RFID in the Employment Context: The Struggle Between Individual Privacy and Corporate Efficiency

By Anna Gotfryd* and Rachel Tenin**

I. Introduction

“Once a new technology rolls over you, if you’re not part of the steamroller, you’re part of the road.”[1]  In this case, Radio Frequency Identification Technology (RFID) is the steamroller, and companies who choose not to adopt this technology are roads.  RFID is a technological advancement that utilizes radio waves to identify objects and people.[2]  Once a RFID tag is near a RFID reader, the tag sends electromagnetic waves to a computer that then become stored as digital data.[3]  Although RFID has been around for over sixty years, it has recently expanded.

II. RFID in Modern Society

Consumers encounter RFID in various forms ranging from toll passes stationed inside their vehicles to microchips implanted in their pets.[4]  Even the Vatican imbeds the chips in identification badges to keep track of clergy and staff with the goal of maintaining the security of private files.[5]  While certainly a valuable and even necessary technology, its expansion has triggered reluctance.  Just over a year ago, a Texas school district was sued after district officials implemented a pilot program using RFID technology to monitor students’ whereabouts on school property in hopes of enhancing safety.[6]  However, privacy-related concerns do not appear to be impeding the anticipated growth of RFID.  The RFID market is expected to triple between 2013 and 2020, from just under $8 billion to more than $23 billion.[7]  RFID is primarily used for inventory management and in corporate supply chains, but in recent years it has gained momentum as an employee tracking technology.

III. RFID as an Employee Tracking Technology

Humans are a corporation’s most valuable resource, and effective management of its resources is of utmost importance to decreasing waste while increasing output.  Thus, companies have begun implementing ways to track employees using RFID.  RFID is a useful tool for many businesses because the chips improve accuracy, efficiency, and productivity.[8]  For example, Bank of America asked ninety workers to wear chipped badges, which recorded their movements and the tone of their conversations.[9]  The data collected demonstrated that the most productive workers were part of close-knit teams.  Implementing the results, Bank of America scheduled group breaks that overrode previous individual breaks and increased workplace productivity by ten percent.

A quick Google search will display dozens of companies that are eager to sell their latest RFID employee tracking products.  One such company, Intelleflex, advertises the sale of RFID badges that track employees and reveal to employers detailed information about their workers such as an employee’s name, location history, photograph, and biometric information.[10]  Perhaps the most intrusive example of RFID use is the human implantation of a microchip.  In 2006, concerns about invasive business practices gained attention after a company in Cincinnati, Ohio announced that it would inject RFID chips into the biceps of willing employees.[11]  While implanting humans with RFID for work-related purposes is considered extreme, many companies have noticed the benefits of RFID technology.

IV. Where Is RFID Headed?

The inexpensive and discreet nature of RFID has led to a myriad of ways private employers can use RFID technology.  RFID today is applied by businesses with the goal of increasing workplace efficiency through the maintenance of employee attendance records, calculation of overtime, and reduction of tardiness among others.[12]  As RFID usage becomes more commonplace, there is much room for discussion regarding security issues, employees’ rights to privacy, and employers’ rights to workplace organization.

A. The “Magic” of Technology and the “Monster” of Profit Margins: Companies Adopt RFID in Global Business Models

Competition is a driving force in all intersections, and its effects are particularly apparent in the marketplace.  This spring, Disney Parks will be introducing MyMagic+ wristbands that collect mounds of visitor personal data in an effort to better customize visitors’ experiences, market effectively to target audiences, and, of course, to increase sales.[13]  Disney’s inevitable struggle with privacy concerns as they launch this innovative program will be exceptionally informative of the lenient or restrictive direction that the law will take.  Despite the hurdles, “Disney has decided that MyMagic+ is essential.”[14]  Thomas O. Staggs, chairman of Disney Parks and Resorts, recognizes the need for the company to “aggressively weave new technology into its parks—without damaging the sense of nostalgia on which the experience depends—or risk becoming irrelevant to future generations.”[15]

B. The Intersection of Individual Privacy and RFID Application

RFID technology itself does not threaten individual privacy; it is when implemented in invasive and opaque ways that problems arise.  Recently, researchers observed RFID tracking sensors at a Boston hospital to monitor the activity of sixty-seven nurses.[16]  The nurses wore chipped identification badges that measured nurse-to-nurse interactions, the physical activity of the nurses, and nurse-to-patient interactions.  Sociometric Solutions, the company that conducted the study, claims that data analyzed through the tracking of these nurses showed strong relationships between nurses’ behaviors and patients’ overall hospital stay.  Sociometric Solutions suggests that the data retrieved will allow the hospital to better plan their investments, leading to improvements to patient recovery and bottom-line cost reductions.  Hospitals in the United States have also implemented RFID wristbands for their staff members.  The wristbands monitor how well employees wash their hands and even send hand-washing hygiene report cards to the employees.[17]  This technology will allow for companies to organize in ways that improve feedback, interactions, and the ways that individuals work.[18]  RFID technology is extremely beneficial from a business perspective, and the law is struggling to keep up.

