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NY Appellate Court Slams Use of Hacked Email

When we hear about discovery abuses in litigation, we often think of overzealous lawyers using obstructionist tactics. Such behavior, however, rarely involves litigants hacking into the email of an adversary or accessing privileged attorney-client communications that disclose litigation strategies.

But in a unanimous ruling last week, a New York state appeals court found that a litigant’s “improper and willful” misconduct – which included “improperly accessing approximately 12,000 of defendant’s privileged attorney/client communications … [and] deleting relevant documents” – justified the dismissal of an assault and battery lawsuit.

“Among the materials improperly accessed here was a privileged memorandum from defendant’s counsel about his strategy,” wrote the unanimous five-judge panel of New York’s Appellate Division, First Department. “[S]ince ‘[p]laintiff’s knowledge … can never be purged’, and he would ‘carry [that knowledge] into any new attorney-client relationship,’ we find that dismissal of the complaint is the only practicable remedy here.”

The First Department noted that the assault and battery case “stems from three related actions in the Delaware Court of Chancery, which were joined for trial and disposition.” The panel also observed that the Delaware court had already found that plaintiff had engaged in “deplorable” misconduct and “[a]dditionally, after a hearing, the Chancellor issued a decision sanctioning plaintiff over $7 million dollars for engaging in egregious litigation misconduct.”

The assault and battery case is part of a long-running dispute between the founders of TransPerfect, the global translation company. Crain’s New York reports that, last year, the company had $705 million in revenue and an operating profit of generated $93 million.

While there’s nothing unusual about judges sanctioning litigants and their counsel for untoward behavior, it’s not often that we see a lawsuit dismissed for a party’s “improper and willful” misconduct. The message in this case from the First Department couldn’t be clearer: when the facts are egregious enough – including “improperly accessing … privileged attorney/client communication" – courts won’t hesitate to use drastic remedies including dismissal of the underlying lawsuit.

The case is Philip R. Shawe v. Elizabeth Elting, No. 8532  155890/14.