In the October 24, 2024 edition of The Legal Intelligencer, Beth Hurley wrote, “An Employer’s Rule 34 ‘Possession, Custody and Control’ Over ESI on ‘BYOD’ Devices.”

In the May 7, 2024 edition of The Legal Intelligencer, Justin Serianni wrote, “High Hopes for Hemp Derived THC-Infused Beverages.”

Beer sales are at a 25-year low and the downturn shows no signs of recovery. As consumers explore alternatives, beverages infused with hemp-derived delta-9 tetrahydrocannabinol have emerged as crossover products attracting both the canna-curious and those seeking an alternative to alcohol with no morning-after side effects. These beverages can be enjoyed socially without the stigma associated with combusting dry flower or vaporizing distillate or liquid cannabis resin. It is estimated that one billion dollars in cannabis beverages were sold in 2022; projections for 2030 are approximately $3.9 billion.

With strict adherence to regulatory requirements and a commitment to producing safe and effective products, THC-infused beverage companies can take advantage of interstate commerce, standard banking and payment processing solutions, and e-commerce marketing tools.

The legal footing for hemp-derived THC-infused beverages lies in the Agricultural Improvement Act of 2018 (the 2018 Farm Bill), which defines “hemp” as “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.” 7 U.S.C.A. Section 1639o(1). “Hemp” is excluded from the Controlled Substances Act’s definition of “marihuana.”

To determine whether the 0.3% Δ-9 THC threshold is met, samples are collected from the plant not later than 30 days before crops are harvested. See 7 C.F.R. Section 990.26(a). Harvested lots testing under the threshold may enter the stream of interstate commerce. See 7 C.F.R. Section 990.26(d). Finished lots of these extracted and processed compounds undergo additional processing to produce emulsifications and powders that can be combined with ready-to-drink base liquids such as seltzers, teas and beers. These emulsifications and powders are tested by a third-party analytical laboratory to identify the composition of the compounds and contaminants before they are released into the market. The Farm Bill’s threshold focuses exclusively on delta-9 tetrahydrocannabinol (Δ-9 THC) and omits reference to its chemical precursor, tetrahydrocannabinolic acid (THCa), which decarboxylates to Δ-9 THC in the drying process that occurs after the crop is harvested.

That which meets the definition of “hemp” may legally enter the stream of interstate commerce. “Marihuana” may not, under federal law, unless it meets the Food and Drug Administration’s criteria for Schedule 3 prescription drugs. A certificate of analysis provided by a third-party analytical testing laboratory establishes whether the material is under or over the 0.3% threshold. It is critically important that the cultivator’s analytical testing laboratory meets the highest industry standards, and that beverage producers implement a secure document retention system to retain the certificates of analysis.

Beverage co-packers for hemp-derived THC-infused beverages apply the same health and safety standards as any other beverage sold in a supermarket. Beverage co-packers formulate cannabis beverages, source and mix base liquids, emulsifications, and powders, can the beverage, provide nutrition fact panel information, and, in some cases, provide logistics and fulfillment solutions. Prominent co-packers in the cannabis beverage space have earned accreditations such as safe quality food (SQF) and operate good manufacturing practice (GMP) certified facilities. Moreover, these facilities are continually audited to ensure compliance with industry safety program standards. Finished product lots may undergo additional analytical testing before they are released to the market. A THC-infused beverage company should view its relationship with its beverage co-packer as a strategic partnership; counsel should nurture the relationship by ensuring that mutual expectations are clearly communicated, achievable, and aligned with the client’s growth objectives.

While cannabis products can only be purchased in state-regulated dispensaries, hemp-derived THC-infused beverages have gained entry into the beer and alcohol industry’s three-tier distribution model—products are delivered from the co-packer to a distributor or wholesaler, and then distributed to retailers. Alternatively, THC-infused beverages can be sold directly to consumers via e-commerce channels utilizing standard payment processing systems. The principal risk for hemp-derived THC-infused beverages would be the elimination of hemp “derivatives, extracts, cannabinoids, isomers” from the 2018 Farm Bill’s definition of “hemp.” The $867 billion 2018 Farm Bill was set to expire in 2023; it has been extended via spending measures due to political gridlock. To date, neither Congress nor the Biden administration has signaled an intent to alter the definition of “hemp.” In light of recent developments on rescheduling cannabis, the economic benefits of the hemp industry, and the broad bipartisan support for legalization of marijuana—according to a November 2023 Gallup poll, 70% of Americans support legalization with no significant differences among political identifications, gender, race, or education.