V. New Legislation Involving RFID Tracking

The utilization of location tracking tools within the workplace is unprecedented and tasks legislatures with the creation of laws.[19]  So far, the most substantial case law was decided in 2012 in United States v. Jones.  The Supreme Court held that the government’s installation of a GPS device on a defendant’s vehicle with the purpose of monitoring the vehicle’s movements represented a “search” within the meaning of the Fourth Amendment.[20]  The holding is quite narrow, as it only addresses the government’s use of GPS tracking when it constitutes a physical trespass.  This raises questions regarding the nature and the scope of location tracking data within the private sector, leaving states to individually address privacy concerns.

In 2005, California was the first state to adopt legislation that addressed RFID and privacy-related concerns, but it was limited to the use of automated teller machines.[21]  Today, six states prevent unauthorized “skimming” of RFID information.[22]  Four states—Wisconsin, North Dakota, Oklahoma, and California—have taken measures to prevent employers from requiring employees to implant RFID chips in their bodies.[23]  In July 2013, Montana made history as the first state to pass a law restricting state officials from tracking anyone using an electronic device.[24]  In January 2014, an Illinois law disallowed state agencies from using electronic tracking devices on vehicles.[25]

In 2011, the New Hampshire House of Representatives proposed House Bill (HB445), which restricted electronic tracking of individuals.  However, it provided an employer exception, allowing employers to track employees within the confines of an employment relationship during working hours.[26]  HB445 passed in the New Hampshire House of Representatives, but it failed in the Senate.  Last year, the New Hampshire House of Representatives tried again with a 2013 House Bill (HB592).  HB592 provides even more leeway to employers than the original draft.  The later draft expands on employers’ abilities to track their employees in any “work-related functions, during or after working hours, upon reasonable notice to the employee.”[27]  This bill died in chambers, but New Hampshire’s efforts illustrate the struggle of legislatures to find a clear solution, leaving employers lacking clarity about limitations on their ability to track their employees.  With the increasing use of RFID in the employment context, federal and state legislatures will need to construct guidelines and clarifications hastily.

VI. Recommendations

Employer efficacy, created through transparency and openness, will lead to workplace efficiency and an embrace of technology necessary to compete in the marketplace, rather than fear and rejection.  Communication is crucial, particularly when implementing technology that is unfamiliar.  In a case study conducted for RAND Infrastructure, Safety, and Environment, researchers monitored six private-sector companies, in an effort to understand these corporations’ policies for collecting, keeping, and using data obtained by RFID.  Of the companies studied, only one had “[e]xplicit, written policies governing the use of RFID in the workplace. . . .”[28]  All of the companies “ke[pt] the records indefinitely,” rather than adopting a “limited data retention policy. . . .”[29]  Not a single company communicated to its employees that the data on their ID badges was being collected and stored.  Employers should deal with legal uncertainties by explaining to employees the benefits that RFID provides to companies.  Policies that clearly define the scope of an employer’s tracking ability on an employee are best to elicit informed consent.  The idea of informed consent is consistent with fair, ethical information practices and clear guidelines communicating employer expectations.  Informed consent will allow for employee rights that strike the right balance between individual privacy and workplace efficiency.

VII. Conclusion

The ever-increasing demands for corporations to exceed their bottom line while competing in a marketplace rapidly adapting to technological advances means that employers should, and in fact must, take advantage of RFID technology in order to merely keep up.  However, the law is unable to match the demands of the market and the advances of technology.  RFID utilization requires a legal remedy.  This technology is being applied to human beings with rights to privacy and non-discrimination.  Corporations ought to be allowed to take advantage of research efforts and maximize workplace efficiency.  However, both parties are entitled to a legal framework setting clear guidelines within which they can operate.  Informed consent is a prerequisite to medical treatment and should necessarily be extended to the employer-employee workplace context.

 


*J.D. Candidate, University of Illinois College of Law, expected 2016. B.A. Sociology, B.A. Communication, summa cum laude, University of Illinois at Urbana-Champaign, 2013. I thank the editors of the Journal of Law, Technology, and Policy for their time and guidance in the creation of this piece.

**J.D. Candidate, University of Illinois College of Law, expected 2016. B.A. History, B.A. Speech Communication, University of Illinois at Urbana-Champaign, 2007. I would like to thank the editors for their time and attention to this piece.

[1] Sherry Kubanyi, New Technology Series: Be Part of the Steamroller—Not Part of the Road, Legaco Express, http://www.legaco.org/blog/new-technology-series-paralegal (last visited Apr. 6, 2014).

[2] What Is RFID?, RFID J., http://www.rfidjournal.com/faq/show?49 (last visited Apr. 6, 2014).

[3] Kristina M. Willingham, Scanning Legislative Efforts: Current RFID Legislation Suffers from Misguided Fears, 11 N.C. Banking Inst. 313, 314 (2007).

[4] All About Radio Frequency Identification (RFID), Nat’l Consumers League http://www.nclnet.org/technology/74-radio-frequency-identification/126-all-about-radio-frequency-identification-rfid (last visited Apr. 6, 2014).

