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December 15, 2004.

STATE OF NEW JERSEY, by and through the ADMINISTRATIVE OFFICE OF THE COURTS-PROBATION DIVISION, ANDREW AMAN, SUPERINTENDENT, in his official capacity and as an individual, RICHARD MASON, ASSISTANT SUPERINTENDENT, in his official capacity and as an individual, and HARRY COSTELLO, SENIOR PROBATION OFFICER, in his official capacity and as an individual, Defendants.

The opinion of the court was delivered by: JOSEPH RODRIGUEZ, Senior District Judge


This matter has come before the Court on Defendants' Motion for Protective Order pursuant to Fed.R.Civ.P. Rule 26(c), and Defendants' Motion for an Order Dismissing Plaintiff's Complaint with Prejudice, or in the alternative, Motion to Disqualify Plaintiff's Counsel. The Court has considered all papers submitted and any opposition filed herein, and for the reasons expressed below Defendants' Motion for Protective Order will be granted, and Defendants' Motion to Dismiss Plaintiff's Complaint with Prejudice will be denied. The Court, however, will grant Defendants' Motion to Disqualify Plaintiff's Counsel.


  A. Procedural History

  On October 7, 2003, Lionel Maldonado ("Maldonado"), a Puerto Rican Probation Officer in the Camden Vicinage, filed a civil complaint alleging employment discrimination, hostile work environment, and retaliation by his employer, State of New Jersey, Administrative Office of the Courts ("AOC"), Probation Division, and against individual defendants Superintendent Andrew Aman ("Aman"), Assistant Superintendent Richard Mason ("Mason"), and Senior Probation Officer Harry Costello ("Costello"). The present issue before the Court concerns a letter written on October 7, 2001 (hereinafter "the October 7th letter" or "letter")*fn1 by Defendants Mason and Costello to their former attorney, Deputy Attorney General Karen Griffin ("DAG Griffin").

  In the October 7th letter, Mason and Costello asked DAG Griffin to take further legal action on their behalf because the New Jersey Division on Civil Rights ("NJDCR") had made a finding of probable cause (hereinafter the "finding") against them.*fn2 The letter also provided DAG Griffin with information regarding the credibility of witnesses who were interviewed in response to the NJDCR matter.*fn3 (Def.'s Mot. at 3.) Some time after October 7, 2001, this letter allegedly ended up in Maldonado's workplace mailbox, was discovered by Maldonado, and was turned over to Mr. Latimer, his attorney on the NJDCR matter. (July 7, 2004 Transcript, hereinafter "July Tr." at 13, 23.) The exact date that Maldonado discovered the letter is unknown, but it appears that it was "later in 2001." (Maldonado Cert. ¶ 19.)

  On April 15, 2004, Deputy Attorney General Gonzalez ("DAG Gonzalez") states she first became aware that the letter was in Maldonado counsels' possession after a meeting between the parties to review the Amended Complaint.*fn4 As a result, on April 19, 2004, DAG Gonzalez sent a letter to Maldonado's New Jersey counsel, David Hodulik ("Hodulik"), informing him that the October 7th letter was protected by attorney-client privilege and demanded the letter's return. (See Gonzalez Cert. ¶ 8.) Hodulik responded on April 21, 2004, stating he would not return his original copy, and demanded an in camera review by the Court. (Def.'s Mot., Exh. B.) Hodulik stated that the letter was part of the NJDCR file, it was bates-stamped, and was part of Plaintiff's self-executing disclosures pursuant to Fed.R. Civ. P. Rule 26. (Id.) Hodulik also explained that because Defendants have not yet answered the Complaint, he was not required to produce the file.*fn5 (Id.) Defendants filed a motion for Protective Order, and after a hearing on July 7, 2004, it was determined that the October 7th letter was protected by the attorney-client privilege and/or the work-product privilege. (July Tr. at 57-58.)

  Nevertheless, the Court ordered the parties to submit briefs on the question on whether Defendants waived any attorney-client or work-product privilege due to the fact that the October 7th letter inexplicably ended up in Maldonado's workplace mailbox. In addition to submitting their briefs on this issue, Defendants filed a Motion to Dismiss Plaintiff's Complaint with Prejudice, or in the alternative, Disqualify Plaintiff's Counsel as a result of the conduct of Maldonado and/or his attorneys regarding the procurement, retention, and use of the October 7th letter.

