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District Court Affirms Magistrate’s Decision Finding No Privilege Waiver as to Personal Files Stored on (but Later Deleted from) Employer-Provided Laptop

Posted in CASE SUMMARIES

Curto v. Med. World Communications, Inc., 2006 WL 1318387 (E.D.N.Y. May 15, 2006)

In this opinion, the district court denied defendants’ objections to a magistrate’s discovery order which concluded that plaintiff had not waived any attorney-client privilege or work product protection as to documents originally created on (but subsequently deleted from) two employer-provided laptops.

Plaintiff had worked for the defendant (“MWC”) out of her home office and was assigned company-owned equipment to use in her home, including company-owned laptop computers. Specifically, plaintiff was assigned a company-owned Macintosh (“Mac”) laptop computer until May 2003, when she was told that she would be converting to a Dell laptop computer. As a result, plaintiff had her files from the Mac laptop transferred to the new Dell laptop. Prior to this transfer, plaintiff deleted her personal files from the Mac laptop, including notes and e-mails she had sent to her attorneys regarding this action. The Mac laptop was then returned to MWC.

In May 2003, plaintiff was assigned a Dell laptop computer to use in her home office. Plaintiff used the Dell laptop until she was terminated in October 2003, at which time she was instructed to return the Dell laptop to MWC. Before plaintiff returned it, she again deleted all personal files and written communications to counsel.

Almost two years later, MWC hired a forensic consultant to inspect the Mac and Dell laptops that were assigned to plaintiff. The consultant was able to restore portions of the computer files and emails that had been deleted by plaintiff. On July 1, 2005, MWC produced these restored documents to plaintiff’s counsel. By letter dated July 8, 2005, plaintiff’s counsel asserted that many of these documents were protected from disclosure by the attorney-client privilege and attorney work product immunity. Plaintiff demanded that the files be returned and not disclosed by defendants. When the parties could not resolve the dispute, MWC moved for an order to determine whether the documents were protected.

The magistrate began his analysis by noting that, while the voluntary disclosure of protected communications generally results in a waiver, inadvertent production does not waive the privilege unless the producing party’s conduct was so careless as to suggest that it was not concerned with protecting the asserted privilege. To determine whether there had been a waiver, the magistrate balanced four factors: (1) the reasonableness of the precautions taken by the producing party to prevent inadvertant disclosure of privileged documents; (2) the volume of discovery versus the extent of the specific disclosure at issue; (3) the length of time taken by the producing party to rectify the disclosure; and (4) the overarching issue of fairness. The magistrate added a further factor or “subfactor” – “whether or not there was enforcement of [any computer usage] policy.”

As for the relevant four factors, the magistrate found that: (1) plaintiff had taken reasonable precautions to prevent inadvertent disclosure in that she sent the e-mails at issue through her personal AOL account which did not go through the defendants’ servers and she attempted to delete the material before turning in her laptops; (2) the case involved limited items that were recovered from a computer as opposed to “a tremendous volume of paperwork”; (3) plaintiff immediately sought to rectify the disclosure; and (4) the “overarching issue of fairness” weighed in plaintiff’s favor because clients should be encouraged to provide full disclosure to their attorneys without fear that their disclosure will be invaded. With regard to the “subfactor,” the magistrate noted that the following facts were undisputed: MWC had a computer usage policy which prohibited the personal use of computers. Plaintiff signed the employee handbook containing this policy, and plaintiff did use the computer for personal use. However, the magistrate stated that this did “not end the issue” because the lack of enforcement by MWC of its computer usage policy created a “false sense of security” which “lull[ed]” employees into believing that the policy would not be enforced. More specifically, he indicated that there were approximately four instances in which MWC monitored the computer use of its employees and that they occurred under very limited circumstances, viz. “when there was a request by either a manager or supervisor or by someone else at [MWC].” For example, one instance involved an employee who allegedly downloaded pornographic materials, another involved an employee allegedly playing poker on the internet, and another involved an employee allegedly using the computer to conduct an outside business. The magistrate further noted that at least two of these cases occurred in Chicago and California, respectively, which would not have provided plaintiff with any notice that the company monitored computer usage.

Accordingly, the magistrate concluded that plaintiff had not waived her right to assert the attorney-client privilege and work product protection with regard to any of the documents retrieved by defendants from the two laptop computers, and directed defendants to return all such material. He reserved decision as to whether the documents at issue were protected by the attorney-client privilege or work product immunity.

The district court found that the magistrate’s ruling, which considered the governing four factors as well as the subset of enforcement, was not clearly erroneous or contrary to law. It further directed that any applications regarding whether the documents at issue were actually protected by the attorney-client privilege or work product immunity should be submitted to the magistrate.