Risk Update

Information Risk: Protective Orders & Inadvertent Disclosure, Client Files & Lateral Lawyers Taking Trade Secrets

Boston Firm Gets $1.2M In Trade Secret Dispute With Ex-Attys” —

  • “A Massachusetts law firm specializing in asbestos and toxic tort litigation has won nearly $1.2 million in its suit alleging that several former attorneys stole its trade secrets and started a rival firm, after a state jury returned a verdict in its favor.”
  • “…the jury generally concluded that CMBG3 Law LLC — another Boston-based law firm — and certain accused attorneys had conspired to steal electronic databases from Governo Law, converted files and documents the firm owned, and breached their duty of loyalty by misusing confidential information.”
  • “Governo Law had alleged in its December 2016 complaint that six attorneys stole proprietary databases, information collections and other files after they failed to negotiate a purchase of the assets from David Governo. The attorneys then resigned en masse after David Governo declined a ‘lowball’ offer for the assets, and converted the stolen electronic data to help them start CMBG3, the suit claimed.”
  • “But CMBG3 and the attorneys argued in a pretrial brief that though they had initially hoped to purchase the assets so they could continue operating Governo Law if David Governo retired, they eventually realized that the risk of staying at the firm likely outweighed the benefits of leaving. The attorneys contended that they only took certain files so that they would have access to client materials if necessary once they departed from the firm, saying that they couldn’t ‘risk harm to client interests.'”

Avoiding Inadvertent Disclosures of Privileged Information” —

  • “Difficult privilege issues often arise in litigation, including evaluating whether a party has impliedly waived privilege through its litigation conduct, and the extent to which a party can use a privileged document that has been inadvertently produced. Southern District Judge Nelson Roman and Magistrate Judge Henry Pitman recently addressed two such issues in Barbini v. First Niagara Bank, N.A., 2019 WL 1922041 (April 29, 2019), and In re Keurig Green Mountain Single Serve Coffee Antitrust Litigation, 2019 WL 2003959 (May 7, 2019).”
  • “In Barbini, Judge Roman addressed whether a party had impliedly waived its attorney-client privilege by making statements during discovery that implicated its counsel’s advice. In Keurig, Judge Pitman addressed whether a party to whom an allegedly privileged document was inadvertently produced could refer to the contents of the document for the limited purpose of challenging the claim of privilege. Roman found that a privilege waiver had occurred and Pitman found that the recipient of the allegedly privileged document could refer to its contents in challenging the claim of privilege.”
  • “‘Although a close call,’ Roman concluded that the HR rep’s testimony coupled with the bank’s above-described defense impliedly waived the privilege, as ‘the bank indirectly assert[ed] reliance on [in-house counsel’s] legal advice as a defense to plaintiffs’ employment discrimination claims.'”
  • “In Keurig, defendant inadvertently produced a privileged document to plaintiffs and then clawed it back pursuant to the protective order governing the case. Thereafter, plaintiffs sought to use the contents of the putatively privileged document for the limited purpose of challenging defendant’s assertion of privilege.”
  • “In resolving the parties’ dispute, Judge Pitman observed that in several prior Southern District cases, courts have allowed parties who reviewed inadvertently disclosed documents before they were clawed back to use what they learned prior to claw back to challenge the asserted claim of privilege.”
  • “Against this backdrop, and notwithstanding the tension between the above-quoted sentences in the protective order, Judge Pitman concluded that the protective order permitted plaintiffs to use the contents of the putatively privileged document to challenge defendant’s claim of privilege, ‘to the extent that [plaintiffs] learned of the contents of the document…prior to the… assertion of privilege.'”

Kelley Drye Attys’ ‘Bad Decisions’ Don’t Merit DQ, Judge Says” —

  • “A Florida federal judge on Friday recommended denying a bid to disqualify Kelley Drye & Warren LLP for passing confidential discovery information to its client, calling the firm’s conduct ‘disappointing’ but suggesting in a strongly worded report that it should instead face sanctions and pay the legal fees stemming from the scuffle.”
  • “U.S. Magistrate Judge Thomas B. Smith took the Kelley Drye attorneys to task for the breach, and the firm’s failure to report the breach to the opposing party, Local Access LLC — chiding their ‘sloppiness’ and ‘bad decisions.’ But he ultimately found that there was “no monster under the bed” and that the actions can be solved through sanctions rather than a disqualification.”
  • “Its second violation — the firm’s failure to follow the order’s prohibition against sharing highly confidential information with unauthorized employees — is ‘more problematic,’ Judge Smith said.”
  • “The firm argued that the information in question — call detail records — is inherently not confidential and that Local Access was wrong to label it as such. ‘This argument would have more teeth if Kelley Drye had bothered to open and review the information produced before transmitting it to Peerless,” the judge said. “I don’t know how the lawyers at Kelley Drye could form a reasonable belief that information was mis-designated when they were unaware of the designation in the first place.'”
  • “In a prior but related case, one of the Kelley Drye attorneys had written that ‘playing fast and loose might have worked well for William Shakespeare, but in this court, it should not be tolerated.'”
  • “The third violation — the firm’s failure to promptly disclose its violations and take steps to remedy them — is ‘most troubling,’ the judge said… ‘Kelley Drye had an affirmative duty to promptly disclose what it knew to Local Access and the court and its failure to do so until well over a month had passed from discovery of the violation is an intentional violation of the protective order.'”
If you liked this post, please share it: