William Gottlieb Management Co, LLC v. Carlin

Background

William Gottlieb Management Co., LLC (WGM), described in the opinion as a real estate company, retained Allan Carlin, a lawyer, to perform legal services. In 2017, WGM gave Carlin a user login for its Dropbox Professional Account. WGM terminated Carlin's services on October 24, 2018, but did not change or revoke his login credentials or otherwise restrict his access to shared folders.

WGM later sued Carlin, alleging violations of the Stored Communications Act and breach of a common-law duty of care based on his alleged access to files and folders in WGM's Dropbox during 2019. The opinion states that WGM's claims under the Computer Fraud and Abuse Act and for trespass to chattels had previously been dismissed. Carlin also filed a counterclaim alleging that he had uploaded files to the WGM Dropbox and that WGM wrongfully retained them.

The court had previously recommended dismissing Carlin's original counterclaim because it did not provide facts showing that he had a possessory right superior to WGM's or an entitlement to immediate possession. The recommendation also found that the original pleading did not show a concrete and particularized injury—the type of injury required for a party to have standing, or the legal ability to sue. No party objected to that recommendation. Carlin instead moved for permission to file an amended counterclaim.

Proposed Amended Counterclaim

Carlin's proposed amended counterclaim focused on two groups of files: approximately 120 files placed in a folder titled “East End Kitchen” and approximately 23 files placed in a folder titled “Greenapple.” He alleged that he intended to upload the files from his password-protected laptop to his personal Dropbox account but mistakenly uploaded them to the WGM Dropbox instead. He alleged that he did not retain other copies, did not intend to give WGM possession, restricted access to himself, and never shared the files with WGM or anyone else.

According to the proposed pleading, the Greenapple files related to Carlin's representation of a client between approximately 2010 and 2015 and included attorney work product, a confidential mediation statement protected by attorney-client privilege, and private contracts. The East End Kitchen files allegedly related to Carlin's representation of a limited liability company owned by his wife and included tax returns, Internal Revenue Service forms, and private contracts. Carlin alleged that neither group of files related to WGM.

Carlin alleged that he demanded return of the files on May 21, 2024, but WGM refused. He sought a judgment declaring that he was entitled to immediate possession and directing WGM to return the files, including copies within its possession or control.

Legal Standard

Federal Rule of Civil Procedure 15(a)(2) generally calls for permission to amend a pleading to be given freely, unless the amendment would be futile, delayed without adequate reason, made in bad faith, or unfairly harmful to the opposing party. An amendment is futile if the proposed pleading could not state a legally sufficient claim. At this stage, the court tests whether the alleged facts, accepted as true, make the claim plausible; it does not resolve the ultimate factual dispute.

Court's Analysis

The court applied New York law because the action is based on diversity jurisdiction. Under New York law, replevin is a claim seeking return of specific personal property. A claimant must allege a possessory right superior to the person currently holding the property and an entitlement to immediate possession. When the other party originally obtained the property lawfully, the claimant must also allege that he demanded its return and that the demand was refused. The court held that digital copies of electronic documents may be the subject of a replevin claim.

The court concluded that Carlin's proposed allegations plausibly stated each element. Unlike the original counterclaim, the proposed version identified the files, explained how and why they were uploaded, alleged that Carlin created or received them while representing other clients, alleged that he had a superior possessory right, and alleged a demand and refusal. The court rejected WGM's arguments that it had exclusive rights to the Dropbox account and its contents because those arguments were unsupported by the pleadings and raised factual disputes not properly resolved on a motion testing the sufficiency of the counterclaim.

The court also concluded that Carlin adequately alleged standing. Carlin claimed injury from WGM's continued possession of and access to confidential files, including the risk that confidential client information, privileged communications, and attorney work product could be disclosed. The court rejected WGM's request to assume that Carlin must have deleted his own copies of the files. It also ruled that WGM's offer to provide paper copies for discovery did not necessarily satisfy Carlin's demand for return of the files, because returning electronic property can require more than providing another copy for inspection.

Disposition

The court GRANTED Carlin's motion to amend his counterclaim. It directed him to promptly file the amended counterclaim as a separate electronic docket entry. The amended counterclaim would replace the counterclaim portion of his amended answer and counterclaim, and WGM's answer would be due 14 days afterward. The opinion addressed only whether Carlin could file the amended pleading; it did not finally determine the parties' competing rights to the files.