Disney Enterprises, Inc. et al v. Hotfile Corp. et al

Filing 370

NOTICE by Hotfile Corp., Anton Titov of Filing the PUBLICLY FILED REDACTED Version of Defendants' Objections to the Magistrate Judge's Report and Recommendation Regarding Plaintiff Warner's Motion to "Use" Titov Exhibit 27 in its Entirety at Trial or on Summary Judgment (Attachments: # 1 Exhibit 1, # 2 Exhibit A, # 3 Exhibit B, # 4 Exhibit C, # 5 Exhibit D, # 6 Exhibit E, # 7 Exhibit F, # 8 Exhibit G)(Munn, Janet)

EXHIBIT 1

PUBLIC VERSION
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 11-20427-WILLIAMS/TURNOFF

DISNEY ENTERPRISES, INC.,
TWENTIETH CENTURY FOX FILM CORPORATION,
UNIVERSAL CITY STUDIOS PRODUCTIONS LLLP,
COLUMBIA PICTURES INDUSTRIES, INC., and
WARNER BROS. ENTERTAINMENT INC.,
Plaintiffs,
v.
HOTFILE CORP., ANTON TITOV, and
DOES 1-10.
Defendants.
/
HOTFILE CORP.,
Counterclaimant,
v.
WARNER BROS. ENTERTAINMENT INC.,
Counter-Defendant.
/

[REDACTED] OBJECTIONS OF DEFENDANTS HOTFILE CORPORATION
AND ANTON TITOV TO MAGISTRATE JUDGE’S
REPORT AND RECOMMENDATION REGARDING
PLAINTIFF WARNER’S MOTION TO “USE” TITOV EXHIBIT
27 IN ITS ENTIRETY AT TRIAL OR ON SUMMARY JUDGMENT

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I.

CASE NO. II-CIV-20427-WILLIAMS/TURNOFF

INTRODUCTION
Plaintiff Warner Bros. Entertainment Inc. ("Warner") cannot properly use evidence

obtained in violation of this Court's Orders, the Federal Rules, and the Florida Rules of
Professional Conduct. Here, Warner examined Hotfile at deposition regarding a document
which an Order of this Court required it to destroy. It then filed a motion regarding the
document beyond the deadline ordered by the Court, and submitted the document under seal in
defiance of another provision of the Court order. It did not adhere to the ethical obligation to
return a document which Warner should have known was protected work-product, even though it
knew that Hotfile asserted work-product protection over another e-mail between the same four
individuals regarding the same attorney-directed investigation and sent only thirty-seven minutes
later. Warner then argued in open court that "the circumstances surrounding the production
make it legally [not] inadvertent," even though the Court had already explicitly ordered that "a
party may not assert ... [the] circumstances of the inadvertent production" as grounds for
seeking the document. Anyone of these transgressions should result in denial of Warner's
current Motion. None of these transgressions were even mentioned in Magistrate Judge
Turnoff s Report and Recommendation granting the instant Motion [Docket No. 306].
Compounding the impropriety of its Motion, Warner relies on inapposite cases. It relies
on cases which do not analyze stipulated Protective Order provisions governing the clawback of
priVileged documents following the enactment of Federal Rule of Evidence 502 in September
2008. The only post-2008 case cited by Warner analyzing a clawback provision in a Protective
Order found ,no waiver of any work-product protection - and thus supports Hotfile. Because
Warner's Motions flout so many mandatory legal and ethical obligations, and because the
Magistrate Judge's Report and Recommendation and his previous Order fails to apply current
law, the rulings should be set aside and Warner's Motions denied. 1

I Hotfile previously objected to Magistrate Judge Turnoffs disposition of a narrower motion to
compel production of an excerpt of the document at issue here. [Docket No. 234.] This Court
overruled the objections without prejudice as premature. [Docket No. 248.] Hotfile respectfully
renews those objections for the reasons stated here so that Plaintiffs cannot argue that sustaining
the instant Objections regarding the broader document nonetheless permits Plaintiffs to continue
to use the excerpt.

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FACTUAL BACKGROUND

II.

A.

Warner's Abuse Of Hotfile's Anti-Infringement Technology

Hotfile provides content owners such as Warner the unrestricted ability to unilaterally
take down content from Hotfile's servers without any oversight whatsoever using so-called
"special rightsholder accounts" ("SRAs"). (Counterclaim [Docket No. 161] ~~ 2-13.) Content
owners must simply verify under penalty of perjury when using the SRAs that they are the
owners or authorized legal representatives of the owners of the copyrights asserted. (Id.

~

15.)

By February 2011, Warner was using its SRA to delete up to tens of thousands of files
from Hotfile daily without even reviewing the files. (Id.
functionality that

~

15-16.) Warner relied on automated

took down content using common terms such as "seven," "the

town," "unknown," or "the box" simply because such terms appeared in the titles of Warner
movies. (Id.

~

29.) Warner's disdain for its obligation to certify copyright ownership led it to

take down some of the most popularly-downloaded files on Hotfile, such as software freely
authorized for distribution (known as "freeware"). (Id.
B.

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21-22.)

Hotfile's Work-Product Investigation Into Warner's Abuse

After praising Hotfile's efforts to counteract copyright infringement for nearly two years
(Id.

