Henry v. IAC/Interactive Group, 2006 WL 354971 (W.D. Wash. Feb. 14, 2006)
In this employment discrimination/trade secrets case, defendants obtained a preliminary injunction that granted the following injunctive relief:
-Expedia’s laptop and all Expedia documents (“Expedia property”) to be returned to Expedia immediately, after defendants’ computer forensics firm removes plaintiff’s privileged documents at her expense. Forensic expert to consider emails privileged if they comprise the substance of messages that were sent or received by anyone at the law firms representing plaintiff. If any of plaintiff’s privileged documents attach or summarize Expedia documents, the attachment and/or summary is to be permanently removed, and the forensic expert is to identify the offending document and certify to Expedia the permanent removal of same. As soon as possible after such production, forensic expert to provide Expedia with a privilege log identifying all documents not produced to Expedia.
-Pending trial on the merits, plaintiff and her counsel are restrained from accessing or controlling access to any Expedia property, or documents derived therefrom, in the custody of defendant’s forensic expert.
Plaintiff had been Vice President of International Product Development of defendant Expedia, Inc. After plaintiff complained that a new supervisor was biased against her, defendants informed plaintiff that she would be removed from her position and would be allowed a transfer. Defendants gave plaintiff a paid leave of absence from November of 2003 until November 2004 to seek another position inside or outside Expedia.
Plaintiff took her Expedia-issued laptop computer to her residence when she took her leave of absence. She continued to receive email communication via the Expedia email server, as well as email via a personal email account. She also maintained a connection to the Expedia computer server, with access to network documents, for at least some part of her leave of absence.
After plaintiff retained her current counsel in July 2004, she relayed information pertaining to her discrimination claims, including providing copies of some Expedia e-mail and documents. Plaintiff was ultimately terminated in November 2004. Defendants did not use an exit process and did not request her to return her Expedia-issued laptop computer.
Plaintiff filed a discrimination law suit in March 2005. Plaintiff’s counsel apparently orally disclosed to defendants that she had a large volume of Expedia email on multiple computers, and that she planned to review and produce them. Meanwhile, plaintiff delivered three laptop computers and an external hard drive to her counsel’s offices. A member of plaintiff’s counsel’s IT department archived and copied certain files from the computers and hard drive, but counsel asserts that she did not begin to look at any email at that time.
From July to October 2005, plaintiff’s counsel reviewed and sorted the email using certain keywords, in an attempt to screen out any potentially privileged communications. In August, plaintiff’s counsel informed defendants’ counsel that there were over 30,000 email communications that they were attempting to segregate. In September, plaintiff produced 4,200 emails to defendants. In October, counsel again met to discuss the sorting and review process. Defendants asserted that it was not until the October discussions that they learned that plaintiff possessed tens of thousands of Expedia documents, an Expedia-issued laptop, and an Expedia-issued email account. Defendants promptly demanded the return of the documents and computer, as well as plaintiff’s two personal computers. Defendants also demanded that plaintiff, her counsel, and any other person to whom information had been disseminated relinquish possession of all copies of Expedia email messages and other documents, and provide written declarations regarding their access of, use, and any further dissemination of these documents.
Plaintiff’s counsel ultimately turned over plaintiff’s two personal computers, along with numerous documents, computer disks and CDs, and four other computers, to an agreed upon forensics firm. Believing that plaintiff’s counsel retained copies of numerous other computer files and documents, including those that may contain privileged, confidential and proprietary documents, defendants filed a motion for temporary restraining order and preliminary injunction and motion to disqualify, and noted depositions of plaintiff’s counsel’s IT representative and a representative of her law firm that is best able to answer questions about the sorting and review process. A representative from plaintiff’s counsel’s IT department was deposed in January 2006.
Defendants sought a preliminary injunction, asserting that they have been unable to access and review their own documents due to plaintiff’s refusal to cooperate, and her insufficient instructions to the forensic firm.
The court first described the defendant’s burden of proof: “To obtain a preliminary injunction, defendants must demonstrate either: (1) probable success on the merits and the possibility of irreparable harm; or (2) that serious questions have been raised and the balance of hardships tips in their favor.”
Assessing the first factor, the court noted that defendants had filed four counterclaims against plaintiff – misappropriation of trade secrets, conversion, breach of duty of loyalty, and breach of contract – and ultimately sought a permanent injunction requiring plaintiff to return all of defendants’ property. The court concluded that defendants had a high likelihood of success on the merits of their breach of contract counterclaim. It found that plaintiff violated her employment contract by providing more than 90,000 documents to her attorneys both before and after her employment was terminated. It further noted that the employment contract explicitly required plaintiff to return the company’s property upon termination of her employment, and that plaintiff’s breach of that provision was not “cured” by delivering the property to the forensics expert. “Even though the disputed property is now in place at a “neutral’ forensic firm, the fact remains that people, other than defendants, have access to, and control over, documents and computers that never should have been provided by plaintiff to her counsel in the first place.”
Regarding the second factor, the court agreed with defendants that irreparable harm would continue if the documents are not returned to them.
Allowing plaintiff and her counsel to continue to have access to the documents increases the risk that they will review privileged documents. Any documents to which plaintiff is entitled can be produced through the normal channels of discovery. There is also risk of spoliation of evidence if defendants are not allowed to receive all of their property back so that they may review all of the documents that were retained.