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In re Nitla S.A. DE C.V.

In re Nitla S.A. DE C.V. 92 S.W.3d 419 (Tex. 2002) Megan Marquardt November 22, 2010. Parties. Nitla Mexican pharmaceutical company Claims that Bank of America misappropriated over $24 million of Nitla’s funds on deposit Bank of America Wants Nitla’s counsel disqualified. Facts.

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In re Nitla S.A. DE C.V.

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  1. In re Nitla S.A. DE C.V. 92 S.W.3d 419 (Tex. 2002) Megan Marquardt November 22, 2010

  2. Parties • Nitla • Mexican pharmaceutical company • Claims that Bank of America misappropriated over $24 million of Nitla’s funds on deposit • Bank of America • Wants Nitla’s counsel disqualified

  3. Facts • Nitla asked BOA to produce documents • BOA asserted attorney-client and work-product privileges - would be irreparably harmed if Nitla’s counsel reviewed the documents • Trial court determined that BOA should produce many of the documents • BOA wants trial court to issue stay • BOA notified Nitla that it would seek mandamus relief, but Nitla’s counsel relied on trial court’s order and reviewed the documents • BOA filed for mandamus relief • Court of appeals ultimately held that the documents were privileged • BOA moved to disqualify Nitla’s counsel • Trial court denied motion, BOA sought mandamus relief • Appellate court grants motion

  4. eDiscovery legal framework • 26(b)(5)(B) - if a receiving party is notified of a mistaken disclosure by the adversary, then the receiving party “must not use or disclose the information until the claim is resolved” • 37(b)(2) - Failure to Comply with a Court Order • Model Rules of Professional Conduct 4.4(b) • FRE 502 - Attorney-Client Privilege and Work Product; Limitations on Waiver

  5. Analysis of Case • “Disqualification is a severe remedy.” • Deprives a party of its chosen counsel and can disrupt court proceedings • Nitla’s counsel didn’t violate any rules - they reviewed the documents based on court order • To disqualify opposing counsel, moving party must show that: • Opposing counsel’s reviewing the privileged documents caused actual harm to the moving party; and • Disqualification is necessary, because the trial court lacks any lesser means to remedy the moving party’s harm

  6. Issues regarding eDiscovery • BOA didn’t “mistakenly” disclose privileged information • trial court handed the documents over before BOA had a chance to seek mandamus relief • BOA notified Nitla that they would be seeking mandamus relief and asked Nitla not to review or distribute the documents • Nitla relied on trial court’s order and reviewed documents anyway • Rule 26 allows receiving party to go to court under seal to get a determination of whether the information is protected

  7. Conclusion • Court of appeals’ order vacated • BOA could only show that reviewing the documents had enabled Nitla’s counsel to identify 4 new witnesses to depose

  8. Questions/Class Discussion • Do you think the trial court should have issued a stay on production until the appellate court had a chance to review? • Court of appeals held that most of the documents were, in fact, privileged • Did Nitla violate rule 26(b)(5)(B) when they reviewed the documents before the claim was resolved?

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