How should you proceed when you received privileged information by way of electronic discovery?

What do you mean that file was privileged?

Author: Aislinn Koch
Case Citation: Harleysville Ins. Co. v. Holding Funeral Home, Inc., No. 1:15cv00057 (W.D. Va. Feb. 9, 2017), vacated in part (W.D. Va. Oct. 2, 2017)
Employee/Personnel/Employer Implicated: Counsel (outside), Employee
eLesson Learned: When in doubt, check to see if you adversary really intended to send you that document labeled “privileged and confidential” and most certainly do not sent it to a third party before making the necessary inquiry.
Tweet This: Just because you got information doesn’t mean you should have. ALWAYS err on the side of caution when opening/sending files labeled “privileged & confidential.”

Thomas Cesario, a senior investigator for Nationwide Insurance Company who owns Harleysville, inadvertently shared “privileged and confidential” information with their adversary. Cesario was unaware of how the cloud actually worked and made an unfortunate yet honest mistake while keeping information organized about this particular case.

The National Insurance Crime Bureau (NICB) asked Nationwide to send over a video of a funeral home that had been burned down. Cersario did as he was asked and sent the video via an internet file sharing service called “Box Folder.” He was able to send the video with a particular link which he believed that only he and NICB could see. This is partially correct as you would have to have the direct link to the folder in order to be able to view its contents. Cesario made a serious error, though, when he uploaded the “Claims File” to that exact Box File with the exact same link in order to share it with Harleysville’s counsel.

Cersario thought that the link worked like the confidential emails he received that would automatically delete after a certain number of days. Due to some carelessness on his part for not doing the proper research on how Box File worked, this link was then shared with the Insureds’ counsel who could not see the Claims File. Even though it was marked with “privileged and confidential” Insureds’ counsel just assumed that they had waived this. This was a huge mistake.

When this matter was litigated, it was ultimately decided that there was no fault on Cesario’s part. It was an inadvertent disclosure due to his lack of understanding of the technology. The court was able to forgive him for that mistake Insureds’ counsel now had access to the Claim’s File. It was Insured’s counsel that made the ultimate mistake by not informing Harleysville’s counsel that it had received this privileged and confidential information. This could have easily rectified the situation. Once Insureds’ counsel would have told Harleysville’s counsel that it had the information. Harleysville could have told them to destroy it. All information and attorney ethics would have been preserved. Unfortunately, Insureds’ counsel just assumed that confidentially had been waived so it had the right to access the information. We all know what happens when you assume now, don’t we.

Insureds’ counsel was horribly incorrect in their assumption as this file as never intended for their eyes. As the court pointed out, Insureds’ counsel should have brought this disclosure to the attention of the court. The worst that could have happened would be they would be told not to look at or use the information. Instead, they went ahead and looked causing a giant issue in this litigation.

The moral of the story folks is to know your technology. If you’re going to share something electronically, make sure you know how the software works and how to keep the appropriate files protected. Additionally, if you receive something electronically, know that mistakes can be made in this ever rapidly changing technological world. If something feels off, then just say something. Insureds’ should have just come forward and they would have saved themselves a whole bunch of trouble. This type of behavior is just not worth the sanctions that were rained down upon them.

Aislinn Koch was a 2014 magna cum laude graduate of Elon University located in North Carolina where she earned her B.F.A. in Dance, Performance and Choreography and her B.A. in Strategic Communications.  She will receive her J.D. from Seton Hall University School of Law in May of 2018. After graduation, Aislinn will clerk for a judge in the Superior Court of New Jersey, Family Division, in Bergen County.

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