~

36), Plaintiffs initiated this lawsuit without warning on February 8, 2011. (Complaint

[Docket No.1].) Shortly after being engaged, Hotfile's trial counsel learned of Warner's
flagrant misuse of its SRA tool. Accordingly, on March 2, 2011, Hotfile's counsel directed
Hotfile to compile a list of Warner's "takedown" demands regarding content to which Warner
had no apparent relationship. See Ex. G. (Declaration Of Roderick M. Thompson In Support Of
Counterclaimant Hotfile Corporation's Opposition To Warner's Motion To Compel [Docket No.
206-1]

~

10 (hereinafter, "Thompson Opp. Decl."». Counsel directed this investigation in

support ofa claim against Warner for abuse of Hotfile's takedown procedures under the DMCA.
(Id.; 15 U.S.C. §512(f).)

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C.

CASE NO. ll-CIV-20427-WILLIAMS/TURNOFF

The "Clawback" Provision In The Parties' Stipulated Protective Order

On May 19, 2011, the parties agreed to a Stipulated Protective Order. See Ex. D [Docket
No. 68.]3 the Order, entered by the Court, possessed the following "clawback" provision:
Inadvertent production of any document produced in response to
discovery requests in this action by any party or non-party, that a
party or non-party later claims should have been withheld on
grounds of a privilege, including the attorney-client privilege or
work product doctrine (referred to hereinafter as an
"Inadvertently Produced Privileged Document'') will not be
deemed to waive any privilege or work product protection. A

3 The Exhibits to these Objections are designated by letters "A" through "G," and are attached to
these Objections. The documents attached as Exhibits are true and correct copies of the
documents.

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party or non-party may request the return of any document that it
inadvertently produced by identifying the Inadvertently Produced
Privileged Document and stating the basis for withholding such
document from production. If a party or non-party requests the
return, pursuant to this paragraph, of such an Inadvertently
Produced Privileged Document then in the custody of one or
more parties, the possessing parties shall within five (5) court
days destroy or return to the requesting party or non-party the
Inadvertently Produced Privileged Document and all copies
thereof and shall make reasonable efforts to expunge from any
other document or material information solely derivedfrom the
Inadvertently Produced Privileged Document, consistent with
Fed. R. Civ. P. 26(b)(5)(B). However, the possessing parties may
retain information sufficient to identify the Inadvertently Produced
Privileged Document (e.g., bates number, author(s), recipient(s),
date) for purposes of a motion to compel production of the
document. A party may move the Courtfor an order compelling
production of the document, and may present the document to the
Court under seal within five (5) court days of receiving a request to
return the document, but said party may not assert as a groundfor
the entering of such an order the fact or circumstances of the
inadvertent production. Nothing in this Order, shall preclude a
party from arguing that the production of the allegedly
inadvertently produced document was not inadvertent or that
conduct since production of the allegedly inadvertently produced
document constitutes a waiver.

ld.

~

20 (emphasis added).

D.

Hotfile's Inadvertent Production Of The "WB Links" Document

Relying on the existence of this clawback provision, Hotfile produced 1,141,401
documents comprising approximately 2,868,354 pages in only a few months. (Thompson Opp.
Dec!.

~

2.) Sometimes its productions exceeded hundreds of thousands of pages; other times its

productions constituted a handful of pages. In both cases, Hotfile employed electronic
"keyword" searching to scour its production for documents prone to protection under the
attorney-client privilege or work-product protection. For example, Hotfile searched documents
for the names of its attorneys, paralegals, or law firms, screened documents for words such as
"attorney-client," "privileged," or "work-product," and searched documents for common
misspellings of the names set forth above. Hotfile also employed a manual privilege review
using outside counsel as well as contract counsel fluent in Bulgarian, the language used by all six
of the individuals supporting Hotfile's operations (including the three owners). This review took

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hundreds of hours of reviewers' time. However, counsel for Hotfile moved quickly to
accommodate Plaintiffs' continuous demands for immediate production of documents. (See id.)
Despite Hotfile's efforts, it inadvertently produced its work-product compilation of
on June 17,2011 and October 14,2011. (Jd.' 4.) Hotfile, a small internet company
operated from a European nation unaccustomed to U.S. litigation, did not uniformly mark workproduct docnments with a "work-product" legend.

However,four other copies of the same document
were caught in Hoifile's manual review and withheld on work-product grounds.

E.

Warner's Knowledge Of The Protected "Work Prodnct" Status Of Hotfile's
Compilation Of Warner Links In Early March 2011

F.

Warner's Exploitation Of Hotfile's Inadvertent Production

For the next several months, Plaintiffs exploited Hotfile's undiscovered error in
producing the "WB Links" document. (Plaintiffs' Reply In Support of Motion To Compel
Production Of Titov Ex. 27 [Docket No. 211] (hereinafter, "Plaintiffs' MTC Reply") at 3-4
("Warner's counsel had the document for more than five months before Hotfile's clawback
r

emails, and had integrated the document into its own work product and deposition
preparation.").) Warner's counsel ignored Florida Rule of Professional Conduct 4-4.4(b): "A
lawyer who receives a document relating to the representation of the lawyer's client and knows
or reasonably should know that the document was inadvertently sent shall promptly notify the

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sender." (emphasis added). Warner exploited Hotfile's inadvertent production even though no
reason existed for Hotfile to possess a list of Warner's wrongful takedowns other than to assist
its counsel in litigation, and even though Warner had known since one month after the
document's production that an e-mail between the same four Hotfile recipients on the same
subject sent within thirty-seven minutes of the document at issue, had already been clawed back
as privileged. (Thompson Obj. Dec!.

G.

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2 & Ex.!.)

Warner's Clawbacks In The Final Hours Before Its Deposition

On October 10,2011, Warner clawed back a variety of documents less than two days
before the deposition of Warner's corporate designee, attributing the lapse to the speed at which
the parties were exchanging discovery in the case (i.e., the same reasoning justifying Hotfile's
clawback here). (See Ex. A.) Warner transmitted replacement documents only after Hotfile's
counsel had departed by airplane for the deposition. (Id.) Nonetheless, Hotfile destroyed the
documents and did not use them at the deposition. (Jd.)

