E-Discovery Update: Look Before You Post: Beware the Dangers of File-Sharing Sites

Look Before You Post: Beware the Dangers of File-Sharing Sites

March 5, 2018

In Harleysville Insurance Company v. Holding Funeral Home, Inc., et al., 2017 WL 4368617 (W.D. Va. 2017), an investigator for Nationwide, which owns Harleysville Insurance, uploaded a surveillance video of a fire scene to an internet-based file-sharing service called Box, Inc. Once the video was uploaded, the investigator for Nationwide sent a link to an agent for the National Insurance Crime Bureau (NICB) via email with a notice that it was “privileged and confidential.” Seven months later, the Nationwide investigator uploaded the claims file to the Box folder and sent a link to plaintiff’s counsel, not realizing it was the same link as the one provided to the NICB.

About a month later, the NICB received a subpoena from the defendant, Holding Funeral Home, to provide NICB’s entire file related to the fire. The NICB dutifully responded by turning over the documents it received from the plaintiff, including the email with the Box folder link. Defendants’ counsel, after consulting with the Virginia State Bar’s ethics hotline and conducting research, concluded that the plaintiff waived attorney-client and work-product privilege, so it was permissible to continue review of the documents in the link. Defendants’ counsel never notified plaintiff’s counsel that the information had been disclosed.

The plaintiff sought an order requiring the defendant to destroy the claims file and to prevent its use in the case. The plaintiff also sought to disqualify defense counsel. The magistrate judge equated the placement of the unencrypted, privileged content on a file-sharing website and distribution of a hyperlink to that content, to leaving a briefcase of privileged documents on a public park bench. The magistrate judge held that the plaintiff had waived privilege because there was no evidence that precautions were taken to prevent disclosure of the privileged material.

Many blogs and articles have been written about the magistrate’s decision. However, scant attention has been paid to the district court’s ruling on the plaintiff’s appeal. In his October 2, 2017, opinion, Judge James Jones reversed the magistrate judge’s decision and held that the plaintiff’s claims file was protected by the attorney-client privilege and work-product doctrine. First, the court concluded that the plaintiff intended to make the claims file available for the plaintiff’s counsel, but not the defendant’s counsel or the NICB. Thus, the subsequent disclosure was inadvertent. Second, Judge Jones applied a five-factor test to determine whether privilege was waived:

(1) The reasonableness of the precautions to prevent inadvertent disclosures

(2) The time taken to rectify the error

(3) The scope of the discovery

(4) The extent of the disclosure

(5) Whether the party asserting privilege used its unavailability for misleading or otherwise improper or overreaching purposes in the litigation, making it unfair to allow the party to invoke confidentiality under the circumstances

Judge Jones found that, although the privileged content was not password-protected, a person would need to enter the specific URL to access it — i.e., one could not stumble upon it by accident. Judge Jones modified the magistrate judge’s analogy, saying the uploaded information was more like a briefcase being buried somewhere in a public park — although the park is technically publicly accessible, the briefcase is practically secured. The plaintiff dodged a bullet here — Judge Jones could have easily affirmed the magistrate’s finding of privilege waiver. Although the court found no waiver in the end, this case should still serve as a reminder to always check website links before uploading and sharing documents.

Defendants’ counsel were not without blame either. They should have notified opposing counsel when they downloaded the privileged material. They clearly knew it was work-product and attorney-client privileged, since they contacted the bar for advice as to whether those protections were waived. The judge was not pleased that defendants’ counsel did not follow their ethical duties to notify the plaintiff or to bring the matter before the court. While the judge did not find that the conduct warranted disqualification, the defendants were barred from using any of the material during litigation.

Remember, the golden rule applies in e-discovery too. If you inadvertently produced privileged materials, wouldn’t you want the other side to notify you? So, the next time someone produces materials that appear to be privileged, be ethical and notify the other side. Better still, include the requirement to return privileged materials in your document production protocol or protective order.