[5] Jake Jones, Vatican To Begin Tracking Clergy and Employees with RFID Cards, Examiner (Dec. 2, 2012), http://www.examiner.com/article/vatican-to-begin-tracking-clergy-and-employees-with-rfid-cards.

[6] A.H. v. Northside Indep. Sch. Dist., 916 F. Supp. 2d 757, 762 (W.D. Tex. 2013).

[7] Pat Toensmeier, Report Predicts Major Growth in RFID Market, ThomasNet News (Oct. 28, 2013), http://www.thomasnet.com/journals/procurement/report-predicts-major-growth-in-rfid-market/.

[8] Marisa Anne Pagnattaro, Getting Under Your Skin-Literally: RFID in the Employment Context, 2008 U. Ill. J.L. Tech., & Pol’y 237, 238.

[9] Rachel Emma Silverman, Tracking Sensors Invade the Workplace: Devices on Workers, Furniture Offer Clues for Boosting Productivity, Wall St. J. (Mar. 7, 2013, 11:42 AM), http://online.wsj.com/news/articles/SB10001424127887324034804578344303429080678.

[10] Personnel Monitoring, Intelleflex, http://www.intelleflex.com/solutions.pm.asp (last visited Apr. 6, 2014).

[11] Citywatcher.com Requires Tagging of Employees, RFID Gazette (Feb. 13, 2006), http://www.rfidgazette.org/2006/02/citywatchercom_.html.

[12] What Is RFID System Attendance Monitoring System?, Biometric System, http://www.biometricsystem.in/Attendance-Recorder.html (last visited Apr. 6, 2014).

[13] Brooks Barnes, At Disney Parks, a Bracelet Meant to Build Loyalty (and Sales), N.Y. Times (Jan. 7, 2013), http://www.nytimes.com/2013/01/07/business/media/at-disney-parks-a-bracelet-meant-to-build-loyalty-and-sales.html.

[14] Id.

[15] Id.

[16] Cases: Nurse Study—Patient Outcomes, Sociometric Solutions, http://www.sociometricsolutions.com/cases.html (last visited Apr. 6, 2014).

[17] Claire Swedberg, IntelligentM Wristband Monitors Hand Hygiene, Vibrates to Provide Staff Alerts, RFID J. (Apr. 1, 2013), http://www.rfidjournal.com/articles/view?10558.

[18] Ben Waber, The Next Big Thing in Big Data: People Analytics, Bloomberg Businessweek (May 16, 2013), http://www.businessweek.com/printer/articles/117040-the-next-big-thing-in-big-data-people-analytics.

[19] Corey A. Ciocchetti, The Eavesdropping Employer: A Twenty-First Century Framework for Employee Monitoring, 48 Am. Bus. L.J. 285, 311 (2011).

[20] United States v. Jones, 132 S. Ct. 945, 947 (2012).

[21] State Statutes Relating to Radio Frequency Identification (RFID) and Privacy, Nat’l Conference State Legislatures (Dec. 20, 2013), http://www.ncsl.org/research/telecommunications-and-information-technology/radio-frequency-identification-rfid-privacy-laws.aspx.

[22] Id.

[23] Id.

[24] Seaborn Larson, Montana the First State To Pass Spy Law, Daily Inter Lake (July 8, 2013, 9:00 PM), http://www.dailyinterlake.com/news/local_montana/article_022211de-e81a-11e2-9d43-0019bb2963f4.html.

[25] H.B. 1199, 98th Gen. Assemb., 381st Sess. (Ill. 2013).

[26] H.B. 445, 2011 Sess. (N.H. 2012).

[27] H.B. 592, 2013 Sess. (N.H. 2013).

[28] Edward Balkovich, Tora K. Bikson & Gordon Bitko, Privacy in the Workplace: Case Studies on the Use of Radio Frequency Identification in Access Cards, Rand, http://www.rand.org/pubs/research_briefs/RB9107/index1.html (last visited Apr. 6, 2014).

[29] Id.

Ongoing Taxation Disputes Between Amazon and State Governments

By Blair M. Anthony*

I. Introduction

“In the U.S., the Constitution prohibits states from interfering in interstate commerce. And there was a Supreme Court case decades ago that clarified that businesses – it was mail-order at that time because the Internet did not exist – . . . could not be required to collect sales taxes in states where they didn’t have what’s called a ‘nexus.’  And that’s a very clear decision.”

