Firm Booted For Reading ‘Burn Files’ Client Kept After Fired

A law firm is out of a case because it didn’t tell a pharmaceutical company defendant that the firm possessed confidential privileged information that its whistleblower client kept copies of after he was fired, the Superior Court of New Jersey, Appellate Division, ruled May 23 in an unpublished opinion.

Courts may be left with little choice but to disqualify counsel that has information he shouldn’t—even if the lawyer himself didn’t illegally obtain it.

Chief Quality Regulatory and Compliance Officer Oscar Sanchez sued his former employer, German pharmaceutical company Maquet Getinge Group, alleging wrongful termination in response to his whistleblowing activities. Maquet said the correct name of the employing entity is MAQUET Cardiovascular, LLC.

Sanchez’s high-level clearance gave him access to proprietary and confidential information, Judge Jose Fuentes wrote for the court. Sanchez signed a confidentiality agreement wherein he agreed not to disclose such information and to return all copies if fired. Two months before he was fired, he received a “written disciplinary warning” for making threatening comments to colleagues and subordinates, the court said.

He then told Senior Vice President of Marketing Philip Freed that he kept copies of Maquet-owned documents, which he called his “burn files,” the court said. Freed also said Sanchez would use them to “‘f—‘ Maquet ‘when they try to get [him].’”

During discovery, Maquet asked for confidential or propriety documents Sanchez had taken, the court said. A court-entered protective order provided that if confidential information “was released inadvertently, the recipient of such unintended disclosure was required to return it or dispose of it as instructed by the producing party,” the court said.

Once Maquet received Sanchez’s response, it said Sanchez had “improperly taken” confidential documents, including attorney-client communications, “without the company’s knowledge or consent,” the court said.

Sanchez’s lawyer, Kevin Barber of Niedweske Barber Hager, LLC, agreed that he produced communications between Sanchez and Maquet’s in-house counsel, but argued that the in-house lawyer waived privilege during a deposition in “an unrelated arbitration hearing,” the court said.

The trial court granted Maquet’s motion to preclude Sanchez from using the documents in his case and disqualified Barber and his firm.

The trial court found Maquet didn’t waive privilege and Sanchez’s counsel “knew or should have known the material was privileged.” The trial court also noted Barber’s failure “to promptly notify the opposing side that they had received its privileged information.” A nine-month delay wasn’t prompt.

The trial court also cited New Jersey Rule of Professional Conduct 4.4(b), which says a lawyer who reasonably believes a document was inadvertently sent should not read it, or stop reading it, and promptly notify and return it to the sender. The trial court found there was “reasonable cause to believe” that the Maquet documents labeled “attorney-client privileged communications” were privileged.

Sanchez appealed and the appellate court affirmed the disqualification.

No Other Way

Fuentes said there was no error in disqualifying Sanchez’s counsel without first holding an evidentiary hearing. Less severe remedies would be inadequate, the court said.

“Plaintiff’s extra-judicial self-help measures deprived defendant of the opportunity to prevent the disclosure of this privileged information,” Fuentes said. And Barber’s “unreasonable delay” in disclosing that he had Maquet’s confidential documents “rendered futile any attempt to mitigate this harm.”

The court said the only way to “salvage” the case is for Sanchez to get new counsel.

The court also agreed that Sanchez was not allowed to use, and had to return, the confidential documents that he took from Maquet. But, as the trial court noted, they could be used if properly produced during discovery and are otherwise admissible.

Judges Harry Carroll and Greta Gooden Brown participated in the panel.

Sanchez was represented by Chasan Lamparello Mallon & Cappuzzo, PC and Niedweske Barber Hager, LLC. Maquet was represented by Alston & Bird LLP and McElroy, Deutsch, Mulvaney & Carpenter, LLP.

The case is Sanchez v. Maquet Getinge Grp., 2018 BL 182268, N.J. Super. Ct. App. Div., A-4994-15T4, unpublished 5/23/18.

To contact the reporter on this story: Mindy Rattan in Washington at mrattan@bloomberglaw.com

To contact the editor responsible for this story: S. Ethan Bowers at sbowers@bloomberglaw.com