In Kyko Global Inc. v. Prithvi Info. Solutions Ltd., the court addressed the question of whether defendants waived their attorney-client privilege following the sale of a seized computer at public auction. Kyko Global Inc. v. Prithvi Info. Solutions Ltd., No. C13-1034 MJP, 2014 WL 2694236 (W.D. Wash. June 13, 2014)
Under Washington law, the court determines that the steps taken to protect information by reformatting the computer and installing a new operating system along with Defendants’ prompt efforts to remedy the error and considerations of fairness weighed against waiver.
Following settlement plaintiffs obtained a Writ of Execution pursuant to which various items of Defendant’s personal property were seized, including her computer. The computer was then sold at a public auction and an attorney for the Plaintiffs purchased it. Plaintiffs sent the computer for analysis and requested ruling as to the admissibility of potentially attorney-client privileged documents found on the computer.
Defendants contend that this action violated ethical rules, that plaintiffs must return the computer, and that attorney should be disqualified from further representation of plaintiffs.
Seeking resolution of these issues, Plaintiffs asked for the admissibility of the retrieved materials.
The court determined that Plaintiffs’ acquisition of the computer was not “inherently wrongful”. Plaintiff purchased the computer at a public auction and also claimed to not have reviewed the material on the computer at the time of the motion.
The court also concluded that Plaintiff’s use of forensic analysis to assess the content of the hard drive did not violate Washington’s RPC 4.4(a) as the
“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”.
To decide on Plaintiff’s argument concerning waiver of privilege by failure to secure materials the court applied the Washington courts balancing. The test is similar to Federal Rule of Evidence 502(b) and considers:
“(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”.
The Court continues by stating that
“The closest analogy to the unique fact pattern at issue here may be early cases in which an opposing party discovers a privileged document in the other party’s trash. The act of discarding privileged material can lead to waiver if the opposing party can show that the person who discarded the material was unconcerned with maintaining its confidentiality”.
In the case at hand, Defendant
“had ‘someone at her office’ reformat the hard drive on the computer and install a new operating system. She further states that she believed her documents had been erased and were not readily accessible.”
The court reasoned that it was not inconceivable that Defendant “believed no one could access the documents on her computer”. It further reasoned that the facts bore
“a closer resemblance to the memo torn into 16 pieces than a document simply placed in a trash can without alteration. Along with Defendant’s prompt effort to remedy the error and by filing a motion with the Court and the general sense that parties should not be able to force waiver of attorney client privilege through investigative activities outside the discovery process and a superior understanding of the relevant technology, the Washington balancing test weighs against waiver.”
The Court also denied Plaintiffs’ Motion to Disqualify counsel.
Accordingly, Plaintiffs were ordered to provide defendants with a copy of the hard drive and defendants were ordered to review the hard drive for privileged documents and to provide plaintiffs with a privilege log within 7 days of the transfer.
Referenced Authority:
- Federal Rules of Evidence 502(b)
- Washington RPC 4.4(a)
The full text of the order is provided at the end of a blog published by K & L Gates (click here)
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