Lawyer's Failure to Safeguard Documents Brings Penalty

Lawyer's Failure to Safeguard Documents Brings Penalty
The New York Law Journal by Andrew Keshner  -  October 14, 2011

A federal judge has ordered an attorney to pay more than $30,000 in sanctions after confidential documents the lawyer turned over to a client ended up fueling a third party's legal action.  Southern District Judge Shira A. Scheindlin ordered Manhattan attorney Daniel S. Brecher and his former client Paul Lewicki to each pay $33,780 to Enzo Biochem after Lawrence Glaser obtained documents that had been under Judge Scheindlin's protective order and used the documents to support a motion to reconsider a closed case filed by Mr. Glaser against Enzo Biochem in Virginia federal court. Enzo Biochem is a bio-tech company based in New York.  Although the judge did not find that Mr. Brecher had acted in bad faith, she faulted him for turning over the documents to Mr. Lewicki in the presence of Mr. Glaser, who had already unsuccessfully sued Enzo Biochem in Virginia and had loaned Mr. Lewicki $20,000 to hire a New York attorney for another suit against Enzo Biochem.  According to Judge Scheindlin's decision, Mr. Brecher said he reminded both men at the handoff about the protective order's requirements.  Mr. Brecher maintains he complied with the court's order by solely turning over the documents to Mr. Lewicki.  Mr. Lewicki argued that he should not be sanctioned because he did not know the documents were confidential and Mr. Brecher failed to alert him to his duties under the order.  Neither argument persuaded Judge Scheindlin.

Referring to Mr. Glaser's financial and legal stakes in the New York action, she wrote in Hunt v. Enzo Biochem, 06-cv-170, "Given this knowledge, Brecher was obliged to do more than simply give Glaser and Lewicki instructions not to violate the Protective Order. Repeated warnings to play by the rules to a person with known incentives to do otherwise simply do not meet the substantial burden of making a diligent attempt to comply with the Protective Order in a reasonable manner."  In addition to paying Enzo Biochem's $67,000 legal bill to fight the Virginia motion, the judge directed Messrs. Brecher and Lewicki to retrieve the confidential documents and return them to the company. The judge said that Mr. Glaser now possesses the documents.  Judge Scheindlin released Tuesday's decision after a hearing on Enzo Biochem's sanction motion over two days in July. Messrs. Brecher and Lewicki both testified.  The dispute stems from suits filed by Messrs. Lewicki and Glaser and others against Enzo Biochem for allegedly misrepresenting the effectiveness of AIDS research, which inflated the value of the company's stock.  Mr. Brecher, then with the Law Offices of Dan Brecher, took Mr. Lewicki's New York case in 2007 after another attorney died.  After the parties entered a protective agreement with Enzo Biochem, both Mr. Lewicki and Mr. Glaser asked Mr. Brecher to seek modification of the order to allow Mr. Glaser access to the papers.  Mr. Brecher rebuffed the requests and threatened to end his representation if Mr. Lewicki petitioned the court for modification himself, Judge Scheindlin said.  Judge Scheindlin ultimately sided with Enzo Biochem in a summary judgment motion in 2009. The U.S. Court of Appeals for the Second Circuit upheld her summary judgment ruling earlier this year. A circuit decision on a motion for reconsideration in banc is still pending.  Mr. Brecher did not handle the appeal.

Mr. Lewicki requested the files after the summary judgment decision. Mr. Brecher and Donald H. Chase of Morrison Cohen, an attorney representing the Enzo Biochem defendants, agreed that documents marked "highly confidential" could not be turned over. But they could not agree on whether to hand over the files marked "confidential."  The disagreement was still unresolved when Mr. Lewicki and Mr. Glaser showed up at Mr. Brecher's office to get the files.  Mr. Lewicki signed for the files, and he and Mr. Glaser moved them into Mr. Glaser's truck and they were later stored at a friend's home.  After using the documents to unsuccessfully pitch an appeal of Mr. Lewicki's case, Mr. Glaser brought several files to a meeting with Mr. Lewicki at a New Jersey Turnpike rest stop.  At least three of the files were marked confidential and would be used by Mr. Glaser in his motion to re-open the Virginia case, Mr. Lewicki testified.  The motion was denied in the Virginia district court in April, and by the U.S. Court of Appeals for the Fourth Circuit this month.  In her decision, Judge Scheindlin noted that Mr. Brecher contended he did "nothing improper" by letting both Mr. Lewicki and Mr. Glaser move the files. But noting Mr. Glaser was not authorized to receive the files under the order, she called Mr. Brecher's view of his actions "irrelevant."  Judge Scheindlin acknowledged Mr. Brecher's efforts to comply with the order's terms leading up to the handoff.  "What makes the act of transferring confidential materials into Glaser's possession deeply troubling—even if [Mr. Brecher] only viewed Glaser as a stand-in for a paid moving company—is what Brecher knew about Glaser," she wrote.  Judge Scheindlin did not find Mr. Lewicki's testimony to be credible, saying his actions essentially showed a "simple dissatisfaction with the fact that Brecher entered into the protective order at all."  Mr. Brecher, who is now counsel to Scarinci Hollenbeck, referred comment to his attorney, Robert J. Bergson at Abrams Garfinkel Margolis Bergson.  "The court expressly found that Mr. Brecher's conduct was not willful or in bad faith. We are confident that the order will be reversed on appeal for this and other reasons," Mr. Bergson said.  In an interview, Mr. Chase called the decision "a clear statement that you cannot take confidentiality orders cavalierly."  Mr. Lewicki, who represented himself, did not return a request for comment.  Andrew Keshner can be contacted at akeshner@alm.com.