H.

Warner's Failure To Honor Hotfile's Clawback Of The "WB Links"
Document

On November 28, 2011, Hotfile notified Warner in writing that Hotfile had inadvertently
produced the "WB Links" document, identified by Bates number HF02866338, despite the
document's protection under the work-product doctrine. (Thompson Opp. Dec!.

~

4 & Ex. 1.)

Citing paragraph 20 of the Protective Order, Hotfile asked Warner to destroy or return all copies

of that document. (Id.)
Despite this Court's unambiguous Order that "parties shall within five (5) court days
destroy or return" clawed-back documents, Plaintiffs did not destroy the "WB Links" document.
(Protective Order [Docket No. 68]

~

20.) Plaintiffs also ignored Rule 26(b)(5)(B) of the Federal

Rules of Civil Procedure. See Fed. R. Civ. P. 26(b)(5)(B) ("After being notified [ofa
clawback], a party ... must not use or disclose the information until the claim is resolved")
(emphasis added). Instead, on December 5, 2011 - one week after Hotfile's c1awback noticeWarner's counsel marked the "WB Links" document as Exhibit 27 to the deposition of Hotfile's
corporate designee, Anton Titov, and interrogated him about the document for more than thirty
questions. (Declaration Of Steven B. Fabrizio In Support Of Plaintiffs' Motion To Compel
Production Of Titov Deposition Exhibit 27 [Docket No. 211], Ex. A at 168:1 - 173:2.)

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I.

CASE NO. ll-CIV-20427-WILLIAMS/TURNOFF

Hotfile's Objections To Warner's Intrusion Into Hotfile's "Work Product"
Investigation Of Warner's Takedowns In Early March 2011

Warner's interrogation on this subject began with Exhibit 26, an internal Hotfile e-mail
from March 7, 2011 entitled "File List." Hotfile's counsel objected on work product grounds:
MR. THOMPSON: Mr. Fabrizio, let me also just state while he's
reading [the document] that we have become aware in the last
week or two of some inadvertent produced documents ... that
contained work product information. And I'd ask - have asked
for their return. ...
MR. FABRIZIO: Well, then, we can deal with that afterwards.
MR. THOMPSON: And I'd just like to - I'll allow this to
continue, but I want to reserve a potential objection to the extent
this has any work product.
MR. FABRIZIO: Okay. Fair enough. You preserve the
objection. ...
MR. THOMPSON: But you agree there's no waiver by letting
meMR. FABRIZIO: No, not by letting him answer . ...

(Id. at 164:7-24.)(emphasis added). Hotfile's counsel repeated the objection regarding the entire
subject matter several questions later:
Q: Hotfile had identified what it believed to have been mistakes in
the notices by Warner throughout February, March, April and even
May of 200 1; is that not correct? .
MR. THOMPSON: I'm going to object to the extent that it calls
for work product information which commenced after the date of
early March 20ll.

(Jd. at 167:2-8.)(emphasis added). Despite these objections, Warner's counsel then marked the
"WB Links" document as Exhibit 27 and continued the examination. (Id. at 168: 1 - 173:2.)
Because the deposition occurred in Bulgaria - over 6,000 miles and ten time zones away
from the Hotfile attorney who clawed back Exhibit 27 from the United States - the attorney
defending the Titov deposition did not have a complete list of clawed-back documents at the
deposition. (Thompson Opp. Dec!.

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8.) However, counsel for Hotfile reasonably assumed that

Warner's counsel would not violate the Protective Order and attempt to use a clawed-back
document at the deposition. (Jd.

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7.)

After the deposition adjourned for the day, counsel for Hotfile confirmed that Hotfile
Exhibit 27 was protected work product. He immediately (that same evening) notified Warner's
counsel and again requested the return of the document. (Id. at ~ 10 & Ex. 2.) When the

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deposition resumed the next morning, he repeated the objection and again asked Warner to
destroy all copies of the document in question. (Id.
J.

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11.)

Warner's Violations Of The Protective Order

Warner refused to destroy or return the document, but chose instead to commit further
violations of the Protective Order. Ignoring the provision in this Court's Protective Order that
"[a] party may move ... for an order compelling production of the [clawed-back] document ...
within five (5) court days of receiving a request to return the document," Warner moved to
compel production of the document on December 12, 2011 - fourteen days after the document
had been recalled. [Docket No. 180.] Ignoring the Court's Order that "[a] party ... may present
the document to the Court under seal within five (5) court days of receiving a request to return
the document," Warner submitted the document two weeks after receiving Hotfile's clawback
notice. [Docket No. 181, Ex. C.] Ignoring the Court's statements that "[i]nadvertent production
... will not be deemed to waive any privilege or work product protection" and that a "party may
not assert as a ground for [compelling production] the fact or circumstances of the inadvertent
production," Warner's motion nearly exclusively argued that Hotfile was careless. (Plaintiffs'
MTC Reply [Docket No. 211] at 4-11 (contending that Hotfile made its production "without
taking reasonable precautions" resulting in an "abdication of responsibility" and ensuing "waiver
of any claim of privilege").)
Without addressing Warner's violations of Paragraph 20 of the Court's Protective Order
or Rule 26(b)(5)(B) of the Federal Rules of Civil Procedure or Rule 4-4.4(b) of the Florida Rules
of Professional Conduct, Magistrate Judge Turnoff entered an order on January 13, 2012
requiring Hotfile to produce the 32-page excerpt of the "WB Links" document used in Mr.
Titov's deposition, but deferring further consideration of the entire 297-page document.
Warner's counsel viewed this as exoneration, gloating to Hotfile: "you accused me of multiple
violations of a protective order and my ethical obligations ... The court did not even give them
the time of day .... So you continue to include whatever you want in your motions. The court
has seen through your nonsense." (Thompson Obj. Decl., Ex. 2 (emphasis added).) Hotfile
objected to Magistrate Judge Turnoffs ruling on January 27, 2012, which this Court denied as
premature on February 7, 2012. [Docket Nos. 234, 248.]

