINESS BRIEF - DIGITAL LEGAL UPDATE

on credit card machines. The hackers’ >> access to Target’s network was obtained indirectly through Fazio Mechanical Services, Target’s HVAC vendor, which had Target network credentials.[2] Through Fazio’s credentials, the hackers were able to cross into Target’s network to install the malware.

4. Extortion: Ransomware is a type of malware designed to block off access to data stored in a computer system until money is paid (typically in bitcoin) to the hacker. When access is blocked—typically through encryption—the data may be lost if the victim does not pay the ransom and the victim does not have the data backed-up.

I don’t buy it. Name a construction company who has had a breach.

In early 2016, Turner Construction was targeted by a spear-phishing[3] scam wherein an employee emailed tax information on current and former employees to a fraudulent email account.[4] The tax information included full names, Social Security numbers, states of employment and residence, and tax withholding data for 2015. Hackers had manipulated, or “spoofed,” the “From” field in the email to the employee to make the email look like it was from a legitimate sender. This scam was a common scam during the 2016 tax season in order to obtain information used to file fraudulent tax returns.

Whiting-Turner Contracting (Baltimore), Central Concrete Supply Company (California), Century Fence (Wisconsin), Trinity Solar, and Foss Manufacturing were also recent victims of this scam.[5]

Are breaches really that big of a deal?

Data breaches can be very costly for a business. Depending on the type of data breached, a breach can cause loss of business and clients, reputation damages, loss of goodwill, decline in share value, increased legal and technological costs, and potential fines. Some businesses are never able to recover from a breach.

Additionally, even when a company can recover, it will often still have incurred significant costs due

to business interruption. Depending on when the data incident occurred, a construction company may also be facing the risk of delay damages.

Yikes, that sounds expensive. What can I do to guarantee I will never be breached?

Unfortunately, there really is no way to “guarantee” that you will never be a target of a hacker. “Most security experts believe that it is a matter of when, not if,” your company will be targeted by hackers.[6] However, there are some actions you can take today to reduce your risk:

• Identify your company’s valuable, private, and/or confidential information and know where that information is located on your network. Block off access to anyone who does not need that information to perform their job duties;

• Work with your IT provider to ensure the company and its employees have strong password controls, any necessary encryption, current firewalls, updated security patches, and other recommended protections;

• Consider using a third-party IT consultant to evaluate your system and identify any holes or vulnerabilities that your in-house IT personnel may have missed;

• If using a subcontractor or other third party service provider that will have access to your network, establish procedures to evaluate those contractors;

• Train employees to be aware and vigilant of risks and their role in protecting company data and assets; and

• Create a plan of action in the event of a data incident.

A number of these steps and further actions to help protect your data can be undertaken with the help of legal counsel.

I have CGL insurance. Wouldn’t this be covered under my insurance?

It depends on the terms of your policy. In 2014, the Insurance Services Office, Inc. (the insurance industry organization that develops standard

policy forms adopted by many insurance companies) issued a new form for CGL policies that expressly excludes coverage for data incidents.[7] Consultation with legal counsel can help you determine whether your current insurance coverage will provide coverage during a data incident.

If your CGL policy or any other policy leaves you without coverage for a data incident, you may want to consider purchasing cyber liability insurance. This relatively new form of insurance can provide coverage for costs associated with a data breach, including (depending on the terms of your policy) business interruption expenses, cyber extortion demand payments, legal expenses, IT forensic team expenses, cost of notification, and/or credit monitoring for affected persons.

I have been breached. What do I do?

If you have been breached, immediately contact your incident response team assigned in your incident response plan. If you do not have an incident response plan in place, contact your IT professionals and legal counsel. Many notification laws require that notice be given to affected persons and other state and federal agencies within certain time-frames, so it is important to have counsel retained in order to respond quickly and appropriately.

[1] Symantec, Internet Security Threat Report: Vol. 21 (Apr. 2016) (available at https://www.symantec.com/

content/dam/symantec/docs/reports/istr-21-2016-en.pdf).

[2] Target Hackers Broke in Via HVAC Company, Krebs on Security (Feb. 5, 2014) (available at https://krebsonsecurity.com/2014/02/target-hackers-broke-in-via-hvac-company/).

[3] Phishing is a type of email scam wherein the victim receives an email from someone who is pretending to be another person or entity, believes that the email is legitimate, and typically sends assets or information to the scammer based upon that mistaken belief. A well-known phishing scam is the “Nigerian Prince” scam. Spear-phishing is a more targeted version of phishing. In a spear-phishing email, the scammer pretends to be a friend, family member, or co-worker. Because the email appears to be from someone the recipient knows, the recipient is often less vigilant in evaluating the legitimacy of the email.

[4] Turner Construction Data Breach Notification Letter, State of California Department of Justice, Office of the Attorney General (last accessed 12/14/16) (available at https://oag.ca.gov/system/files/Turner%20Construction%20Ad%20r4prf_1.pdf?)

[5] Data Breaches, Cyber Security, and the Construction Industry, iSqFt.com (May 2, 2016) (available at http://www.isqft.com/start/blog-data-breaches-cyber-security-and-the-construction-industry/).

[6] Data Breaches, Cyber Security, and the Construction Industry, iSqFt.com (May 2, 2016) (available at http://www.isqft.com/start/blog-data-breaches-cyber-security-and-the-construction-industry/).

[7] Marla Kanemitsu & Erin Webb, Reviewing Emerging Insurance Protection for Cyber Risks, Security Magazine (Apr. 1, 2014) (available at http://www.securitymagazine.com/articles/85358-reviewing-emerging-insurance-protection-for-cyber-risks).