Risks also arise at the state level. Some states have banned sales of hemp-derived products to consumers. Often, these bans are protectionist measures to safeguard state-level cannabis programs facing the simultaneous headwinds of softening demand, supply glut, and price compression. Others have focused on the absence of a defined regulatory scheme to ensure public health. Some states have determined that intoxicating products run afoul of their controlled substances acts. Any operator entering this space must understand that the territories may shift. However, even if states change their position on the sale of hemp-derived THC-infused beverages there remains an opportunity to operate within regulated state-level cannabis programs (assuming beverages are an accepted product form).

In general, and with exception, states evaluate hemp-derived products utilizing four criteria: the cannabinoids in the product; the product forms; whether they can be sold in brick-and-mortar stores; and whether they can be sold online and mailed to the consumer. This being the marijuana industry, the rules and their interpretation are subject to change quickly, without warning, and often with immediate effect.

The absence of industry standards and clearly defined regulatory schemes could present additional opportunities for risk. THC-infused beverages may reach the market without appropriate testing and quality verifications, creating a situation akin to the 2019 vaping lung illness outbreak that adversely impacted the vaping sector of the cannabis industry. Vigilant counsel should also set guidelines for and monitor representations made to consumers in marketing material concerning the composition of the products, their potency, and recommended dosing. Because the hemp-derived THC-infused beverage market is self-regulating, counsel’s role in maintaining standards is imperative.

Justin Serianni has been active in the cannabis industry since 2017. He has stood up cannabis operations on the East Coast, provided operationally focused counsel to growth-stage companies, and served as general counsel for a multistate operator. Serianni is of counsel at Kang Haggerty, where he provides outside general counsel services. Contact him at jserianni@kanghaggerty.com.

Reprinted with permission from the May 7, 2024 edition of “The Legal Intelligencer” © 2024 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-257-3382 or reprints@alm.com.

In the January 26, 2024 edition of The Legal Intelligencer, Kelly Lavelle wrote, “Strategies for Successful Recovery of E-Discovery Expenses.”

E-discovery has evolved into an integral component of the litigation process. With vast amounts of electronic data available, expenses associated with e-discovery can be substantial. In federal courts, the presumption is that the responding party is responsible for bearing the costs associated with discovery requests, including those related to electronic discovery. However, there are avenues through which parties can seek recovery of e-discovery expenses. Parties should understand the basis upon which courts will allow recovery of these costs and establish reasonable limits on the scope of discovery at the beginning of the litigation process. This proactive approach will allow litigants to manage and control the financial aspects of e-discovery more effectively.

The general rule is that a party producing documents pays the cost of production. However, an exception to this rule exists. Federal Rule of Civil Procedure Rule 26(c) provides parties with the possibility of cost-shifting during the course of litigation. In 2015, Rule 26 was amended to include a key change to 26(c)(1)(B). The amendment expressly confirmed the authority of federal courts to shift costs to protect parties from undue burden or expense. The advisory committee note accompanying the amendment clarified that the purpose of the change was “‘to include an express recognition of protective orders that allocate expenses for disclosure or discovery’ to ‘forestall the temptation that some parties may feel to contest’ a court’s authority to issue such orders.” It is important to note, however, that the advisory committee also cautioned against making cost-shifting a routine practice, emphasizing the need for restraint in its application.

A party seeking to shift costs under Rule 26 may do so by filing a motion with the court. The burden is on the responding party to demonstrate that the costs should be shifted. If the expenses associated with e-discovery are deemed an unreasonable burden on the producing party, a court may consider shifting some or all of the expenses to the requesting party.

Many courts have interpreted the language of Section 1920(4) as it applies to e-discovery expenses. Some courts have taken an expansive view of “making copies” and have awarded costs for TIFF conversion and project management; collecting, searching, and processing ESI; and costs related to applying date ranges, custodian filters, and deduplication. Conversely, other courts have adopted a narrower interpretation, disallowing many of the same costs. Consequently, a party seeking cost-shifting under Section 1920 must ensure that the costs align with the statutory limits. Parties often rely on invoices from e-discovery vendors to prove the expenses should be covered. However, the bills can be vague and confusing, which could lead a court either to deny cost-shifting altogether for failure to meet the statutory requirements or to create its own estimate of the costs. It is imperative for parties to meticulously review vendor invoices, ensuring a detailed breakdown of charges, as undocumented costs are unlikely to be awarded by the court.

To navigate current trends and strategies for successful cost-shifting, proactive e-discovery planning becomes crucial. Parties should engage in open discussions about the scope and cost of ESI productions, conducting a thorough early case assessment to determine e-discovery scope and estimate potential costs. Utilizing predictive advanced data analytics can further assist in evaluating the cost and relevance of ESI requests. Cooperative and good-faith negotiations between parties can streamline the e-discovery process and reduce costs. If one party unreasonably resists negotiations, there is an increased chance that a court will shift costs. When presenting the case to the court, clearly articulating reasons such as proportionality, good-faith cooperation, and the potential burden on the client will increase the chances that cost-shifting requests will be granted.