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K.

CASE NO. ll-CIV-20427-WILLIAMS/TURNOFF

Warner's Reliance On The Clawhack Provision Of The Protective Order
Last Month For The Very Protection Which Warner Seeks To Deprive To
Hotfile Here

On February 9, 2012, Hotfile notified Warner that Warner had failed to redact privileged
information from over a dozen documents, duplicating Warner's same error first discussed by the
parties four months previously on October 10,2011. (See Ex. B.) Rather than claiming a
privilege waiver based on Warner's "abdication of responsibility" and lack of "reasonable
precautions" in producing documents, Hotfile acted properly and permitted Warner to claw back
the documents to remedy identical errors repeated four months apart. (See Exs. A-B.)
On February 28, 2012, Magistrate Judge Tumoffrecommended granting Warner's instant
Motion. [Docket No. 306.] These objections ensued.
III.

LEGAL STANDARD
The Court "shall make a de novo determination" regarding a report and recommendation

issued by Magistrate Judge. 28 U.S.C. § 636(b)(l)(C); Magistrate Judge Local Rule 4(b).
IV.

ARGUMENT

A.

Warner Cannot Properly Use Evidence Obtained In Violation Of This
Court's Orders, Rules, And Ethical Obligations

"[W]here attorneys or parties obtain evidence in violation of the court's rules or orders,
the court may exercise its power to enforce those rules and orders by excluding the evidence
wrongfully obtained." United States v. Venske, 296 F.3d 1284, 1291 (lIth Cir. 2002).
Specifically, "courts have discretion to exclude evidence [resulting from] violation of a
discovery order." Id. (citation omitted).
In filing this Motion, Warner does not and caml0t deny its violations of the Protective
Order, the Federal Rules, and the Florida Rules of Professional Conduct. Instead, it pointedly
ignores them and leaps instead to an analysis of whether Hotfile's document review practices
justifY waiver of any work-product protection over the "WB Links" document. 4 While Hotfile
4 Notably, Warner nowhere argues that Hotfile's document was not protected work product;
Warner only argues that the protection was waived. Mot. at 7-12. The parties do not dispute that
non-lawyers may create protected work product at the direction of counsel. Every Penny Counts,
Inc. v. American Express Co., No. 07-CV-1255-T-26MAP, 2008 WL 2074407, at *1 (M.D. Fla.
May 15,2008). Indeed, Warner's counsel has explicitly argued that non-lawyers may create
protected work product regarding Hotfile's counterclaim.

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has exercised due care, this Court should not even reach that issue: Warner cannot properly seek
admission of any evidence obtained in repeated abuse of so many orders and rules. Magistrate

Judge Turnoff did not address any of these arguments in his Report and Recommendation.

1.

Warner Violated The Protective Order By Refusing To Destroy Or
Return The "WB Links" Document Within Five Days Of Receiving
Hotfile's Clawback E-Mail

There is no dispute that Hotfile clawed back the "WB Links" document on November 28,
2011. There is no dispute that Paragraph 20 of the Protective Order required Warner to destroy
or return all copies of that document within five court days. See Stipulated Protective Order
[Docket No. 68] , 20. 5 There is no dispute that Warner refused to destroy the document and
instead used it as a deposition exhibit seven days later on December 5, 2011. Thus, Warner
violated the Protective Order in eliciting testimony at length regarding a clawed-back document
which Warner remained under an Order of this Court to destroy. This document and all related
testimony should be excluded from evidence. Venske, 296 F.3d at 1291.
Warner attempts to blarne Hotfile for Warner's wrongdoing, asserting that Hotfile did not
reasonably identify its clawed-back documents because the documents were "identified only by a
string of Bates numbers." See Plaintiffs' MTC Reply [Docket No. 211] at 3. However, Bates
numbers exist for the sole reason of identifying documents. E.g., Sussman v. Us. Marshals

Service, 657 F.Supp.2d 25, 26 (D.D.C. 2009). Warner's counsel has itself used Bates numbers-

Warner contends that Hotfile provided an oral extension of the five-day deadline to destroy the
"WB Links" document. See Warner's Responses To Hotfile's Objections To Magistrate Judge's
Order Regarding Warner's Motion To Compel Titov Deposition Exhibit 27 (hereinafter,
"Warner's Obj. Resp.") at 11-12. Setting aside the fact that the parties may not by agreement
alter court-ordered deadlines absent a motion, Warner cannot argue that an extension agreed to
by counsel permitted Warner to freely use the document in the meantime. In fact, the declaration
of Warner's counsel makes clear that Warner knew about the "WB Links" document prior to the
depositions in Bulgaria and knew that Warner remained obliged by Court Order to destroy the
document prior to any further use. Declaration Of Duane C. Pozza In Support Of Warner's
Responses To Hotfile's Objections' 5. Whether Warner deleted the "WB Links" document by
December 5, 2011 or December 12,2011, it indisputably remained under an Order of this Court
not to use the "WB Links" document in deposition on December 5, 2011 - yet this is exactly
what Warner did. Protective Order, 20; See Ex. F, Declaration Of Tony Schoenberg (making
clear that, in permitting Warner additional time to destroy the "WB Links" document, Hotfile did
not agree to allow Warner to use the document or any work-product document).
5

