Ever find something you knew did not belong to you, but kept it anyway? If you have, perhaps you did so under the guidance of the old adage “Finders keepers, losers weepers.” The adage can be applied in a multitude of ways to a variety of things. One of the more humorous situations in which this occurs is via the receipt of an inadvertently sent email.

Perhaps a colleague, thinking he was writing to his wife, inadvertently sent you an email about shopping at Bed, Bath, and Beyond. Or perhaps another colleague inadvertently hit reply all to an email belittling his boss. If you have spent anytime in the workplace, scenarios like these are all too familiar. When you receive an email like this, it may be the greatest gift the office humor gods can bestow upon you and it must be opened immediately and maybe even saved to embarrass a colleague at some later date. Finders keepers, losers weepers right? Unfortunately, this is not always so. When legal counsel inadvertently receives an email with privileged information, finders keepers can have dire consequences.

A recent decision from the U.S. District Court of Northern District of California sent a warning to attorneys across the country: if you inadvertently receive privileged information, read it, and fail to disclose receipt of said information, you may be disqualified. That is precisely what the U.S. District Court for the Northern District of California did in Terraphase Engineering, Inc., et al. v. Arcadis, U.S., Inc.

At issue in Arcadis was an employment dispute where a group of employees left their former employer to form their own competing company. The former employer, Arcadis, believed its former employees stole trade secrets before they left. The former employees believed that Arcadis was threatening any potential new clients with litigation if they did business with their new company. The former employees sued and Arcadis countersued.

Prior to litigation the plaintiff’s attorney, intending to send an email to his client discussing strategy, inadvertently sent the email to Arcadis. While certainly a terrible blunder by any account, it happened innocently as a result of the auto-complete function in the attorney’s email system (the feature that inserts saved email addresses as you being entering the recipient’s name) which selected the old email address for one of the former employees. Ultimately, counsel at Arcadis received this email as they had been monitoring the former email accounts of the former employees.

On receiving the aforementioned email, in house counsel read the email and then forwarded it to outside counsel who also read the email. Neither Arcadis’ in house counsel nor outside counsel attempted to notify opposing counsel about having received the email. Instead, the plaintiffs discovered Arcadis’ use of the privileged information only after confronting them on suspicions that they had privileged information. The tip off was that Arcadis’ counterclaim contained information that could have only been known from viewing privileged information. When questioned about the use of privileged information, Arcadis admitted to the plaintiffs that it had received and read the privileged information.

In response, the plaintiffs filed a motion urging the court to prohibit Arcadis from using any privileged information gathered from the email it inadvertently received. The plaintiffs argued this was only reasonable since under California law and California’s rules of professional conduct, an attorney who receives information from an adversary that appears to be privileged must refrain from reviewing the information any more than is necessary to determine that it is privileged, and immediately notify the sender that the information appears to be privileged.

In its opposition, Arcadis never denied that it received the email. Instead, they argued that they only conducted a cursory review of the email, which they believed was not privileged anyway, because it was sent “unsolicited” to the plaintiff’s work email address, where he had no reasonable expectation of privacy. In addition, Arcadis argued that the plaintiffs would not suffer irreperrable harm from the information gleaned from the email and attachment, because the information was not privileged and it would be disclosed during discovery. Finally, Arcadis argued that the rules of professional conduct did not apply because there was no active litigation between the parties at the time the email was sent.

The court rejected each of Arcadis’ arguments and handed down a punishment even greater than what the plaintiffs were seeking. The court disqualified Arcadis’ outside counsel and the in-house counsel who reviewed the e-mails, and also ruled that the company’s general counsel must be “removed from all aspects of the day-to-day management of the case, including . . . making any substantive or strategic decisions with regard to the case.” Additionally, the court ordered Arcadis to dismiss its counterclaim without prejudice and to re-file the pleading with new counsel, without any reference to the inadvertently disclosed privileged information. Finally, the court awarded the plaintiffs their costs and fees in connection with bringing the motion against Arcadis.

The outcome in this case serves as an important reminder to practitioners as to what to do (or not do) when they inadvertently receive and/or review privileged information. When it comes to privileged information, the court will not stand for “finders keepers, losers weepers.” As such, practitioners should be come familiar with a newer adage as it pertains to privileged information: Finders; Do Not Read, Notify, and Send Back-ers!