  B. Disclosure of the October 7th Letter

  The October 7th letter was prepared by Mason at his home on his own personal computer in response to the NJDCR finding of probable cause. (July Tr. at 45-46.) Later that day, Mason telephoned Costello to come over to his house to review the document. Costello reviewed the letter on the computer screen and suggested some changes. (Id. at 47.) Mason then printed out the letter, and both he and Costello signed it. (Id.) The following morning, Mason made three (3) copies of the letter in his workplace copy room.*fn6 (Id.) Mason went to Costello's office and gave Costello the original letter and a copy and instructed Costello to mail the original to their attorney, DAG Griffin. (Id.) Mason kept two copies. At the July 7th hearing, Mason testified that, at that time, he did not discuss or show the letter to anybody except Costello and DAG Griffin. (Id. at 48.) After giving Costello his copy, Mason took his two copies to his house where they have remained since October 8, 2001. (Id. at 50.) DAG Griffin received the letter in the mail on October 12, 2001. (Id. at 51.)

  Costello put his copy of the letter in an orange folder in which he kept all of his papers involving the NJDCR matter. (Id. at 54.) Costello kept his orange folder in his home, in his briefcase, or on his office desk at work. (Id. at 54-55.) Other probation-related matters were stored in manilla folders. (Id.) As of the July 7, 2004 hearing, Costello's copy of the letter was missing. Costello testified that it was common practice for probation officers to enter other probation officer's offices. (Id. at 55.) Costello testified that he knew of times that Maldonado had entered his office when he was not present. (Id.) Maldonado did not have keys to Costello's office, yet it appears that the office doors were open most of the time. (Id. at 10.)

  Maldonado's involvement began when the October 7th letter was allegedly found in his workplace mailbox. There has been no direct evidence offered by either party explaining how the letter appeared in Maldonado's mailbox.*fn7 Upon finding the letter, Maldonado noticed that the letter was addressed to DAG Griffin and signed by Costello and Mason. (July Tr. at 31-32.) Maldonado testified that he generally understood the contents of the letter, and admitted that he felt that the letter would be something favorable to his case. (Id. at 36.) Then, Maldonado "immediately" produced the documents to his counsel.*fn8 (Maldonado Cert. ¶ 20.)

  Defendants allege that they were not aware that Maldonado had the October 7th letter until April 15, 2004, when DAG Gonzalez read "Paragraph 93" of the Amended Complaint during a conference with Maldonado's counsel. Defendants attempted to recover the documents from Hodulik, but when Hodulik refused, Defendants filed a Motion for Protective Order. A hearing was held on July 7, 2004, which determined that the letter was privileged. Defendants now bring forth these motions.


  Three discrete, but related, issues are before the Court. The first issue concerns whether Defendants waived their attorney-client and/or work-product privilege as it relates to the October 7th letter. The second issue concerns Defendants' motion to dismiss Maldonado's Complaint with prejudice because he allegedly engaged in misconduct regarding the procurement of the letter. If a dismissal of the Complaint is not warranted, the Court will then consider Defendants' motion to disqualify counsel, which is based on the alleged prejudicial effect that the contents of the letter would have on Defendants' case.

  A Waiver of Attorney-Client/Work-Product Privilege

  Separate and apart from the Motion to Dismiss Plaintiff's Complaint with Prejudice, or alternatively, Disqualify Counsel, is the issue of whether Defendants waived their privilege as to the October 7th letter. Essentially, Maldonado argues that Defendants waived their privilege as to the letter because the letter was "leaked." Conversely, Defendants assert that their privilege remains intact because they took reasonable precautions to safeguard the letter.

  1. Privilege Doctrines

  The Federal Rules of Civil Procedure allow parties to

[o]btain discovery regarding any matter, not privileged, which is relevant to the claim or defense of any party, [and] . . . for good cause, the court may order discovery of any matter relevant to the subject matter involved in the action. Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence.
Fed.R.Civ.P. 26(b)(1) (emphasis added). The attorney-client privilege and the work-product doctrine are two separate principles intended to protect litigants from unfettered disclosure. See Hickman v. Taylor, 329 U.S. 495, 508 (1947). In certain circumstances these protections can be waived. Here, Plaintiff asserts that Defendants waived their privilege as to the letter.

