Court Orders HoudiniEsq Founder to Take Down Blog Post

Last Tuesday, Oct. 1, Frank Rivera, developer of the HoudiniEsq practice management software, posted an article to his blog entitled, “IT Consultant, Friend or Foe: Is Your Law Firm’s Clients’ Private Personal Data at Risk?” In it, Rivera claimed that a North Carolina IT consulting firm, Out of the Box Developers (which does business as OTB Consulting), had exposed a law firm’s confidential client data by placing it on the public Internet, unencrypted and freely downloadable. He also posted a video to YouTube entitled, “OTB Consulting Exposes Law Firm’s Private Client Data — Proof the Data Was Posted Unsecure.” He also posted these items to several LinkedIn groups.

On Friday, a North Carolina Superior Court judge ordered Rivera to take down these posts. As it turns out, Rivera and his company, LogicBit Corp., have been embroiled in litigation with OTC for almost two years. In ordering Rivera to take down the posts, Judge James L. Gale found that Rivera had used material obtained in discovery as the basis for his posts, even though the discovery material was subject to a protective order. The judge wrote:

While Defendants may contend that statements they made were true, Plaintiff Out of the Box Developers d/b/a OTB Consulting denies that it ever disclosed its client’s data publicly on the internet, and asserts that Mr. Rivera’s allegations are false. The significant point is that, regardless of the truth or falsity of the statements, making them violated an order of this court.

The judge order Rivera and LogicBit to “immediately remove each and every instance in which they disclosed to anyone in any way any allegation based on any material governed by the Protective Order entered in this case.”

Rivera and LogicBit have appealed Judge Gale’s order to the North Carolina Court of Appeals.

Meanwhile, Thomas Rowe, managing partner of OTB Consulting, posted his own message to the LinkedIn groups from which Rivera’s message have now been deleted. He wrote in part:

Mr. Rivera posted that OTB had stored our client’s data so that it was publicly available on the Internet, a very serious allegation against someone in our business. He emailed some of that client’s information to members of this group, with the personal identifying information redacted. He was able to access this client’s information because we produced documents in discovery that showed how to do so. Without this confidential information, this data could not have been accessed. This discovery information was the subject of a court order that prohibited its use for anything other than the litigation.

The underlying case appears to involve OTB’s claim that a California law firm and LogicBit unlawfully copied source code for a Time Matters add-on developed by OTB.  The full docket of the case can be found here, but the original complaint is not listed there. As best as I can tell, OTB sued a  California bankruptcy firm, the Doan Law Firm, after it stopped using BKexpress, OTB’s Time Matters add-on, and migrated to the HoudiniEsq platform. HoudiniEsq’s parent company, LogicBit, and Rivera were brought into the litigation at some point subsequent. As far as I can tell without reading the complaint, OTB is alleging that in the migration process, its source code was unlawfully copied.

Two months ago, Judge Gale awarded OTB $38,000 in attorneys’ fees as sanctions for the Doan firm’s failure to comply with discovery orders, as is described on the North Carolina Business Litigation Report blog.