Reed Smith Attorneys Cleared of Ethics Claims in LuLaRoe Suit

Reed Smith LLP attorneys took appropriate measures with privileged documents sent to them anonymously about an ongoing lawsuit between clothing company LuLaRoe LLC and one of its manufacturers, a California appellate court said Friday, declining to disqualify the firm from the litigation.

Providence Industries LLC, represented by Reed Smith, sued LuLaRoe and its founders in 2018 for more than $48 million, alleging the company failed to pay for clothing and services.

During the litigation, Reed Smith received several anonymously sent documents relating to the case. The documents turned out to have been sent by an employee of LuLaRoe’s outside counsel, but only the last document, which included an attachment, appeared to be possibly privileged to the Reed Smith attorneys who reviewed them.

When the last letter arrived, Reed Smith lawyers who reviewed it contacted the California State Bar’s ethics hotline, and then disclosed the document, as well as the others they had previously received, to LuLaRoe’s counsel.

After finding that the anonymously-sent documents were in fact privileged, the trial court in Riverside County ordered Reed Smith to return the documents and destroy all copies.

Several months later, when LuLaRoe moved to disqualify Reed Smith, the trial court refused, finding the firm had complied with its ethical duties regarding the documents.

The California Court of Appeal, Fourth District, affirmed the ruling, rejecting LuLaRoe’s argument that Reed Smith was put on notice of potentially privileged information when the first anonymous document arrived.

That first document is an email sent by Providence’s counsel to LuLaRoe’s counsel and a LuLaRoe employee, Justice Michael J. Raphael wrote in the unpublished opinion. While handwritten notes on the email printout turned out to be attorney work product, the Reed Smith attorneys viewing the document wouldn’t necessarily have been on notice that the handwriting belonged to an attorney, let alone LuLaRoe’s attorney.

Once Reed Smith received the last of the anonymously sent documents, it had additional context for all of the communications, provided by the attachment containing what seemed to be LuLaRoe’s confidential information, Raphael wrote.

At that point, they notified LuLaRoe’s counsel of the firm’s receipt of the documents, initiating dialogue, which is exactly what California appellate precedent instructs attorneys to do in such circumstances, Raphael said.

Reed Smith complied with its obligations and there is no genuine likelihood the firm will advantageously use the inadvertently disclosed information, he wrote.

Justices Art W. McKinster and Richard T. Fields joined the opinion.

Rutan & Tucker represents LuLaRoe.

The case is Providence Indus. LLC v. LuLaRoe LLC, Cal. Ct. App., 4th Dist., No. E075513, unpublished 11/5/21.