– Amazon.com Founder and C.E.O. Jeff Bezos on why Amazon does not collect a sales tax in some states.[1]

In many instances, online retailers such as Amazon.com (Amazon) have avoided charging customers a sales tax because they do not have a physical presence in some states where their products are sold.  To the dismay of brick-and-mortar retailers, the physical presence sales tax requirement often gives online retailers a significant competitive advantage in terms of pricing.  However, several factors are making it easier for states to induce Amazon and other online retailers to impose a sales tax on consumers.  One such factor is the rise of “affiliate programs” in which third parties place links on their websites leading consumers to the websites of online retailers like Amazon.[2]  Some states have questioned whether the “affiliates” may be categorized as employees and cause the online retailer to have a physical presence in the state.[3]  Amazon founder Jeff Bezos opposes state online sales tax legislation, but supports creating a federal sales tax for online retailers.  In order to avoid taxation issues in the meantime, Amazon and other online retailers have built distribution centers and negotiated tax settlements with some state politicians.  To date, Amazon imposes a sales tax on purchases made in twenty of the states[4] and in the future may impose a sales tax in more states.  However, competing judicial interpretations between the highest courts in New York and Illinois illustrate the ongoing conflict between Amazon and states regarding the physical presence requirement.

II. Affiliate Commerce Programs Spark E-Commerce Taxation and Litigation

Amazon has developed a program, known as “Amazon Associates,” which allows third party websites to advertise Amazon.com in exchange for a commission if their advertisement yields a purchase on Amazon.[5]  Similarly, Overstock.com (Overstock), another online retailer, has an affiliate program through which third party websites are paid for links on their websites that yield sales on Overstock.

A. New York Victorious in Assertion that Affiliate Program Constitutes Physical Presence

Cash-strapped states looking for a way to earn additional tax revenue have asserted that affiliate programs serve as a physical presence within their state.[6]  In Amazon.com, LLC v. New York State Department of Taxation & Finance, Amazon and Overstock sought injunctive relief from a New York statute that imposed a duty on out-of-state retailers to collect sales and use tax when they utilized in-state residents to solicit business through Internet websites.[7]  In reaching its decision, the New York Supreme Court reasoned that “while it must constitute more than a ‘slight presence,’ [the physical presence requirement of Quill Corp.] may be manifested by the presence in the taxing State of the vendor’s property or the conduct of economic activities in the taxing State performed by the vendor’s personnel or on its behalf.”[8]  Consequently, in finding the New York statute constitutional, the court dismissed Amazon’s complaint.  The resulting appeal in the New York Court of Appeals affirmed the lower court’s decision on the constitutionality of the state statute.  The subsequent denial of certiorari by the United States Supreme Court meant that New York had successfully defeated the largest online retailer in the battle to collect state sales tax resulting from presence due to the affiliate programs.

Amazon could potentially follow in the footsteps of Overstock, which withdrew its affiliate program from the state of New York after the decision was first issued.[9]  However, if Amazon did so then it would run the risk of losing additional business generated from the New York affiliate programs.  Still, if every state follows the model of New York, Amazon runs the risk of having to deal with fifty different state bureaucracies’ sales tax statutes.

B. Illinois Tax Statute Deemed Discriminatory Against E-Commerce Companies

Despite New York’s success in using the affiliate program as a mechanism to mandate the imposition of a sales tax, in a similar case the Illinois Department of Revenue was unsuccessful in trying to impose such a tax.  In Performance Mktg. Association v. Hamer, the Illinois Supreme Court struck down a state statute that imposed a tax collection obligation on out-of-state retailers who paid Illinois residents when advertisements on their website led to sales on the online retailer’s website.[10]  Illinois asserted that the use of state residents by out-of-state online retailers created a physical presence and a duty on behalf of the online retailer to collect sales tax.  The plaintiff argued that the Illinois statute constituted a discriminatory tax on electronic commerce because print and broadcasting entities using Illinois residents and compensating them based on sales performance did not mandate a tax collection obligation.  The decision by the Illinois Supreme Court, especially when contrasted with the decision of the New York Court of Appeals, illustrates the competing interpretation of whether affiliate programs may be used to force online retailers to collect sales tax.

III. Proposed Federal Legislation and Tax Agreements to End Disputes

While zealously litigating and lobbying against the tax statutes in New York and Illinois, Amazon founder Jeff Bezos has been an ardent proponent of a federal online sales tax.

A. Amazon Founder Supportive of Federal Legislation to Solve Tax Disputes

In an interview with Consumer Reports Bezos said, “[o]ur point of view on this is that we should simplify the sales tax system, and we’ve been consistent on this for about 10 years . . . Because the right way to fix this is with federal legislation.  That’s where it can be fixed properly.”[11]  Bezos supports the Marketplace Fairness Act of 2013.  The Act, which passed in the U.S. Senate in the spring of 2013, stipulates that online retailers that do not have a physical presence in a state where they make sales must collect sales tax if they have gross annual receipts in the United States exceeding one million dollars.[12]  If passed, this legislation would give large online retailers a streamlined process for imposing state sales tax on customers.  They would not be subject to fifty different state statutes for imposing sales tax.  Despite the upside of this proposed legislation, there is speculation that the bill will not pass in the U.S. House of Representatives due to concerns that its passage would lead to a tax increase for constituents.[13]

B. Amazon Solves Disputes with Some States by Reaching Sales Tax Agreements

Besides supporting efforts for a federal online sales tax, Amazon has reached tax agreements with some states in an effort to preempt state legislation that would force the retailer to impose a sales tax.  One of these states is Florida, where Amazon reached an agreement to build warehouses, and create as many as 3,000 jobs as part of a $300 million investment.[14]  In return, Florida will delay mandating that Amazon impose a sales tax on customers in the state.  A similar deal was reached with the state of South Carolina.[15]  In exchange for building a distribution center and bringing jobs to South Carolina, Amazon will not have to collect tax there until 2016.

