Fourth Dimension Software v. Der Deutsches Reiseburo GMBh & Co., OHG

Background

The parties asked the court to resolve a discovery dispute about a September 28, 2016 email from Fourth Dimension Software’s former in-house counsel, John Pavolotsky, to Fourth Dimension’s president and chief executive officer, Ilya Pavolotsky. The email had the subject line “Re: AOVO” and was sent the day before Ilya was scheduled to meet with Aovo Touristik in Germany about a possible license for Fourth Dimension’s software tools.

Fourth Dimension withheld the email based on attorney-client privilege, which generally protects confidential communications made for the purpose of obtaining legal advice. Der Touristik Deutschland argued that the privilege did not apply and, alternatively, that Fourth Dimension waived it when Ilya forwarded the email to the hotel front desk at “info.berlin@hilton.com” with a request to print one copy.

Whether the Privilege Applied

The court applied California law to the privilege dispute. Under California law, a corporation may claim attorney-client privilege, and the privilege is ordinarily asserted or waived by corporate officers and directors. The party claiming the privilege must first establish facts showing that the communication occurred in an attorney-client relationship and concerned legal advice.

The court found that Fourth Dimension met that initial burden. Although John had left Fourth Dimension and was working as in-house counsel at Intel in September 2016, that fact did not automatically prevent him from having an attorney-client relationship with Fourth Dimension. Fourth Dimension represented that John had advised the company for years on legal matters, including software-product licensing, and that the company continued to seek his legal advice after he left.

The court concluded that the main purpose of the relationship at the time of the email was obtaining legal advice about Fourth Dimension’s product licensing. It rejected Der Touristik’s unsupported speculation that the email might have contained business rather than legal advice and its argument that John’s family relationship with Ilya undermined the privilege.

The court had ordered Fourth Dimension to submit the email for private judicial review. But because California Evidence Code section 915 may prohibit such review in a diversity case, and because the parties had not addressed that issue, the court stated that it did not consider or rely on information obtained from that review in deciding the dispute.

Waiver by Disclosure

The court then considered whether Ilya’s forwarding of the email to the hotel front desk waived the privilege. Under California law, disclosure of a significant part of a privileged communication waives the privilege unless the disclosure was confidential and reasonably necessary to transmit the information or accomplish the purpose of the legal consultation.

The court held that Fourth Dimension had not shown that forwarding the email to the hotel’s general email address was reasonably necessary. Ilya already possessed the email, and the record did not explain why sending it to that address was necessary to transmit the information. The email also contained no warning that it was confidential, no instruction not to read or share it, and no request to delete it after printing. The court further noted that it was unclear whether Ilya was even a hotel guest.

The court rejected Fourth Dimension’s reliance on California Evidence Code section 917(b), which protects a privileged communication from losing its privileged character merely because electronic-delivery, facilitation, or storage personnel might access it. The court found that the hotel front desk was not acting in that kind of electronic-delivery or storage role; instead, it was an unnecessary third party to whom Ilya knowingly disclosed the email.

Disposition

The court found that the email was initially protected by attorney-client privilege but that Ilya’s disclosure to “info.berlin@hilton.com” waived the privilege. It ordered Fourth Dimension to produce the disputed email to Der Touristik by September 29, 2021. The order was nondispositive, meaning it did not finally resolve the entire case, and either party could object within 14 days under Federal Rule of Civil Procedure 72(a).