12 13THE COUNSELOR BUSINESS BRIEF - DIGITAL LEGAL UPDATE THE COUNSELOR BUSINESS BRIEF - DIGITAL LEGAL UPDATE

Jason CashioPartner

Business Brief Contributors

Court Holds That Text Messages Are Subject to Duty to Preserve ESI

Social Media is Discoverable in Louisiana

By Sam Lumpkin, Associate

By Jason R. Cashio, Partner

The US District Court for the Western District of North Carolina recently held that even text messages are subject to the duty to preserve electronically stored information (ESI). In Shaffer v. Gaither, the plaintiff asserted claims against her former boss – a US District Attorney – for constructive dismissal based on sexual harassment and creation of a hostile work environment. The plaintiff also added a claim of defamation, based on an allegation that the former boss had falsely spread rumors plaintiff was fired for having a sexual relationship with a married member of the defense bar. Although the plaintiff admitted that the relationship existed, the defamation claim was based on what plaintiff argued was a false reason for her termination.

The defendant contended that plaintiff had sent her paramour text messages about the termination in which she admitted that she was fired because of the relationship. However, the text messages were lost when plaintiff purportedly dropped her cell phone in a bathroom. The court therefore had to address whether, in light of the claims pending at the time the text messages were lost, the plaintiff had failed to preserve relevant ESI.

Under the recent amendments to Federal Rule of Civil Procedure 37(e), the duty to preserve ESI arises when litigation is “reasonably anticipated,” and the loss of ESI is sanctionable if reasonable steps to preserve the ESI are not taken and the information cannot be restored or replaced

through additional discovery. Dismissal is not an automatic remedy for spoliation, and some remedies are only available when the spoliating party acted with intent to deprive the opposing party of evidence.

The court in Shaffer found that before the messages were destroyed, plaintiff had threatened litigation and her attorney had discussed the messages with the defendant’s attorney. The messages were therefore clearly relevant to the defamation claim, and both plaintiff and her attorney knew they had a duty to preserve the messages at least five months before the messages were destroyed. The court did not immediately find that the destruction of the plaintiff’s phone was intentional, and because similar evidence might be available through the testimony of various parties who had viewed the texts before they were destroyed, the court did not order dismissal of the defamation claim.

However, the court did provide guidance to potential litigants: “Once it is clear that a litigant has ESI that is relevant to reasonably anticipated litigation, steps should be taken to preserve that material, such as printing out the texts, making an electronic copy of such texts, cloning the phone, or even taking possession of the phone and instructing the client to simply get another one.” Although the plaintiff in Shaffer did not face dismissal due to the circumstances of the case, other litigants may not be so fortunate.

Continuing a trend among other courts, a recent ruling from U.S.D.C., Middle District of Louisiana, recognized the discoverability of plaintiff’s social media postings. Baxter v. Anderson, 2016 U.S. Dist. LEXIS 110687 (M.D. La. Aug. 18, 2016). In Baxter, Magistrate Judge Bourgeois addressed the discoverability of social media in a recent discovery ruling on August 19, 2016. The discovery requests calling for production of plaintiff’s social media information, as propounded, were overly broad. However, the court was still willing to permit the discovery with some limitations.

Magistrate Judge Bourgeois was not willing to permit unfettered access to a plaintiff’s social media account just because a personal injury lawsuit was filed, which placed plaintiff’s mental and physical conditions at issue. However, the ruling permitted access to any postings that met one of the following criteria:

1. Postings by the plaintiff that relate to the accident;

2. Postings related to any emotional distress or treatment received that relate to the accident;

3. Postings or photographs that relate to alternative potential emotional stressors, or that are inconsistent with the alleged mental injuries;

4. Postings that relate to physical injuries sustained as a result of the accident and any treatment therefor;

5. Postings that relate to other, unrelated physical injuries; and,

6. Postings or photographs that reflect physical capabilities that are inconsistent with the alleged injuries at issue.

Accordingly, the court acknowledged that social media posts/photographs are subject to discovery, which is consistent with numerous other rulings within Louisiana, as well as around the nation.

Sam LumpkinAssociate

Jessica EnglerAssociate

THE COUNSELOR BUSINESS BRIEF - DIGITAL LEGAL UPDATE14 15THE COUNSELOR BUSINESS BRIEF - DIGITAL LEGAL UPDATE

Everything IP under one digital roof.

People First

State and Local Tax Team Obtains Louisiana Supreme Court Decision On Further Processing Exclusion

The Kean Miller State and Local Tax litigation team of Linda Akchin and Chris Dicharry recently obtained a significant decision from the Louisiana Supreme Court with respect to amendments to Louisiana’s further processing exclusion from sales and use tax in Bridges v. Nelson Industrial Steam Company, Inc.

Louisiana law imposes a sales tax on “sales at retail.” “Sale at retail” is defined in the sales tax law, and the definition provides that the term does not include “sales of materials for further processing into tangible personal property for sale at retail.” This provision is commonly referred to as the “further processing

exclusion.” The most recent Louisiana Supreme Court’s decision interpreting this “further processing exclusion,” Bridges v. Nelson Indus. Steam Co., 2015-1439 (La. 5/3/16), 190 So.3d 276 (the “NISCO decision”), recently became final.

The decision is significant for all taxpayer-manufacturers. It provides an excellent explanation of applicable legal principles relating generally to interpretation of the further processing exclusion and a comprehensive explanation of the three-prong jurisprudential test for application of the exclusion. After the NISCO decision was rendered, but before it became final, the Legislature amended the further processing exclusion as it relates to materials purchased for further processing into byproducts. The new legislation creates additional questions, including among others, the interpretation of the statutory definition for the term “byproduct” and whether the new law may be applied retroactively to sales or use taxes that became due before the law was enacted.

Chris Dicharry & Linda Akchin Partner Partner

Learn More atLouisianaLawBlog.com

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