The tax agreements with selected states serve as only short-term shields from the long-term collection of sales tax in these states.  For example, Amazon agreed to build two warehouses in exchange for a year-long exemption from collecting sales tax in the state of California.[16]  That year has passed, and now the tremendous advantage that Amazon had against traditional brick-and-mortar retailers is gone for the foreseeable future.  Nevertheless, Amazon might feel that such short-term preclusions of tax collection for the building of warehouses may be more advantageous than costly litigation and renewed state tax legislation.

IV. Impact of State Tax Agreements If Federal Legislation is Unsuccessful

As the short-term tax deals that Amazon has negotiated with states expire, more and more customers will begin to pay sales tax.  However, positive outcomes may result from these short-term arrangements.  Amazon has a greater network of distribution warehouses than it had prior to the tax disputes through settlements they reached with states like South Carolina, California, and Florida.  Amazon has stated that this greater quantity of warehouses has meant that it will be able to save up to a day off its two-day shipping time.[17]  Therefore, in losing what many consider a competitive advantage—no sales tax in these states—Amazon gains another advantage: faster shipping speed than many of its online competitors.

It is also questionable whether collecting states sales tax in these states will lead to a large loss of customers.  If these customers go to brick-and-mortar stores instead, they will have to pay sales tax there as well.  Moreover, imposing state sales tax may prove less restrictive and burdensome on actions that Amazon may undertake going forward.  In states where Amazon does not collect sales tax due to lack of a physical presence, the company has restricted employee travel.[18]  Amazon fears that employees traveling to those states on business would constitute the “nexus” requirement under Quill Corporation v. North Dakota.  Further, by imposing a tax Amazon could reinstate its affiliate programs in states where it chose to abandon the programs due to proposed online tax legislation.  States in which Amazon severed ties with affiliates due to state online tax legislation include Arkansas, Missouri, Minnesota, and Rhode Island.[19]  The reinstating of these affiliate programs along with faster shipping times and a lesser need for litigation and lobbying may make up for the loss of those customers that leave due to the collection of sales tax.

V. Conclusion

The only certainty in regard to the Amazon sales tax situation is that the status quo will not remain.  Amazon may reach agreements with states that it currently does not collect a sales tax in, or a federal law may be passed to govern the imposition of online sales tax.  By doing nothing states are losing out on vast quantities of tax revenue from online purchases.  Brick-and-mortar retailers have lobbied and will continue to lobby state officials over what they view as an unfair competitive advantage enjoyed by online retailers like Amazon.[20]  In spite of the likelihood that the number of states where Amazon must impose a sales tax will increase, all is not lost in terms of Amazon having continued success.  The faster shipping times that result from an increased number of distribution centers, and the ability to reinstate affiliate programs could mean continuing years of prosperity and success for the nation’s largest online retailer.

 


*J.D. Candidate, University of Illinois College of Law, expected 2016.  B.A. International Affairs, University of Georgia, 2012.  First, I would like to thank God for this opportunity.  This column would not have been possible without the guidance of Angie Nizio, the Recent Developments Editor at the Journal of Law, Technology and Policy.  I would also like to thank my friends and family for all of their encouragement and support.

[1] Graeme McMillan, Why Doesn’t Amazon Collect Sales Tax? The Constitution, That’s Why, Time Tech (May 18, 2011), http://techland.time.com/2011/05/18/why-doesnt-amazon-collect-sales-tax-because-of-the-constitution-thats-why/.

[2] Overstock.com, Inc. v. New York State Dep’t of Taxation & Fin., 987 N.E.2d 621, 623 (N.Y. 2013).

[3] Id. at 627.

[4] About Sales Tax on Items Sold by Amazon.com, Amazon, http://www.amazon.com/gp/help/customer/display.html?nodeId=468512 (last visited Mar. 8, 2014).

[5] Amazon.com, LLC v. New York State Dep’t of Taxation & Fin., 913 N.Y.S.2d 129, 134 (N.Y. App. Div. 2010).

[6] Id. at 135.

[7] Id. at 134.

[8] Id. at 137.

[9] Greg Stohr, Amazon Rejected by U.S. Supreme Court on New York Sales Tax, Bloomberg Businessweek (Dec. 2, 2013), http://www.businessweek.com/news/2013-12-02/amazon-rejected-by-u-dot-s-dot-supreme-court-on-new-york-sales-tax.

[10] Performance Mktg. Ass’n, Inc. v. Hamer, 998 N.E.2d 54, 59–60 (Ill. 2013).

[11] McMillan, supra note 1.

[12] The Marketplace Fairness Act of 2013, S. 743 113th Cong. § 2 (2013).