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in the absence of any additional information - to identify documents, both in correspondence and
in formally responding to interrogatories. See Ex. C. Indeed, Warner has specifically asked
Hotfile to identify documents by Bates number when discussing documents. ld. Warner cannot
credibly suggest that Bates numbers do not sufficiently identify its clawed-back document.
Warner's counsel then argues that he was too busy to return or delete Hotfile's clawedback document. See Plaintiffs' MTC Reply at 3 ("The days between November 28 and
December 3 ... were some of the busiest in this litigation."). However, it is not particularly
time-consuming or arduous to delete a document. Moreover, it is difficult to believe that one of
the world's largest entertainment corporations could not muster the support necessary to
accomplish the task, even if two of its many lawyers were "readying to board flights" to travel
for Hotfile's deposition. ld. In any event, Hotfile remains unaware of any authority for the
proposition that parties may ignore Orders of this Court because they are too busy to comply.
Warner's counsel then asserts that because he chose to embed the privileged document in
his work product that he "could not locate copies of the document simply by going to a
document production file and searching for Bates numbers." Plaintiffs' MTC Reply at 4.
However, Warner's counsel produced a copy of a clawed-back document at deposition, recited
its production number before marking it as an exhibit, and asked Hotfile questions about it. It is
fair to conclude then that, when he violated the Protective Order, the clawed-back document was
top-of-mind. In any event, the Protective Order does not excuse non-compliance if inconvenient
or unintentional. Warner remained under an Order of this Court nolto use at deposition the very
document it used at length. On its own, Warner's violation of the Protective Order's "return or
destroy" deadline justifies denial of this Motion.

2.

Warner Violated The Protective Order And Rule 26(b)(6)(B) By
Using Exhibit 27 After Receiving The Clawback E-Mail

Federal Rule of Civil Procedure 26(b)(5)(B) - explicitly incorporated into Paragraph 20
of the Protective Order - states that, upon receiving notice of an inadvertently-produced
document, a party "must not use or disclose the information until the claim is resolved." Fed. R.
Civ. Pro 26(b)(5)(B) (emphasis added). Warner indisputably used Exhibit 27 at Hotfile's
deposition. The claim regarding Hotfile's clawback remains pending to this day. Warner cannot
justifiably perpetuate evidence in violation of the Court's Order and the Federal Rules and then
seek to benefit from its wrongdoing. Again - independent of any other transgression catalogued

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herein _. Warner's violation of the "status quo" provision of the Protective Order and Rule
26(b)(6)(B) justifies denial of this Motion. 6

3.

Warner Violated The Protective Order By Filing Its Motion To
Compel And Submitting The Document Under Seal More Than Five
Days After The Claw back Notice

The Protective Order explicitly states that a party seeking to compel production of a
clawed-back document must do so within five court days of notification, and may only submit
the document under seal within five court days of the clawback. See Protective Order, 20 ("A
party may move for an order compelling the production of the document, and may present the
document to the Court under seal within five (5) court days of receiving a request to return the
document"). Here, there is no dispute that Hotfile clawed back the document on November 28,
2011 - fourteen days before Warner filed its motion to compel and submitted the document
under seal to the Court on December 12, 2011.
The requirement that parties bring motions over clawed-back documents within five court
days exists to prevent parties from compounding harm caused by discovery disputes. For
example, absent Warner's violations of the Protective Order, there would be no testimony
regarding Exhibit 27 to dispute. The provision also ensures timely redress of disputes. See Fed.
R. Civ. P. 1 (Rules exist "to secure the just, speedy, and inexpensive determination of every
action and proceeding"). Here, Warner should not benefit from its disdain for this Court's
deadlines. See Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 610 (9th Cir. 1992) ("[an
order setting deadlines1is not a frivolous piece of paper, idly entered, which can be cavalierly
disregarded by counsel without peril.").
This untimeliness alone suffices to defeat Warner's Motion. In Bro-Tech Corporation v.
Thermax, Inc., No. 05-CV-2330, 2008 WL 5210346 at *1-2 (E.D. Pa. Dec. 11,2008), the parties

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agreed to a five-day deadline for filing motions objecting to clawback requests. Finding that "the
terms of the Clawback Agreement were negotiated by the parties, incorporated by them into a
formal Stipulation, and approved by a subsequent Order of the Court," the Court denied
Plaintiffs' untimely motion to use the contested document based on tardiness alone.
[T]he Court considers that the parties will be bound by the rules
and protocols they ... devised, including the terms of the
Clawback Agreement. In the instant matter, such terms are
dispositive. Plaintiffs had an opportunity under the Clawback
Agreement to object to Defendants' conduct with respect to the
Document, but that opportunity has now passed, and Plaintiffs'
Motion must be denied as untimely.
Id. at *2. No credible distinction exists between Bra-Tech and the instant case.