  At the July 7, 2004 Protective Order hearing the Court held that the October 7th letter is protected by the attorney-client and/or work-product privilege. (July Tr. at 57.) Each doctrine approaches the waiver issue differently; thus, each concept will be addressed in turn.

  2. Attorney-Client Privilege

  The privileges noted in Rule 26(b)(1) are encompassed in Rule 501 of the Federal Rules of Evidence. Rule 501 states that the application of any claimed privilege is governed by the common law, unless otherwise provided by the Constitution or other federal statute. In cases premised upon federal question jurisdiction, federal common law, rather than state law, governs the evidentiary privileges. Wm. T. Thompson Co. v. General Nutrition Corp., Inc., 671 F.2d 100, 103 (3d Cir. 1982); Wei v. Bodner, 127 F.R.D. 91, 94 (D.N.J. 1989). Moreover, where, as here, there are both federal and state law claims, federal privileges rather than state privileges apply to all claims. Wei, 127 F.R.D. at 94. Accordingly, federal common law shall govern those claims premised upon federal question jurisdiction as well as those premised upon state law. Additionally, the party claiming the privilege has the burden of establishing that the privilege applies. See Harding v. Dana Transport, Inc., 914 F. Supp. 1084, 1089-90 (D.N.J. 1996) (citing cases).

  The United States Supreme Court has recognized that the purpose of the attorney-client privilege is "to encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and administration of justice." Upjohn Co. v. United States, 449 U.S. 383, 389 (1981); see also In re Grand Jury Investigation, 599 F.2d 1224, 1235 (3d Cir. 1979) (stating that the attorney-client privilege exists to foster disclosure and communication between the attorney and the client). No bright-line rule governs the applicability of the attorney-client privilege and, as a result, the applicability of the privilege should be determined on a case-by-case basis. Upjohn, 449 U.S. at 396-97. The Third Circuit has enumerated the traditional elements of the privilege:
The privilege applies only if (1) the asserted holder of the privilege is or sought to become a client; (2) the person to whom the communication was made (a) is a member of the bar of a court, or his subordinate and (b) in connection with this communication is acting as a lawyer; (3) the communication relates to a fact of which the attorney was informed (a) by his client (b) without the presence of strangers (c) for the purpose of securing primarily either (I) an opinion on law or (ii) legal services or (iii) assistance in some legal proceeding, and not (d) for the purpose of committing a crime or tort; and (4) the privilege has been (a) claimed and (b) not waived by the client.
In re Grand Jury Investigation, 599 F.2d at 1233 (citation omitted). Courts have found that because the privilege obstructs the search for the truth and because its benefits are, at best, "indirect and speculative," it must be "strictly confined within the narrowest possible limits consistent with the logic of its principle." Id. at 1245.

  It is within this context that the doctrine of waiver of the attorney-client privilege resulting from inadvertent disclosure by an attorney developed. Instructive on the issue of inadvertent disclosure is Ciba-Geigy Corp. v. Sandoz, Ltd., 916 F. Supp. 404, 410-11 (D.N.J. 1995). In Ciba-Geigy, Judge Wolfson reviewed the development of three distinct schools of thought regarding the waiver doctrine, falling along a continuum. Id. On one end of the continuum, the cases rest all responsibility on the attorney, holding that the inadvertent disclosure of a privileged document vitiates the privilege and constitutes waiver. Id. at 410. On the other end, the cases recognize the general precept that the client and not the attorney holds the privilege, and thus adopt a "no waiver" rule. Id. at 410-11. The third school seeks a middle ground that focuses upon the reasonableness of the steps taken to preserve the confidentiality of privileged documents. Id.