[13] Robert Barnes, Supreme Court Declines Case on Making Online Retailers Collect Sales Taxes, Wash. Post (Dec. 2, 2013), http://www.washingtonpost.com/politics/supreme-court-declines-case-on-making-online-retailers-collect-sales-taxes/2013/12/02/e430ec8c-55f5-11e3-835d-e7173847c7cc_story.html.

[14] Greg Bensinger, Amazon, Web Sales Taxes Coming to Florida, Wall St. J. (June 14, 2013), http://blogs.wsj.com/digits/2013/06/14/amazon-web-sales-taxes-coming-to-florida/.

[15] Rob Mandelbaum, Amazon Denies It Has a Small-Business Problem, N.Y. Times (Dec. 12, 2011, 11:00 AM), http://boss.blogs.nytimes.com/2011/12/12/the-backlash-to-amazons-price-check-promotion-builds/?_php=true&_type=blogs&_r=0.

[16] David Streitfeld, Amazon, Forced to Collect a Tax, Is Adding Roots, N.Y. Times (Sept. 11, 2012), http://www.nytimes.com/2012/09/12/technology/amazon-forced-to-collect-sales-tax-aims-to-keep-its-competitive-edge.html.

[17] Id.

[18] Robert W. Wood, Amazon No Longer Tax-Free: 10 Surprising Facts as Giant Loses Ground, Forbes (Aug. 22, 2013, 3:14 AM), http://www.forbes.com/sites/robertwood/2013/08/22/amazon-no-longer-tax-free-10-surprising-facts-as-giant-loses-ground/.

[19] See Updates to the Associates Operating Agreement Effective February 12, 2014, Amazon Associates (Feb. 12, 2014), https://affiliate-program.amazon.com/gp/associates/help/operating/compare.

[20] See Lydia Depillis, Amazon Wants to Send Stuff Before You Order It. Are Other Retailers Doomed?, Wash. Post (Jan. 30, 2014, 3:45 PM), http://www.washingtonpost.com/blogs/wonkblog/wp/2014/01/30/amazon-wants-to-send-stuff-before-you-order-it-are-other-retailers-doomed/.

Issues in Using Free Web Resources in Legal Practice

By Paul Healey* and Paul Gatz**

I.          Introduction

Access to accurate, complete, and timely legal information is an essential component of practicing law.  Unfortunately, such access has historically been expensive.  The growth and integration of the World Wide Web into daily life has led to a popular sentiment that “everything is on the web, and it’s free.”[1]  Although this is not true in most areas of information, there is reason to investigate such a possibility in the case of legal information, particularly in regard to primary resources such as statutes, cases, and regulations.

Traditional legal publishers moved online in the 1970s with the advent of Lexis and Westlaw.  These services, along with other newer competitor services are now accessed through the Web and are certainly accurate, complete, and timely, but they are far from free.  However, there are Web resources that offer a wealth of information that can be accessed free of charge.  In particular, several free Web resources, such as Google Scholar,[2] Cornell University’s Legal Information Institute (LII),[3] and numerous government websites provide an expanding coverage of legal information that attorneys can use to conduct legal research.

Our question is whether these free Web resources have developed the features and level of quality to serve as suitable legal research substitutes for the traditional fee-based electronic resources.  This Column will explore the online legal research habits of attorneys and will consider the types, extent, and depth of legal information available for free on the Web.  The Column will conclude with a discussion of issues related to conducting practice-oriented legal research solely by means of free Web resources.

II.        Trends in Online Legal Research

The use of free Web resources for the purposes of legal research seems to be prevalent among practicing attorneys.  In 2012, the Academic Law Libraries Special Interest Section (ALL-SIS) of the American Association of Law Libraries appointed a Task Force that distributed a survey on the legal research practices of attorneys.[4]  In the survey, 61.4% of responding attorneys reported that they use free Web resources in their legal research frequently or very frequently.[5]  Only 12.6% reported using them rarely or never.[6]

The 2013 annual Legal Technology Survey Report published by the American Bar Association (ABA) found that 92.9% of practicing attorneys use free Web resources for legal research purposes[7] and that 95.9% of attorneys use Web resources in general.[8]  The ABA survey information, unfortunately, offers few details on how attorneys are using free Web resources to conduct legal research.  However, it does say that fifty percent of survey respondents reported starting research projects with free Web resources in 2013.[9]  The percentage of attorneys who reported starting their research with fee-based Web resources was 36.4% in 2013,[10] while the percentage of attorneys who reported starting research with print resources was only 10.7%.[11]  These data indicate a clear preference for using free Web resources in the initial stages of research.