Warner argues that the Protective Order only requires submission of the disputed
document under seal within five days of clawback, and that a motion contesting that clawback
may be made anytime. Plaintiffs' MTC Reply at 1-2. This argument defies logic. No credible
reason exists why a party would or could submit a document under seal to the Court
unaccompanied by a motion or other paper explaining on what authority the document was being
presented and then move to compel its production weeks or months later when it felt subjectively
and unilaterally inclined to proceed, notwithstanding any intervening discovery that might have
been impacted by the motion.
Even torturing the Protective Order as it does, Warner cannot find any credible excuse for
its belated filing of Exhibit 27 under seal, since even under Warner's interpretation the Protective
Order required submission of the document within five court days. In their zeal, Warner cannot
even forthrightly confess this violation, only conceding that Exhibit 27 "arguably should not
have been provided to Your Honor." Id. at 2 (emphasis added). Instead, Warner argues that it
could have submitted in timely fashion a different copy of the "WB Links" document under seal,

since Hotfile inadvertently produced the same document under two different Bates numbers. See
Docket No. 206-2 (recalling "all copies" of Hotfile document HF02866338 - i.e., Exhibit 27
on November 28, 20 II); Docket No. 206-3 (explicitly recalling identical document HF00036777
on December 3,2011).
First of all, whether Warner could have submitted HF00036777 instead ofHF02866338
is immaterial: Warner used HF02866338 at the Titov deposition and submitted the same to the
Court. Counterfactual hypotheticals accomplish nothing. In any event, Hotfile's November 28

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e-mail explicitly clawed back "all copies" of the "WB Links" document, of which HF02866338
and HF00036777 are identical copies. As such, both were recalled on November 28, 2011,
making the deadline for submitting either copy to the Court the same for either copy.7
In any event, and most inexplicably, Warner counts days incorrectly. Even if
HF00036777 was recalled on December 3, 2011, and even if Warner had submitted HF00036777
instead ofHF02866338 to the Court on December 12, 2011, such a submission still would have
been nine days after Hotfile's clawback rather than the requisite five court days - and thus would
have been untimely under the Protective Order. Protective Order~ 20. Thus Wamer's attempt
to claim that "there is no question" that it could have submitted HF00036777 to the Court on
December 12 further demonstrates Warner's casual relationship with the facts. Warner's Motion
should be rejected on untimeliness grounds alone.

4.

Warner Committed An Ethical Violation In Failing To Return The
Document

Florida Rule of Professional Conduct 4-4.4(b) provides that "[a] lawyer who receives a
document relating to the representation ofthe lawyer's client and knows or reasonably should
know that the document was inadvertently [produced] shall promptly notify the sender." Fla. R.
of Prof. Conduct 4-4.4(b). Here, Warner admits to using the "WB Links" document for five
months after production of the document,

Warner argues that it could properly keep a copy of the "WB Links" document (HF00036777)
until five days after clawback of the document with that specific Bates number, even if Hotfile
previously clawed back the identical document (HF02866338). Warner's Obj. Resp. at 14 n.ll.
Warner ignores Rule 26(b)(5)(B), explicitly incorporated into the Court's Protective Order. See
Protective Order ~ 20; Fed. R. Civ. P. 26(b)(5)(B) ("After being notified, a party must promptly
return, sequester, or destroy the specified information and any copies it has" (emphasis added).
Anticipating that parties like Warner might try to elevate form (i.e., Bates numbers) over
substance (i.e., the content of protected information), the provision requires receiving parties to
destroy all copies of protected information, regardless of Bates number.
7

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mandatory ethical obligations, Warner sought to exploit its smaller adversary's inadvertence by
embedding Hotfile's work product in Warner's trial preparation materials. 9 The Court should
not reward counsel's ethical malfeasance. Again, independent of any other violation, this
wrongdoing alone warrants denial of the instant Motion. I0

Warner asserts that it had no reason to know of the protected nature of the "WB Links"
docnment, given counsel's belief that Hotfile might have intended to produce Exhibit 27 on June
17,2011 to support a motion to compel filed against Warner five months later on November 16,
2011. Mot. at 3. This argument is facially implausible. In any event, no party disputes (or has
ever disputed) that nonlawyers may create work-product at the direction of counsel. See supra at
10 n.2. Hotfile argued previously that Warner may not concealfacts under the guise of work
product. See Hotfile's Motion To Compel Discovery From Warner [Docket No. 164] at 5-7.
Specifically, Hotfile argued that Warner could not refuse to produce data showing its wrongful
takedowns on Hotfile's website based simply on the fact that its litigation counsel also requested
such information. Id. This does not credibly suggest that Hotfile intentionally produced a copy
of its own work product in June. In fact, Warner's argnment establishes that, at the time of
Warner's deposition on October 12th and four months into the period of Warner's "embedding"
of Exhibit 27 into its trial plan, Warner knew that Hotfile's investigation of its counterclaim in
March represented protected work product.
9

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5.

CASE NO. ll-CIV-20427-WILLlAMS/TURNOFF

Warner Violates The Protective Order By Relying On The
Circumstances Of Hotfile's Production As The Basis For This Motion

The Protective Order states that a party seeking to compel production of a clawed-back
document "may not assert as a ground for the entering of [an order compelling production] the
fact or circumstances of the inadvertent production." Protective Order ~ 20. "Under the prior
case law [before the promulgation of Federal Rule of Evidence 502 in 2008], reaching the
conclusion that a document had been 'inadvertently produced' required analysis of the

circumstances surrounding the production, including the number of documents produced in
discovery and the care with which the pre-production document review was peiformed."

