INTERNET CLOUD POSTING WAIVES CLIENT FILE PROTECTIONS OPPOSING COUNSEL SANCTIONED FOR VIEWING INADVERTENTLY DISCLOSED FILES
INTERNET CLOUD POSTING WAIVES CLIENT FILE PROTECTIONS OPPOSING COUNSEL SANCTIONED FOR VIEWING INADVERTENTLY DISCLOSED FILES
JUSTICE DANIEL CROTHERS North Dakota Supreme Court
The peril of posting confidential litigation documents online is highlighted in a recent federal case . The case also provides direction for opposing parties who come into possession of information that might have been inadvertently produced .
A federal court recently held a plaintiff waived its attorney-client privilege and workproduct protection when an employee posted an investigative file to a publicly accessible internet file sharing website and emailed the file ’ s web address to third parties . 1 In the same opinion , the court refused the plaintiff ’ s motion to disqualify defense counsel for accessing and reading the file without first notifying the plaintiff . The case provides valuable lessons about the risks of posting and sharing electronically stored information , viewing information posted by others , and sanctions .
The pertinent facts are the plaintiff ’ s insurance company brought a declaratory judgment action to determine whether it was required to pay a fire loss claim . The insurance company denied coverage , claiming among other things , that the fire was intentionally set . During litigation , an insurance company investigator obtained video surveillance footage and stored it on a publicly accessible internet file storage service called Box . The investigator emailed an employee of the National Insurance Crime Bureau ( NICB ). The email contained a hyperlink to the video and a notice that the email was intended to be confidential . 2 The investigator subsequently uploaded all of the insurance company ’ s investigative files to the Box site for its attorney to download and review and sent counsel an email with the same hyperlink and confidentiality notice that was sent to NICB .
Defense counsel subpoenaed the NICB ’ s file on the fire loss . NICB produced its file , including the insurance company investigator ’ s email with the hyperlink to the Box site . Without notice to the plaintiff , defense counsel used the URL to access , view , and download the video and the entire claims file that had been uploaded by the insurance company . Defense counsel thereafter shared the video and claim file with all defense counsel of record and the defendants . A privilege fight ensued , followed by the plaintiff ’ s motion to disqualify defense counsel .
The court assumed , without deciding , that at least some of the materials were covered by the attorney-client privilege and workproduct doctrine , and considered whether the plaintiff ’ s claim file was discoverable by defense due to the plaintiff ’ s handling of the materials . The court first made a thorough analysis of whether the plaintiff ’ s disclosure of the file was involuntary or inadvertent ( the scope of which is too extensive to be recounted here ). 3 Concluding disclosure was inadvertent , the court next considered whether the disclosure waived the attorney-client privilege . 4 On that question , the court held the privilege was waived because , under the Virginia five-part test , the insurance company took inadequate measures to protect the confidential information . 5 The court stated :
“ Harleysville has conceded that its actions were the cyber world equivalent of leaving its claims file on a bench in the public square and telling its counsel where they could find it . It is hard to image an act that would be more contrary to protecting the confidentiality of information than to post that information to the world wide web .” 6
The court reasoned its ruling was supported by public policy regarding use of evolving technology . “ Whether a company chooses to use a new technology is a decision within that company ’ s control . If it chooses to use a new technology , however , it should be responsible for ensuring that its employees and agents understand how the technology works , and , more importantly , whether the technology allows unwanted access by others to its confidential information .” 7
The court similarly decided the workproduct protection for any of the documents was waived . 8 Reaching this conclusion , the court examined Federal Evidence Rule 502 and case law to find an insurance company employee intentionally – rather than accidentally – posted the materials to the website . 9 “[ W ] hen a client makes a decision – albeit an unwise or even mistaken decision – not to maintain confidentiality in the document , the privilege is lost due to an overall failure to maintain confidence .” 10
Finally , the court noted even though the plaintiff ’ s attorney-client privilege and work-product protection were waived , defense counsel violated the discovery rules and potentially violated ethical rules by accessing and using the materials before communicating with opposing counsel and seeking a ruling from the court .
26 THE GAVEL