However, when starting a research project conducted solely online, the survey data indicate little difference in attorneys’ preferences for free or fee-based Web resources.  The percentage of attorneys who reported starting online research projects by using fee-based online resources was about 40%,[12] while the percentage of attorneys who reported starting online research projects by using free general search engines was 37%.[13]

The ABA survey reports provide some detail as to what sorts of free Web resources attorneys use for legal research.  In 2013, over a third of respondents, or 35.6%, reported using Google,[14] and about a quarter of respondents, or 24.6%, reported using a state bar association offering, which presumably means Fastcase or Casemaker.[15]  Other responses included government websites (14.3%), FindLaw (9.7%), and Cornell’s LII (9.4%).[16]

The ABA and ALL-SIS surveys present a picture of the legal research habits of practicing attorneys in which the use of free Web resources is widespread.  We know that attorneys are using free resources like Google, government websites, Cornell’s LII site, and state bar association offerings, but we do not know what types of information (primary or secondary, factual or legal, statutes or case law) or how much information attorneys are retrieving from these resources.  It is possible, however, to form some idea of how attorneys could use these resources, based on the types and extent of legal information that they make available.

III.       The Free Web Legal Information Environment

What is referred to here as the “free Web legal information environment” is nothing less than the totality of legal information available free of charge on the Web.  As a single entity, the Web is unfocused, disorganized, and fragmented, and the full range of its coverage is unknown.  However, consideration of its constituent websites, in particular those identified in the ABA Legal Technology Survey as used by practicing attorneys for legal research, can shed some light on the types, extent, and depth of legal information available in the free Web environment.  Below we describe the resources most often mentioned in the surveys.

A. Google & Google Scholar

Google’s standard search uses “software known as ‘web crawlers’ to discover publicly available webpages” and then creates an index of those websites.[17]  When a user enters search terms into Google’s search box, Google’s algorithms use those terms to determine and retrieve the most relevant websites from its index.[18]  Therefore, a Google search will help the legal researcher find only information available on publicly accessible websites and only information that the Google algorithms deem relevant to the search terms.

For a more focused search, the Google Scholar database of published case opinions covers “US state appellate and supreme court cases since 1950, US federal district, appellate, tax and bankruptcy courts since 1923 and US Supreme Court cases since 1791.”[19]  It also features a rudimentary citator, accessible by clicking “How cited” for a particular case.

B. Fastcase/Casemaker

Fastcase[20] and Casemaker[21] are not free Web resources, but nearly all state bars offer one or the other as a benefit of membership in the state bar association.[22]  Both databases provide online access to state and federal case law, statutes, and regulations.[23]  Fastcase’s Federal Library features a full set of case opinions for the U.S. Supreme Court, all federal appellate courts, all federal district courts, and all federal bankruptcy courts.[24]  Casemaker also features a “negative citator” called CaseCheck+[25] and daily summaries of state and federal appellate cases in its CasemakerDigest.[26]

C. Government Websites

Federal, state, and local government websites all provide information useful to the legal researcher.  Court websites provide recent case opinions, legislative websites provide statutory codes, as well as session laws and bills, and agency websites provide regulations, administrative decisions, and guidance.  In particular, the Government Printing Office’s Federal Digital System provides around fifty collections of information from all three branches of the federal government in the form of “authentic, digitally signed PDF documents.”[27]

D. Cornell University Law School’s Legal Information Institute

Cornell’s LII “publishes electronic versions of core materials in numerous areas of the law,” including U.S. Supreme Court opinions going back to 1992 and the full U.S. Code.[28]  The LII also publishes secondary sources, such as Wex, “a collaboratively-edited legal dictionary and encyclopedia,”[29] and provides links to other federal and state law material.

IV.       Issues in Using Free Web Resources in Legal Practice

Having reviewed a few of the more popular free Web resources for legal research, it is clear that the free Web legal information environment contains a wealth of primary legal information, along with a few citators and secondary sources.  To supplement these resources, the Web offers other free resources such as legal blogs and websites of law firms, law schools, libraries, and non-profit organizations that provide guidance on both the law and legal research.  The question remains whether the free Web legal information environment stands as an adequate legal research alternative for the fee-based electronic resources like Westlaw and LexisNexis.  Primarily, this is a question about whether these resources can offer specific features, like secondary sources, sophisticated citators, and editorial enhancements that match or exceed the level of quality offered by the fee-based resources.

Assuming that these threshold requirements were met, a number of issues and questions would arise.  For one, without the mediation of a trusted legal publisher like Thomson Reuters or Reed Elsevier,[30]   the practicing attorney would need to make determinations about the reliability of particular free Web resources.  Jootaek Lee has suggested that free Web resources should be evaluated on standards of authority, accuracy, currency, coverage, and usability.[31]  These evaluations would either need to be performed by the attorney during the course of legal research or performed and compiled into research guides by legal information experts.

Second, the transition from a legal research environment that is isolated from the public to one that is open to all may have serious effects on attorneys’ standards of professional competence and duty of care.  Lawrence Duncan MacLachlan has argued that public access to legal information on the Web “challenges the traditional assumption that lawyers are more competent researchers than the general public” and may lead to the transformation of “the minimal standard of professional competence in legal research from that of the ordinary lawyer to the higher standard of the ‘intelligent layman.’”[32]  In an environment in which attorneys conduct legal research solely using free Web resources, they will need to be more competent in using those resources than the “intelligent layman” in order to avoid alterations to their professional standards of competence.

