Court Sanctions Plaintiff for Accessing Password-Protected Documents and Other Violations, Reduces Sanction based on Behavior of Plaintiff’s Counsel and Defendant

Feb 19 2010

Lawson v. Sun Microsystems, Inc., 2009 WL 5842136 (S.D. Ind. Oct. 16, 2009); Lawson v. Sun Microsystems, Inc., 2010 WL 503054 (S.D. Ind. Feb. 8, 2010)

Where plaintiff accessed privileged, password-protected documents in defendant’s production, “carelessly” produced poor and incomplete copies of relevant taped conversations, and intentionally lied regarding taped conversations in deposition, the magistrate judge declined to recommend dismissal but recommended monetary sanctions instead. The amount of sanctions recommended was reduced by 25% upon the magistrate judge’s finding that plaintiff’s counsel mitigated plaintiff’s violations by ignoring plaintiff’s emails regarding the password-protected documents. The magistrate judge also found plaintiff’s “improprieties” mitigated “by the part [the defendant] and its counsel played in creating this perfect storm of a disaster” and reduced the sanction an additional 25%. While the magistrate judge recommended plaintiff’s counsel be ordered to pay monetary sanctions equal to a 25% reduction in plaintiff’s maximum sanction, the district court declined to adopt that recommendation. The recommendation was otherwise adopted.

In the course of discovery, defendant produced to plaintiff a hard drive containing large volumes of electronically stored information, some of which was privileged and password-protected. Prior to this production, the parties entered into a protective order and an agreement that plaintiff would provide defendant with fourteen days notice before using any information on the hard drive and that defendant would have seven days to object. It was apparently upon these agreements that defendant relied when producing privileged materials as well as a prior arrangement in which plaintiff had been allowed to return his company issued computer with privileged material encrypted to maintain its protection. Plaintiff’s counsel denied the existance of any agreement regarding password-protected documents.

In the transmittal letter accompanying the hard drive, defendant indicated the password-protected documents were privileged. Later, there was disagreement as to whether this letter was provided to plaintiff by his attorneys.

Plaintiff accessed the password-protected documents. Thereafter, he sent an email to counsel disclosing his access with the subject line “Password protected files – Unlocked!” Although disputed amongst the parties, the magistrate judge determined that plaintiff’s attorneys did not open the email and remained unaware of plaintiff’s access. It was also determined that counsel did not see a later email in which the “unlocked documents” were mentioned. Counsel later withdrew.

Upon learning of plaintiff’s activities, defendant moved for sanctions. In addition to the password-protected documents, the magistrate judge was asked to consider defendant’s allegations that plaintiff intentionally produced an incomplete and low quality copy of a recorded conversation, failed to reveal the existence of other relevant tape recordings, and lied about those recordings in deposition.

Sifting through the contradictory assertions from all interested parties (plaintiff, former counsel, and defendant), the court found the following:

plaintiff’s attorneys did not read the email from plaintiff indicating he had accessed password-protected materials;
plaintiff did not speak with his attorneys prior to accessing the password-protected documents;
plaintiff intentionally accessed and viewed password-protected documents meant to remain confidential and privileged;
plaintiff’s attorneys had no knowledge of plaintiff’s activities;
plaintiff acted carelessly in responding to discovery when he produced an incomplete and poorly reproduced copy of a relevant taped conversation;
plaintiff’s failure to disclose the existence of other taped conversation was “careless and sloppy” but not intentional;
plaintiff intentionally lied about taped conversations at deposition.

The magistrate judge held that Rule 37 and “the inherent power of the court” provided authority for sanctions and that sanctions were appropriate. Plaintiff’s inappropriate behavior was “mitigated” however, by his own behavior, as well as that of his attorneys and the defendant. Specifically, for example, the magistrate judge credited plaintiff with his decision to volunteer certain information at deposition and his apparent lack of effort to hide his access to the privileged documents (as evidenced by his email to counsel). The magistrate judge also found plaintiff’s behavior mitigated by that of his attorneys because counsels’ failure to read or respond to plaintiff’s email “contributed to the situation” and because “[Plaintiff] cannot be blamed for the lack of attention paid to him by his attorneys.” Finally, the magistrate judge found that defendant’s behavior mitigated that of the plaintiff where defendant and defense counsel contributed to the “perfect storm of a disaster” by failing to remove the privilege documents from production in the first place, among other things.

Accordingly, having determined the maximum appropriate sanction to be $54,500, the magistrate judge recommended plaintiff’s sanction be discounted by 25% to account for the contributory behavior of his counsel and recommended counsel be ordered to pay an amount equal to the reduction. Similarly, the magistrate judge further reduced plaintiff’s sanction by another 25% to account for defendant and defendant’s counsel’s contributions to the problem.

Upon the district court’s consideration of these recommendations, counsels’ objections to the recommended sanction were sustained and the order of sanctions modified to reflect that counsel should not be sanctioned.