Effectively recovering e-discovery expenses through cost-shifting demands a strategic and proactive approach. Parties can significantly enhance their chances of shifting the financial burden associated with e-discovery by understanding the legal principles involved, engaging in open communication, and presenting a compelling case to the court. In cases with substantial e-discovery expenses, counsel should consider seeking advance relief under Rule 26 to either limit, share or shift vendor costs. The standards set by Rule 26 for such relief offer the court broader options than the potentially narrow interpretation of the “making copies” standard applicable to taxable costs recoverable post-judgment.

Furthermore, a comprehensive understanding of a jurisdiction’s laws governing the recovery of e-discovery expenses is crucial and should be assessed at the early stages of a case. This knowledge serves as a guide for proceeding with discovery and offers insights into potential exposure. Given the continuous evolution of technology, the significance of cost-effective e-discovery strategies, including mechanisms like cost-shifting, remains paramount. Legal professionals can effectively navigate the complexities of e-discovery and mitigate financial challenges by establishing clear guidelines, maintaining meticulous documentation, exploring innovative cost-shifting strategies, embracing technology and staying abreast of pertinent legal developments.

In the June 16, 2022 edition of The Legal Intelligencer, Edward T. Kang co-authored, “‘Depp v. Heard’: Public Trials and the Social Media Era.“

Over the past few months, the world has found itself embroiled in several compelling crises; the war in Ukraine, crushingly high inflation and the ongoing COVID-19 pandemic. Despite these weighty and important issues, one story has dominated the headlines like no other: the Depp v. Heard trial. Naturally, this story about a Hollywood power couple and the salacious allegations made against each other quickly became a tabloid favorite.

For those unaware, this case centered around the tumultuous and ill-fated marriage of actors Johnny Depp and Amber Heard. After their divorce, Heard made several public statements and published an op-ed claiming to be a “public figure representing domestic abuse” who “spoke up against sexual violence.” While not expressly named in these publications, Depp sued, claiming that these statements were defamatory statements about him and had damaged his career.

At trial, the evidence presented painted a tale of addiction and acrimony throughout the pair’s five-year relationship before their eventual divorce. Depp’s attorneys won praise for exposing inconsistencies in Heard’s case, and by the end of the trial, public support was decidedly in his favor. The jury awarded Depp $10 million in compensatory and $5 million in punitive damages. The jury also awarded Heard $2 million for one of her counterclaims for certain statements made by Depp’s attorney, but declined to award any punitive damages.

Public reaction to the verdict has not been uniform, although most agree that this has been a public relations victory for Depp. Beyond the substantive legal matters at issue, one procedural aspect of the trial has also generated significant attention; namely, that the entire proceeding was livestreamed for the public. We discuss below the pros and cons of such coverage, the history of recording devices in courtrooms, as well as provide recommendations for balancing the countervailing concerns at issue.

The basic argument supporting broadcast coverage of court proceedings is that it enhances the public’s ability to watch court proceedings, allowing millions to see what would otherwise be limited to the capacity of the courtroom itself. By doing so, supporters of this practice argue that the public becomes more engaged and informed as to the legal system and its operation. No doubt, these are laudable goals.

Critics of the practice point to the perverse incentives that public scrutiny can sometimes bring, the risk of improper juror influence, and the corruption of the legal system itself. In much of this country, including Pennsylvania, judges and prosecutors are elected. While everyone hopes that this would not come to bear, the presence of cameras in the courtroom may motivate these individuals to act in a way that promotes their political profile, and not the interests of justice. Similarly, if parties to the case know that the proceedings will be televised, they may attempt to use the legal system for purposes beyond enforcing and protecting their legal rights. For instance, most would agree that the public relations aspect of Depp v. Heard was at least as important to the parties as the substantive legal matters involved.

Relatedly, widespread media coverage can sometimes lead to a consensus effect, where the public quickly chooses a side, and dissent becomes heresy. The jury in Depp v. Heard was not sequestered and, while admonished by the judge not to conduct their own independent research, the media barrage accompanying the case made this a Herculean task. These concerns are exacerbated in the social media era, where information can spread faster and echo chambers can form more easily, providing a modern twist to an age-old dilemma. You did not need to go looking for the trial coverage, it came to you via many different means of the social media. In all likelihood, the jurors in Depp v. Heard found themselves in the same position as the general public, bombarded with constant trial updates and reactions.

