Counsel Waived Privilege by Forwarding E-mail Chain Containing Privileged Conversations to Opponent

On March 15, 2019, Justice Friedman of the New York County Commercial Division issued a decision in Semsysco GMBH v. Global Foundreis Inc., 2019 NY Slip Op. 30664(U), holding that counsel waived the attorney-client privilege by forwarding an e-mail chain containing privileged conversations to an opponent, explaining:

CPLR 4503(a)(1) provides that unless the client waives the privilege, confidential attorney-client communications shall be protected from disclosure. As the Court of Appeals has explained, generally, communications between an attorney and a client that are made in the presence of or subsequently disclosed to third parties are not protected by the attorney-client. Thus, when a litigant or counsel voluntarily discloses privileged communications, by email or otherwise, a waiver will be found.

The general rule that a disclosure of a privileged communication will operate as a waiver of the attorney-client privilege is subject to an exception where it is shown that the client intended to maintain the confidentiality of the document, that reasonable steps were taken to prevent disclosure, that the party asserting the privilege acted promptly alter discovering the disclosure to remedy the situation, and that the parties who received the documents will not suffer undue prejudice if a protective order against use of the document is issued.

Although this rule has been articulated by the Appellate Division in the context of disclosures by attorneys, it has been persuasively applied by New York trial courts, and a substantially similar rule has been applied by federal courts, in the context of inadvertent disclosures by clients. The court follows this authority here.

It is further settled that the party who asserts the privilege has the burden of establishing that it has not waived the privilege.

Applying these standards, the court holds that plaintiffs have not met their burden of establishing that Mr, Otzlinger's forwarding of the email chain did not result in a waiver of the attorney-client privilege. As a threshold matter, plaintiffs fail to meet their burden of showing that the disclosure of the email chain was inadvertent.

Mr. Otzlinger's email to Mr, Ehvveiner inquired: "how do you see this?" The first email in the chain, beneath this email to Mr. Ehweiner, was an email from Mr. Otzlinger to, among others, Dr. Petra Wibbe, plaintiffs' in-house counsel, agreeing that a settlement dialogue with GlobalFoundries should be undertaken and making suggestions about whom he could contact. Earlier emails in the chain by Dr, Wibbe and Richard Hegger, Semsysco' s outside counsel, were also focused on the desirability of initiating settlement discussions before litigation was commenced. However, a still earlier email dated June 8, 2015, from Dr. Wibbe to Semsysco's litigation counsel and others, on which Mr. Otzlinger was copied, discussed litigation strategy at length, including proposed changes to a draft "notice of breach" letter and possible damages claims. Mr, Ehweiner responded to Mr. Otzlinger's email by suggesting a GlobalFoundries' contact. His email stated: "I think Rutger would be an alternative." Mr. Ehweiner's responsive email also included the entire email chain.

Mr. Otzlinger acknowledges that he deliberately sent the "top email" (i.e., the first email in the chain beneath his email to Mr. Ehweiner) in order to facilitate settlement discussions. He asserts, however, that he inadvertently forwarded to Mr. Ehweiner certain emails involving privileged communications with Grunwald and Semsysco's counsel. Mr. Otzlinger's statement that he inadvertently forwarded the chain is wholly conclusory. He nowhere states that he was unaware that the email chain was attached. Nor does he address the fact that Mr. Ehweiner's response also included the entire email chain, or claim that he was not put on notice by this responsive email that the entire chain had been forwarded. In addition, the top email expressly refers to statements by De Wibbe and Mr. Hegger, and cannot readily be understood without references to their underlying emails in the chain concerning settlement discussions.

In claiming that Mr. Otzlinger did not intentionally forward the entire email chain, plaintiffs argue that Mr. Otzlinger sent the email to Mr. Elnveiner after getting off a long flight to Taiwan and only one minute after sending the top email to Semsysco and Grunwald personnel and their counsel. Plaintiffs do not provide a meaningful explanation for the time difference between these emails. More important, Mr. Otzlinger himself does not make any claim that the circumstances under which he sent the email to Mr. Ehweiner caused him to inadvertently or unintentionally forward the entire email chain. For example, he does not claim in his affidavit that he erred in forwarding the chain because he acted so quickly-within one minute of his email to Dr. Wibbe --- in sending the email to Mr. Ehweiner. Nor does he claim that the long flight caused him to inadvertently forward the chain.

Under these circumstances, the court does not find that plaintiffs have shown that the forwarding of the chain was inadvertent. Plaintiffs also fail to meet their burden of showing that they acted promptly after discovering the disclosure to remedy the situation. In claiming that they acted promptly, plaintiffs point to their counsel's request for the return of the email chain in June 2018, within 48 hours of a letter from defendants' counsel to plaintiffs' counsel advising them that their client had waived its attorney-client privilege by disclosing the email chain to Mr. Ehweiner when he was an employee of GlobalFoundries. Plaintiffs do not, however, make any showing that they were unaware, prior to receipt of defendants' counsel's letter, that Mr. Otzlinger had forwarded the email chain. Mr. Otzlinger's affidavit fails to address when he realized that he had forwarded the email chain. Plaintiffs also fail to clarify apparently inconsistent statements made on this motion as to when they first acquired knowledge that the email chain had been forwarded. In their memorandum in opposition, plaintiffs state that "Defendants incorrectly suggest that the Email Chain was not collected and that Plaintiffs 'hid' it from Defendants. In fact, the Email Chain was properly collected and later marked as privileged-unsurprising given the ubiquitous presence of attorneys on the Email Chain and the fact that it was forwarded to a personal, non-GlobalFoundries email address. In contrast, at oral argument of the motion, plaintiffs' counsel appeared to state that plaintiffs did not know about the email chain. He apparently acknowledged that the computer review system failed to identify the chain, stating: "'I freely admit my mistake, it should have been caught and we should have produced only the unredacted, the non-privilege part."

As plaintiffs have not established the date of their discovery of the forwarding of the email chain, the court does not find that they have shown that their request for the return of the chain was prompt. The court accordingly holds, under the NY Times standard, that Mr. Otzlinger's forwarding of the email chain resulted in waiver of the attorney-client privilege.

The court rejects plaintiffs' contention that the waiver cannot extend to the Grunwald plaintiffs because Mr, Otzlinger has never been their officer or employee. The Appellate Division has held that a party who shares a common interest or counsel with another party cannot unilaterally waive the joint privilege on behalf of the other party. Plaintiffs fail to cite any authority that a waiver will not occur where the same counsel represents both parties, in this case related entities, and becomes aware of the disclosure but fails to timely assert the privilege on behalf of its clients.

(Internal quotations and citations omitted).

An issue that arises in almost all complex commercial litigation is identifying evidence that should be withheld from production in evidence because it is subject to the attorney-client or other privilege. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have questions regarding the attorney-client, common interest, work product or other privileges or exemptions from production of evidence.