Finally, it is worth considering what sort of market impact the free Web legal information environment may have on the traditional, fee-based electronic resources.  If free Web resources can adequately serve as substitutes for Westlaw, Lexis, or Bloomberg, then one might expect the greater degree of competition in the market for legal information to have serious economic effects on the business models and choices of the fee-based resources.  Competition may lead to increased quality of existing products and services, such as citators, finding aids, and editorial enhancements, as well as to new, innovative products and services.  Along with higher-quality and more innovative products and services, the fee-based resources may raise their subscription fees and market themselves solely to larger firms willing to pay their prices, leaving smaller firms and practice environments to rely solely on the free Web legal information environment.

V.        Conclusion

Practicing attorneys are using free Web resources for legal research.  These free Web resources vary in the types, extent, and depth of legal information they offer, and the free Web legal information environment itself remains unfocused, disorganized, and fragmented.  As free Web resources continue to develop, the legal profession should maintain an awareness of the issues and opportunities that may arise when attorneys can competently conduct legal research solely by means of the free Web legal information environment.

 


*Senior Instructional Services Librarian, Associate Professor of Library Service, University of Illinois College of Law

**Graduate Assistant, University of Illinois College of Law

[1] The True Value/Cost of Web-Based Information, CIT Infobits, May 2002, at 3, 3, available at https://cdr.lib.unc.edu/indexablecontent?id=uuid:43df4571-41b8-44ab-b73f-90df0e8b8457&ds=DATA_FILE (last visited Feb. 9, 2014).

[2] Google Scholar, http://scholar.google.com/ (last visited Feb. 8, 2014).

[3] Legal Info. Inst., http://www.law.cornell.edu (last visited Feb. 8, 2014).

[4] ALL-SIS Task Force on Identifying Skills & Knowledge for Legal Practice, A Study of Attorneys’ Legal Research Practices and Opinions of New Associates’ Research Skills 2 (2013), available at http://www.aallnet.org/sections/all/storage/committees/practicetf/final-report-07102013.pdf.

[5] Id.

[6] Id.

[7] Am. Bar Ass’n, 2013 Legal Technology Survey Report, Vol. V: Online Research 35 (Joshua Poge ed., 2013).

[8] Id. at 33.

[9] Id. at 22.

[10] Id.

[11] Id.

[12] Id. at 34.

[13] Id.

[14] Id. at 38.

[15] Id.

[16] Id.

[17] Crawling & Indexing, Google Inside Search, https://www.google.com/intl/en/insidesearch/howsearchworks/crawling-indexing.html (last visited Feb. 8, 2014).

[18] Algorithms, Google Inside Search, https://www.google.com/intl/en/insidesearch/howsearchworks/algorithms.html (last visited Feb. 8, 2014).

[19] Google Makes Free Caselaw Search Available in Scholar, Internet for Law., http://www.netforlawyers.com/content/google-makes-free-caselaw-search-available-scholar (last visited Feb. 8, 2014).

[20] Fastcase, http://www.fastcase.com/ (last visited Feb. 8, 2014).

[21] Casemaker, http://www.casemaker.us/Main.aspx (last visited Feb. 8, 2014).

[22] Shawn G. Nevers, Becoming a Cost-Effective Researcher, 14 Student Law. 18, 18–19 (2012), available at http://www.americanbar.org/publications/student_lawyer/2012-13/dec/cost_effective_researcher.html (last visited Feb. 8, 2014).

[23] Products, Casemaker, http://www.casemaker.us/Products.aspx (last visited Feb. 8, 2014); Scope of Coverage, Fastcase, http://www.fastcase.com/whatisfastcase/coverage/ (last visited Feb. 8, 2014).

[24] Scope of Coverage, supra note 23.

[25] CaseCheck+, Casemaker, http://www.casemaker.us/Productscasecheck.aspx (last visited Feb. 8, 2014).

[26] CasemakerDigest, Casemaker, http://www.casemaker.us/ProductsCMDigest.aspx (last visited Feb. 8, 2014).

[27] About FDSys, U.S. Gov’t Printing Office, http://www.gpo.gov/fdsysinfo/aboutfdsys.htm (last visited Feb. 8, 2014).

[28] Who We Are, Legal Info. Inst., http://www.law.cornell.edu/lii/about/who_we_are (last visited Feb. 8, 2014).

[29] FAQ, Legal Info. Inst., http://www.law.cornell.edu/wex/FAQ (last visited Feb. 8, 2014).

[30] These are the owners of Westlaw and LexisNexis, respectively.

[31] Jootaek Lee, Gatekeepers of Legal Information: Evaluating and Integrating Free Internet Legal Resources into the Classroom, 17 Barry L. Rev. 221, 228 (2012).

[32] Lawrence Duncan MacLachlan, Gandy Dancers on the Web: How the Internet Has Raised the Bar on Lawyers’ Professional Responsibility to Research and Know the Law, 13 Geo. J. Legal Ethics 607, 609–10 (2000).