The controversy surrounding media presence in the courtroom, especially in criminal cases, is almost as old as the camera itself. One of the first cases to confront this issue, State v. Hauptmann, 180 A. 809 (N.J. 1935), dealt with the kidnapping and murder of the Lindbergh baby. Everything about this case seemed assured to bring about a media circus: a celebrity couple, a contemptible crime and a tangled web of circumstantial evidence. The accused, an illegal immigrant who had fought against the United States in World War I, was not a particularly sympathetic character in the public eye. Hundreds of reporters descended on the Flemington, New Jersey courthouse in a scene that resembled a feeding frenzy more than a judicial proceeding. And while the New Jersey Supreme Court rejected any contention that this violated the defendant’s right to a fair trial, the ABA would amend its advisory Canons of Judicial Ethics two years later to forbid broadcast coverage of trials.

Decades later, in Estes v. Texas, 381 U.S. 532 (1965), another highly publicized case would reach the Supreme Court. Billy Sol Estes, a close friend and political ally of President Lyndon Johnson, was charged with “swindling” in a case that garnered nationwide coverage. Radio, television, and news photography were permitted at various times throughout the trial, and the recordings of these proceedings “clearly illustrate that the picture presented was not one of that judicial serenity and calm to which petitioner was entitled.” While the court emphasized the importance of public trials in the Anglo-American tradition, it also recognized that a certain level of publicity is so distracting and intrusive that it violates a defendant’s right to a fair trial. According to the court, this was such a case, and Estes conviction was overturned.

Following Estes, there was some confusion as to whether the court had announced a total prohibition on the broadcast coverage of trials, or if its holding was motivated by the particularly disruptive media presence in that case. In Chandler v. Florida, 449 U.S. 560 (1981), the court would answer this question in another sensational case. The defendants in that case, two Miami Beach police officers, were accused of robbing a popular local restaurant. Under a recently enacted Florida law, broadcast media were allowed to film these proceedings, subject to certain restrictions. These restrictions included limiting the media presence to one camera and one camera technician operating from a fixed location, a prohibition on recording the conversations between lawyers, and the judge’s discretionary power “to forbid coverage whenever it may have a deleterious effect on the paramount right of the defendant to a fair trial.” A unanimous Supreme Court held that these restrictions were sufficient to safeguard due process, and the convictions were upheld.

Since Chandler, states have created a patchwork of rules governing what type of recording devices are allowed in courtrooms and in what contexts. In Pennsylvania, the rules governing recording equipment in the courtroom are governed by 201 Pa. Code Rule 1910. This section announces a criminal prohibition on the use of recording devices “within a judicial facility” absent express approval of the judge. The statute then carves out exceptions, such as for the presentation of evidence or educational purposes. For nonjury civil proceedings, Rule 1910(B)(4) announces a more flexible standard, and arguments before the Superior Court are regularly livestreamed for the public.

Recently, due to the COVID-19 pandemic, the Pennsylvania Supreme Court issued Emergency Order of Statewide Judicial Administration Nos. 531 and 532. These provided that in proceedings where the public would otherwise have a right to spectate, “provision must be made to ensure some reasonable means of access.” The court specifically stated that “with respect to a proceeding conducted using audio-visual means, such public access may be effectuated during the proceeding by providing live-stream access …” For a short while, Philadelphia was one of the jurisdictions that allowed the livestreaming of trials, although this practice was quickly discontinued due to concerns of witness intimidation and harassment.

Between the extremes of secret tribunals and trial by TikTok, there exist a range of compromise options. For instance, some courts allow video or audio recording of proceedings, but mandate that these recordings only be released after the proceedings have concluded. Other courts allow livestreaming of arguments, but forbid recording these proceedings, a prohibition that relies largely on the honor system. Some jurisdictions will draw a distinction between jury and nonjury cases, and the right of a criminal defendant to a fair trial is especially sacrosanct. Overall, most jurisdictions give trial judges broad discretion as to when and how to allow recording equipment in their courtroom.

While it is likely that there is no Goldilocks solution to this conundrum, courts should be especially wary of allowing live coverage of proceedings in the social media era. Often, courts find themselves in a Catch-22; the select few cases that the public actually wants to watch are the ones where the risk of impropriety is highest. Courts should be more selective about which proceedings are broadcast, and should be especially concerned about media interference in jury trials if the jury is not sequestered.

Public access to court proceedings is worth protecting, but so is the right to a fair trial. And while these concerns are particularly acute in the criminal context, that is not to say that they are not also present for civil proceedings. Especially when the parties know that a case will generate significant public attention, there is always the risk that the legal system would be weaponized to pursue claims for reasons beyond their substantive merit. Trials are already invasive enough for litigants, and they should not have to litigate parallel proceedings in the court of public opinion.

Edward T. Kang is the managing member of Kang Haggerty. He devotes the majority of his practice to business litigation and other litigation involving business entities. Contact him at ekang@kanghaggerty.com.

Kang Haggerty associate Ryan Kirk served as co-author of this article.

Reprinted with permission from the June 16, 2022 edition of “The Legal Intelligencer” © 2022 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-257-3382 or reprints@alm.com.