Failure to Supervise Expert in Facebook Case Waives Privilege

When you sue Facebook and its founder Mark Zuckerberg claiming three-quarters ownership in the wildly successful social network, you are certain to get attention. Paul D. Ceglia has had plenty of that since 2010, when he filed his lawsuit based on an alleged 2003 contract between him and then Harvard undergrad Zuckerberg. Facebook and Zuckerberg deny Ceglia’s claim.

As the case continues on in U.S. District Court in Buffalo, N.Y., news reports have covered it in broad terms. Meanwhile, a recent ruling in the case involves issues that are unlikely to be covered by the general news media, but which are noteworthy for legal professionals.

Making the ruling even more notable is that the issues arise at the intersection of two key components of contemporary litigation: experts and e-discovery. The ruling reveals how an attorney’s failure to properly supervise an expert can result in waiver of attorney-client privilege in an otherwise-protected electronic document.

The ruling by U.S. Magistrate Judge Leslie G. Foschio stems from a pretrial discovery dispute in which defense lawyers sought to compel Ceglia to produce 11 documents as to which he asserted either the attorney-client or work-product privilege.

Inadvertent Disclosure by Expert?

As to one of those documents, an email dated March 6, 2011, Ceglia claimed that it had been inadvertently disclosed to the defendants and he asked the court to order the defendants to either return or destroy all copies of it. The defendants objected to this, arguing that Ceglia had not met the requirements of Federal Rule of Evidence 502(b) for maintaining privilege.

What make this case interesting are the circumstances which led to the inadvertent disclosure. Earlier in the discovery process, Ceglia’s attorney, Paul A. Argentieri, retained an information technology expert for the purpose of having him recover a document titled LawsuitOverview.pdf from Argentieri’s law office computer and produce it to a digital forensic consulting firm hired by the defendants. He had the expert do this, he explained, because he was in California at the time, away from his office in Hornell, N.Y.

Argentieri had originally received the PDF document as an attachment to the March 6, 2011, email now at issue in the motion to compel. He argued that when the expert copied the PDF document, he also mistakenly copied the email, burning both to a CD which was then forwarded to defendants’ forensic consultants.

Defendants disputed this version of events, contending that their consultants first received both the email and the PDF via an email sent from Argentieri’s Gmail account, with email headers indicating that the plaintiff’s expert had forwarded the email to the defendants’ consultants directly from Argentieri’s account.

Judge Blames Failure to Supervise

Under Rule 502(b), an inadvertent disclosure of a document does not waive the attorney-client privilege if three conditions are met: (1) the disclosure is inadvertent; (2) the privilege holder took reasonable steps to prevent disclosure; and (3) the privilege holder took reasonable steps to rectify the error.

Applying this test, the magistrate concluded that the plaintiff failed to take reasonable steps to prevent the disclosure. In reaching this conclusion, she placed particular weight on the attorney’s failure to personally supervise the expert.

“Although Argentieri cannot be admonished for retaining the services of [the expert] to retrieve from Argentieri’s Hornell law office, while Argentieri was in California,” the magistrate judge wrote, “information responsive to Defendants’ discovery requests, Argentieri could have had [the expert] first forward any documents to Argentieri in California where Argentieri could have reviewed the documents to ensure there was no extraneous, privileged materials attached.

“If Argentieri’s physical presence in Hornell was necessary to properly and thoroughly oversee the production of evidence, Argentieri, as lead counsel in this high-profile case, should have made himself present to do so,” she continued, “and Argentieri has not proffered any explanation as to why his presence was not possible.”

The magistrate also concluded that the plaintiffs did not take reasonable steps to rectify the inadvertent disclosure. Although the plaintiff had knowledge of the error by Jan. 4, 2012, it did nothing about it for more than two months.

“On this record, Plaintiff is unable to establish he took reasonable steps to remedy the inadvertent disclosure of the March 6, 2011 email by waiting more than two months before seeking the return or destruction of the information,” the magistrate held.

The moral of the story, perhaps, is that an attorney should always carefully supervise the work of retained experts and should be extra careful when the expert is working with privileged documents, in order to prevent inadvertent disclosure.

But there is a bright side for the plaintiff in this case: At least no one posted the privileged document to Facebook.

The case is Ceglia v. Zuckerberg, No. 10-CV-00569A(F) (W.D. N.Y., April 19, 2012).