Coburn Group, LLC v. Whitecap Advisors LLC, 640 F. Supp. 2d 1032, 1036-1037 (N.D. Ill.
2009) (emphasis added). However, "a clawback arrangement involves the return of documents

without waiver irrespective of the care taken by the disclosing party." Us. v. Sensient Colors,
Inc., 2009 WL 2905474, at *2 n.6 (D.N.J. Sept. 9, 2009) (emphasis added). Thus - setting aside
the irrelevance of Hotfile's level of care to instant Motion under Federal Rule of Evidence
5 02( d) and (e) - the Protective Order expressly forbids Warner from asserting that Hotfile lacked
due care in producing the "WB Links" document. Yet this is all Warner does.
Warner makes no argument in its Motion other than arguments based on Hotfile's
supposed carelessness. See Mot. at 8 (Hotfile "produced documents without taking reasonable
precautions" resulting in an "abdication of responsibility"); id. at 7 ("Hotfile provided absolutely
no information as to what specific efforts were taken to prevent disclosure"); id. at 9-10 (arguing
that the Cqurt should ignore the numerical reasonableness of clawing back sixty-four documents
out ofa production of 1,141,401 documents); id. (arguing that producing the "WB Links"
document on two occasions five months apart demonstrated a lack of "reasonable precautions,"
even though Warner itself committed identical errors resulting in clawback demands four months
apart); id. at 11 (arguing that another episode of twice producing a privileged communication
demonstrated Hotfile's "lack of appropriate care"). Warner even admits its transgression, stating
as follows at the hearing on its motion to compel production of Exhibit 27: "It is not the fact that
they produced [the document] that makes it not inadvertent. It is the fact that all of the

circumstances surrounding the production that make it legally [not] inadvertent." Mot., Ex. A at
16: 15-18 (emphasis added). Counsel did not even appear aware that he was confessing to
violation of this Court's Order. Pursuant to stipulation, this Court forbade arguments of waiver

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CASE NO. ll-CIV-20427-WILLIAMS/TURNOFF

based on the circumstances of Hotfile's production. This reason alone defeats Warner's instant
Motion. I I

B.

In Attempting To Prove Carelessness Rather Than Intentionality In Hotfile's
Disclosure, Warner Spends All Onts Twelve-Page Motion Chasing An
Irrelevant Inquiry

Warner's Motion and Reply fail to cite even one case in its favor analyzing a clawback
provision. Mot. at 6-12; Reply at 5. By relying on outdated and irrelevant cases, Warner
fundamentally misapprehends the applicable legal inquiry in considering whether a party may
properly exploit its opponent's production of a work-product document. Id.
Rule 502 of the Federal Rules of Evidence became effective on September 19,2008.
Fed. R. Evid. 502 (Adv. Comm. Notes). Designed to address burgeoning costs of privilege and
work-product review in cases involving electronic discovery, the Rule "codifie[d] the wellestablished proposition" that parties can "enter into so-called 'clawback agreements'" permitting
the parties to recall protected documents produced in the absence of any privilege review
whatsoever. Fed. R. Evid. 502(d)-(e) (Adv. Comm. Notes). The Rule ensured that courts would
enforce these agreements in the face of accusations of waiver "irrespective of the care taken by
the disclosing party." Rajala v. McGuire Woods, 2010 WL 2949582 at *3 (D. Kansas July 22,
2010); see Zubulake v. UBS Warburg LLC, 216 F.R.D. 280,290 (S.D.N.Y. 2003); see Us. v.
Sensient Colors, Inc., 2009 WL 2905474, at *2 n.6 (D.N.J. Sept. 9, 2009) ("Clawback
agreements essentially [permit parties to] 'undo' a document production" - i.e., to return to the
status quo ante as if the production never happened). In most circumstances - e.g., absent an

intentional waiver in support of an "advice of counsel" defense - "a party who receives
information under such an arrangement cannot assert [waiver]." Fed. R. Civ. P. 26(b)(5)(B)
(Adv. Comm. Notes 2006); Fed. R. Evid. 502 (Adv. Comm. Notes); Sensient Colors, 2009 WL
2905474 at *2 n.6; see Coburn Group, LLC v. Whitecap Advisors LLC, 640 F. Supp. 2d 1032,
Despite the unambiguous prohibition against mentioning "the fact or circumstances of the
inadvertent production" in any motion, Warner argues that it may argue the circumstances of
Hotfile's production here because of the Protective Order's ensuing statement that "[n]othing ...
shall preclude a party from arguing that the production of the allegedly inadvertently produced
document was not inadvertent." [Docket No. 211 at 2.] Warner would have one sentence
eviscerate the other. In fact, the Protective Order permits Warner to argue that Hotfile
intentionally disclosed a document - but that does not mean that Warner may attack Hotfile
based on the circumstances resulting in Hotfile's production.
II

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CASE NO. II-CIV-20427-WILLIAMSITURNOFF

1036-1037 (N.D. Ill. 2009) ("Rule 502 contrasts a waiver that is intentional with a disclosure that
is inadvertent."); Thorncreek Apartments III, LLC v. Park Forest, 2011 WL 3489828, at * 5
(N.D. Ill. Aug. 9, 2011) ("[When] determining whether a document was inadvertently
produced ... courts look[ed] at the circumstances surrounding the disclosure. However, [recent]
cases ... have asked whether the party intended a privileged or work-product related document to
be produced or whether the production was a mistake."). Thus, in cases involving clawback
provisions, Courts no longer analyze waiver of inadvertently-produced documents based on
considerations such as the time devoted by a party to privilege review, the measures taken to
prevent inadvertent disclosure, the attorney and paralegal resources devoted to review, and the
reasonableness of precautions employed, but instead allow the explicit terms of any clawback
provision to govern. See Rally Mfg., Inc. v. Federal-Mogul Corp., No. 10-23791-CIV, 2011 WL
2938270, at *4 (S.D. Fla. July 21, 2011) (finding, in the presence of a clawback provision, that
"[t]he Protective Order is controlling over the waiver issue" and declining to further explore the
circumstances of defendant's production). Reliance by the party receiving the inadvertent
production - i.e., the foundation for Magistrate Judge Turnoffs Report And Recommendationis not a factor to be considered at all. See Docket No. 306 at 8 ("the cat is out of the bag").
Here, Warner cites over a dozen cases which do not analyze a clawback provision
following enactment of Rule 502 in 2008. Mot. at 6-12; Reply at 5. In the one cited case
applying a clawback provision after 2008, the court ruled against waiver, supporting Hotfile
here. Board of Trustees v. Palladium Equity Partners, LLC, 722 F. Supp. 2d 845, 851-52 (E.D.
Mich. 2010).12
Had Warner properly cited the applicable legal standard, it would have known that no
evidence exists that Hotfile intentionally produced the "WB Links" document - especially given
that (l) Hotfile withheld four identical copies of the document based on work-product protection,
and

Because Warner makes no effort to demonstrate any intentional
production of the document, Warner's Motion should be denied.

