The Electronic I-9 Tug of War, Part 2

The dispute between electronic I-9 vendors LexisNexis and USVerify continues, according to recent court documents and filings online.

As reported earlier, LexisNexis filed a breach of contract suit against USVerify demanding the immediate return of all I-9 data prepared in USVerify’s system following the termination of the parties’ reseller agreement. USVerify has resisted this demand, arguing that that the data does not belong to LexisNexis and that USVerify is not obligated under the terms of the Reseller Agreement to export the I-9 and E-Verify data in any particular format without additional compensation.

Not surprisingly, the stakes have been high for both companies: LexisNexis has reportedly received increasing pressure from its clients for the return of the I-9/E-Verify data (especially in light of recent audit waves) whereas USVerify faced the loss of a significant book of business and additional engineering costs which may not have been contemplated between the two parties. How did the court rule on these issues? And what are the additional lessons learned for employers considering (or already using) an electronic I-9 system? First, let’s take a quick look at the court summary since our last blog: June 30: Shortly after the complaint was filed in the Superior Court of Fulton County, Georgia, the case was removed to federal court (specifically, the United States District Court for the Northern District of Georgia). All filings since then have been made with the district court. July 5: After a motion hearing was conducted (and additional memos were filed), the court issued an order granting in part LexisNexis’ motion for injunctive relief. Specifically, USVerify was ordered to (1) refrain from deleting, destroying, altering or undermining LexisNexis I-9 and E-Verify data, which includes electronic signature data, copies of all electronic I-9s, copies of identity and work authorization documents, audit trails, and E-Verify data; (2) preserve all such data in a readily accessible and usable format; and (3) provide the federal government with such data in the event of an audit. Noticeably absent from the order was the return of I-9/E-Verify data – that would come later. July 13: Another motion hearing was held to discuss the return of I-9 data to LexisNexis. Specifically, the parties discussed hiring a third party consultant to evaluate USVerify’s system and determine how long an appropriate data transfer would take. USVerify also requested that LexisNexis deposit $375,000 in escrow for payments which USVerify alleges are due under the reseller agreement.July 18: The Court granted LexisNexis’ motion for a preliminary injunction and specifically orderedUSVerify to return all information that LexisNexis’s customers need to comply with any and all I-9 and E-Verify related rules, regulations, executive orders, or requests for information, and secure the prompt transmission all such information, including E-Verify reports, data, and images either to LexisNexis or to LexisNexis’s customers directly. Specifically, USVerify was ordered to do the following:

1. Return and transmit to LexisNexis in a readily accessible, usable format all I-9 data[1], electronic signature data, copies and images of all electronic I-9s, copies of identity and work authorization documents, audit trails, E-Verify data[2] (and accompanying images), and all other information containing or reflecting information provided by LexisNexis or its customers.

2. Return all PDF images (or other images) of all I-9 forms, including all electronic signature data for each Form 1-9, all work authorization documents, and any other images it has stored on behalf of a LexisNexis customer, including E-Verify images

Appointment of Third Party Technology Consultant Following LexisNexis’ suggestion, the Court also decided that it would appoint a third party technology consultant to (a) inspect and audit USVerify’s methods of storing the data identified, (b) inspect and audit USVerify’s data export capabilities, (c) identify the cost and effort required to export, return, or transmit all of the data identified, and (d) recommend the most reasonable, efficient and effective method (including the format) of transmitting all of this relevant data to LexisNexis. Digging Deeper To a large degree, this case turned on the language and intent of the reseller agreement between the two parties. However, if we look beyond all of that, we’re left with two fundamental disputes between the parties: (1) what data belongs to LexisNexis and its customers, and (2) how must that data be provided at the end of the agreement. LexisNexis argued (and the court ultimately agreed) that the contract called for the return of all information related to LexisNexis customers, whether the information came from LexisNexis, from the DHS (through E-Verify), or directly from the customers. USVerify on the other hand considered the I-9, audit trails, E-Verify results and the like part of its intellectual property – something that its software produced. The only information it was initially willing to share was the raw data provided by the end-user companies. AnalysisPersonally, I think LexisNexis got it right when they argued that accepting raw “free-floating” I-9 data alone would leave employers at risk in the event of an audit. Specifically their counsel wrote, “[I]t is not enough to LexisNexis’s customers to possess a reengineered version of the I-9; they need the actual electronic copy in USVerify’s possession.” The notion that an electronic I-9 is simply the raw data or simply the PDF copy is a frequent misconception amongst many vendors in the electronic I-9 space. In reality, an electronic I-9 consists of multiple data points, electronically generated signatures, audit trails, as well as snapshots and PDF representations.  If your vendor gives you the impression that all you need is data or PDFs, be very concerned! Also, as mentioned in our last post, employers today should be very careful to ensure that their license agreement clearly spells out who owns the electronic I-9 data – and specifically, what that data encompasses. There are a lot of moving parts in an electronic I-9 system, so it’s wise to list each element you expect to receive in some detail. The second major point of contention concerns how the data is to be sent back to LexisNexis and its customers. In reading the briefs, it appears that LexisNexis originally suggested the data be sent in HR-XML format, or through .csv files in an Excel format – which was rejected by USVerify. Later, USVerify offered to do so, but only at a price. In the end, the parties agreed (after much arguing) to hire an independent consultant to evaluate the system and recommend the format. Another lesson learned for employers: ambiguity such as this can be easily avoided by either specifying the method or guaranteeing it to be in a “readily accessible and usable format.” A well designed electronic I-9 system will then be able to import the data and files and make them available for historical audit purposes. Lastly, although this may seem obvious by now, I’m a big fan of documenting vendor guarantees. It makes good business (and legal) sense, and prevents these endless disputes down the road. Be wary of vendors who make broad “assurances” about your data in marketing collateral and press releases. While it may be comforting to hear during the sales process, that marketing literature will not necessarily hold up if you ever have to take that vendor to court. Put more succinctly: talk is cheap, so get it in (legal) writing!

[1] I-9 data fields includes but is not limited to Employer Identifier (associated to the I-9s via login credentials); Location Identifier; Last Name; First Name; Middle Initial; Date of Birth; Social Security Number; Immigration Status; Work Until Date; Employment Date; Work Authorization Document Code; Work Authorization Document Expiration Date; Alien number; 1-94 number; Passport number; Visa number; Maiden Name) [2]E-Verify data fields includes but is not limited to Company Id Number, Company Name, Parent Company Id, User Id, Access Code, City, State, Pilot, Initiated By, Initiated Date, Case Verification Number, Card Number, Alien Number, I-94 Number, Last Name, First Name, SSN, Hire Date, Three Day Exception, Three Day Exception Other, Initial Resolution, Additional Resolution, DHS 3rd Step Resolution, Additional 3rd Step Resolution, Case Closure Date, Closure Descr