  In this middle ground, the Ciba-Geigy court reasoned that general rules concerning waiver should apply equally in the inadvertent disclosure arena. The court stated that in general, a waiver must be a knowing and intentional act to be effective. Id. While an inadvertent disclosure is, by definition, an unintentional act, if such a disclosure results from gross negligence, courts following the third approach will deem the disclosure to be intentional, thus constituting a waiver of the privilege. Id. at 411. Following the modern trend, Judge Wolfson adopted this third approach and considered the following factors:
1) the reasonableness of the precautions taken to prevent inadvertent disclosure in view of the extent of the document production;
2) the number of inadvertent disclosures;
3) the extent of the disclosure;
4) any delay and measures taken to rectify the disclosure; and
5) whether the overriding interests of justice would or would not be served by relieving the party of its error.

  Merely establishing that a disclosure was unintentional does not go far in establishing the absence of waiver. Rather, the party resisting a waiver argument must demonstrate that it undertook reasonable precautions to avoid inadvertent disclosures of privileged documents. Id. at 412 (emphasis added). While the Third Circuit has not addressed which of the approaches controls, the Ciba-Geigy court cited to several district courts in this Circuit, as well as courts in other circuits, that have endorsed the third approach. Id. at 411; see also Redland Soccer Club, Inc. v. Department of the Army, 55 F.3d 827, 856 (3d Cir. 1995) (implying that the Third Circuit would adopt a balancing test to determine whether an inadvertent disclosure constituted a waiver).

  In Ciba-Geigy, the corporate defendant asked the court to compel the plaintiff corporation to return an internal memorandum which the in-house counsel had written and addressed to an employee of the defendant. The parties did not dispute that the memorandum was privileged. Upon review of the above factors, the court held that the relatively small size of the document production at issue, the lack of time constraints, combined with the defendant's own admission that it failed, on two occasions, to conduct any privilege review prior to producing copies of the . . . document, compel a finding of waiver in this case. Id. at 412. The court further found that counsel's failure to conduct a privilege review in two separate instances amounted to inexcusable neglect. Id. Significant in the court's analysis was the fact that the parties were subject to self-imposed time constraints on themselves regarding discovery and that, although counsel quickly attempted to rectify the second disclosure, the disclosure would not have occurred if counsel had initially implemented an appropriate review process. Id. at 414.

  Here, the parties' briefs apply the Ciba-Geigy factors (an inadvertent disclosure case) to the facts of this case (an involuntary disclosure case). Defendants argue alternatively that the issue of waiver is different in an involuntary disclosure case, than in an inadvertent disclosure case; essentially, Defendants argue that the possibility of waiver is higher in an inadvertent disclosure case because it involves unilateral errors by the party asserting the privilege i.e. carelessly placing a privileged document in a box of discovery documents and delivering them to the other side. Thus, Defendants define an involuntary disclosure as an occurrence when the privileged information inexplicitly ends up in the other side's hands. This distinction, while helpful in determining the degree of fault attributed to the attorney who caused the disclosure, is not particularly useful in ascertaining the prejudice to the privilege holder's case.

  Because the impact to the privilege holder's case is the same regardless of the manner of disclosure, the Ciba-Geigy factors would work equally well in an involuntary disclosure case. Morever, given the modern trend that applies a case-by-case analysis to the waiver determination, it is appropriate that these factors be applied to this case. See Alldread v. City of Grenada, 988 F.2d 1425, 1434 (5th Cir. 1993) (using these factors and favoring the modern trend, instead of rigid waiver rules, and opting instead for an approach which takes into account the facts surrounding a particular disclosure).

  (i) The reasonableness of the precautions taken to prevent inadvertent disclosure in view of the extent of the document production

  The first factor, the reasonableness of the precautions taken to prevent disclosure, weighs in favor of finding no waiver. The record provides ample evidence that Mason and Costello, the privilege holders, took all reasonable precautions to safeguard the October 7th letter. Furthermore, there is no indication that either Mason, Costello, or DAG Griffin were responsible for the disclosure of the letter. It does appear that the letter was taken from Costello's office; yet, it was taken from an orange folder that was specially designated for the NJDCR case. This is noteworthy because this folder was distinct from the other manilla-colored work folders used for probation related matters, and therefore, demonstrates a modicum of precaution on Costello's part.

  Costello's handling of the letter was not perfect, nevertheless, he took reasonable precautions to avoid disclosure of the letter. Persuasive precedent from other jurisdictions support the determination that the attorney-client privilege ...

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