In Palladium, the Protective Order did not forbid parties from asserting waiver based on the
"circumstances" of production, necessitating a more detailed review of defendant's practices. Id.
at 849-51. Nonetheless, the Court still found no waiver.
12

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C.

CASE NO. ll-CIV-20427-WILLIAMSITURNOFF

Hotfile Properly Objected To Warner's Improper Use Of The Document At
Deposition

Without citing any authority, Warner argues that Hotfile waived any work-product
protection for the "WB Links" document at the deposition of Anton Titov by only objecting
before and after Warner's questioning, and not during the questioning. Mot. at 11-12. Even
setting aside the fact that Hotfile labored under no obligation to object to an examination which
already violated this Court's Orders, Warner is mistaken.
A party does not waive work-product protection if, upon learning of the protected nature
of document after deposition questioning, the party promptly objects. See Datel Holdings Ltd. V.

Microsoft Corp., 2011 WL 866993, at *5 (ND.Cal. March 11,2011) (party did not waive
protection by objecting to questioning hours after examination upon discovering protected status
of documents); see also Rally Mfg., Inc. v. Federal-Mogul Corp., No. 10-23791-CIV, 2011 WL
2938270, at *4 (S.D. Fla. July 21, 2011) ("a thirteen-day period between [discovery of
inadvertent production] and [ensuing c1awback request] is insufficient to constitute a waiver of
the privilege in the modern legal world."). Here, Hotfile's counsel objected repeatedly to
questions on Hotme's work-product investigation "commenced [in] early March," after which
counsel immediately repeated the objection hours later upon confirming the work-product status
of Exhibit 27. He then repeated and formalized the objection immediately when the deposition
resumed the next morning. Nothing more was required to preserve Hotfile's objection.
V.

CONCLUSION
For the foregoing reasons, Magistrate Judge Turnoffs Report and Recommendation

should be set aside and Warner's Motion denied. Warner should be required to return any and
all copies of the "WB Links" document to Hotfile and prohibited from making any use of this
document in any manner, including utilizing it in any court papers or legal argument.

20

CASE NO. 11-CIV-20427-WILLIAMS/TURNOFF

FILED UNDER SEAL

DATED: March 5, 2012

Respectfully submitted,

fii~ d Esq. Fla. Bar No. 501281
.JnM1VC=
et T. Munn,
Email: [e-mail]
Rasco Klock
283 Catalonia Avenue, Suite 200
Coral Gables, F133134
Telephone: [phone]
Telecopy: 305.476.7102

~
ROd=~o~~rf&t~
Email: [e-mail]
Andrew Leibnitz, Esq . (admitted pro hac vice)
Email: [e-mail]
Anthony P. Schoenberg, Esq. (admitted pro hac vice)
Email: [e-mail]
Deepak Gupta, Esq. (admitted pro hac vice)
Email: [e-mail]
Janel Thamkul, Esq. (admitted pro hac vice)
Email: [e-mail]
FARELLA BRAUN + MARTEL LLP
235 Montgomery St.
San Francisco, CA 94104
Telephone: [phone]
Telecopy: 415.954.4480
And

1J~~~~~ptt~O'~
Email: [e-mail]
BOSTON LAW GROUP
825 Beacon Street, Suite 20
Newton Center, MA 02459
Telephone: [phone]
Telecopy: 617.928.1802

Counsel for Defendants Hotfile Corporation
and Anton Titov

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CASE NO. 11-CIV-20427-WILLIAMS/TURNOFF
CERTIFICATE OF SERVICE

I hereby certify that on March 5, 2012, the foregoing Objection Of Defendants Hotfile
Corporation And Anton Titov To Magistrate Judge's Report And Recommendation Regarding
Plaintiff Warner's Motion To "Use" Titov Ex. 27 In Its Entirety At Trial Or On Summary
Judgment was filed conventionally under seal and served on all counsel of record identified
below via e-mail and by First Class U.S. Mail:
Karen R. Thorland, Esq. (admitted pro hac vice)
Senior Content Protection Counsel
Email: Karen [e-mail]
Motion Picture Association of America, Inc.
15301 Ventura Boulevard, Building E
Sherman Oaks, CA 91403-5885
Telephone: [phone]

Karen L. Stetson, Esq.
ORA Y-ROBINSON, PA
Email: [e-mail]
1221 Brickell Avenue
Suite 1600
Miami, FL 33131
Telephone: [phone]
Telecopy: 305.416.6887
Steven B. Fabrizio, Esq. (admitted pro hac vice)
Email: [e-mail]
Duane C. Pozza, Esq. (admitted pro hac vice)
Email: [e-mail]
Luke C. Platzer, Esq. (admitted pro hac vice)
Email: [e-mail]
JENNER AND BLOCK, LLP
1099 New York Avenue, N.W.
Suite 900
Washington, DC 20001
Telephone: [phone]
Telecopy: 202.639.6066

B~rutL~.~
Ja etT. Munn

22