eDiscovery Daily Blog

• August 11, 2014

In Kyko Global Inc. v. Prithvi Info. Solutions Ltd., No. C13-1034 MJP (W.D. Wash. June 13, 2014), Washington Chief District Judge Marsha J. Pechman ruled that the defendants’ did not waive their attorney-client privilege on the computer of one of the defendants purchased by plaintiffs at public auction, denied the defendants’ motion to disqualify the plaintiff’s counsel for purchasing the computer and ordered the plaintiffs to provide defendants with a copy of the hard drive within three days for the defendants to review it for privilege and provide defendants with a privilege log within seven days of the transfer.

In this fraud case, after several of the named defendants settled and confessed to judgment, the plaintiffs obtained a Writ of Execution in which the King County (Washington) Sheriff seized various items of personal property, including a computer owned by one of the defendants.  The computer was sold at a public auction, and an attorney for the plaintiffs outbid a representative sent by the defendants and purchased the computer.  The plaintiffs sent the computer to a third party for analysis and requested a ruling as to the admissibility of potentially attorney-client privileged documents contained on it, while the defendants contended the actions of the plaintiffs violated ethical rules, and requested that the plaintiffs return the computer to defendants, and also requested that the plaintiff’s attorneys should be disqualified from the case.

With regard to the plaintiff’s actions, Judge Pechman ruled that plaintiffs’ acquisition of the computer was not “inherently wrongful”, noting the plaintiffs’ claim that they had not reviewed the materials on the computer at the time of the motion.  She also determined that plaintiff’s “use of a third party vendor to make a copy of the hard drive is not equivalent to metadata mining of documents produced through the normal discovery process, because whereas the hard drive might plausibly contain many documents unprotected by any privilege, metadata mining is expressly aimed at the kind of information one would expect to be protected by attorney-client privilege and/or work-product protections”.  As a result, she denied the defendants’ motion to disqualify the plaintiff’s counsel.

As for the waiver of privilege, Judge Pechman used a balancing test to determine waiver “that is similar to Rule 502(b)”, which included these factors:

1. the reasonableness of precautions taken to prevent disclosure,
2. the amount of time taken to remedy the error,
3. the scope of discovery,
4. the extent of the disclosure, and
5. the overriding issue of fairness.

Using the analogy of where “an opposing party discovers a privileged document in the other party’s trash”, Judge Pechman considered the potential waiver of privilege.  However, because the defendant stated in a declaration that she had “someone at her office” reformat the hard drive on the computer and install a new operating system and believed her documents had been erased and were not readily accessible, she related it “to the memo torn into 16 pieces than a document simply placed in a trash can without alteration”.

As a result, Judge Pechman determined that given “Defendants’ prompt efforts to remedy the error by filing a motion with the Court and the general sense that parties should not be able to force waiver of attorneyclient privilege through investigative activities outside the discovery process and a superior understanding of the relevant technology, the Washington balancing test weighs against waiver.”  She also and ordered the plaintiffs to provide defendants with a copy of the hard drive within three days for the defendants to review it for privilege and provide defendants with a privilege log within seven days of the transfer.

So, what do you think?  Were the plaintiff’s counsel actions ethical?  Should privilege have been waived?  Please share any comments you might have or if you’d like to know more about a particular topic.

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