We Can Just Claw Back Those Privileged Documents? Not Always.
Records Retention and Electronic Discovery Law Update 09/27/11
This update from the Illinois E-Discovery Law Team discusses a new case addressing every attorney's fear - inadvertent disclosure of privileged documents and a resultant finding of waiver of the privilege from the court. You may be surprised by how easy it is to waive the privilege if you do not stay on top of the technological aspects of your production even after you have conducted a complete review and indentified privileged documents.
Thorncreek Apartments III, LLC v. Village of Park Forest, 2011 WL 3489828 (N.D. Ill. Aug. 9, 2011).
Procedural Posture: Plaintiffs filed a motion with the court seeking an order finding that six documents produced by Defendants to Plaintiffs in March 2009 were not protected from disclosure by the attorney-client privilege, or alternatively, were not protected from disclosure because the privilege had been waived by Defendants' production of the documents.
Facts: The discovery at issue was conducted by electronic means. Using a third-party vendor, Defendants used a three-step process for producing documents to Plaintiffs from certain computer backup tapes. Defendants screened documents for responsiveness and privilege before making them available to Plaintiffs and marked documents as "responsive," "nonresponsive" and "privileged." Defendants did not intend to make available any documents it had labeled as privileged and assumed they would automatically not be placed into the electronic database of documents later made available to Plaintiffs. However, all documents, including privileged ones, were produced to Plaintiffs.
During the seven months Defendants produced documents, Defendants never produced a privilege log or contacted Plaintiff to say that any privileged documents had been inadvertently produced.
Two months after the production was complete, at a deposition of Defendants' client, Defendants objected to the use of two documents it claimed were privileged and may have been inadvertently produced. Following the deposition, Defendants' counsel contacted Plaintiffs' counsel to report that certain documents that had been intended to be withheld on the basis of privilege had been produced. However, it was not until four months later that Defendants tendered to Plaintiffs a document entitled "Privilege Log - Documents Inadvertently Produced," identifying 159 documents that Defendants had marked as privileged, but were not withheld from the electronic database of produced documents. The parties were able to resolve their disputes regarding all but six of the alleged privileged documents. Defendants contended that the disclosure of documents was inadvertent, and there had been no waiver of privilege.
Law: The Court applied a three-step inquiry to determine whether documents that already have been produced nonetheless can be withheld from use under a claim of privilege:
- Is the disputed document privileged?
- Was the disclosure inadvertent?
- Even if the document is privileged and inadvertently produced, was privilege waived?
Holding: While some of the documents were privileged when originally created, the privilege had been waived.
Analysis: After finding some of the documents at issue were privileged, the court analyzed whether production had been inadvertent and whether privilege had been waived. On the inadvertence issue, the court found the relevant inquiry was whether a party intended a privileged or work-product document be produced or whether production was a mistake. The court found that production in this case had been inadvertent since Defendants' counsel had believed documents electronically marked as privileged would be automatically withheld from the production database. Defendants had also immediately objected to the use of the privileged documents at a deposition and had shortly thereafter contacted Plaintiffs' counsel to indicate the production was inadvertent.
On the waiver issue, the court analyzed whether Defendants took reasonable steps to prevent the disclosure pursuant to Fed. R. Evid. 502(b)(2). The court relied on the Advisory Committee Notes to Rule 502(b), which set out factors to consider on the waiver issue, such as the reasonableness of precautions taken, the time taken to rectify the error, the scope of discovery, the extent of disclosure, and the overriding issue of fairness. Considering these factors, the court found Defendants had waived privilege:
- Reasonableness of precautions
- The court found Defendants did not provide an adequate account of the review procedure for documents other than it spent "countless hours" reviewing documents as responsive, nonresponsive and privileged. Moreover, Defendants could only state it "thought" marking a document as privileged would save it from production to Plaintiffs, but it never actually checked prior to production. Defendants had also inadvertently produced every document it regarded as privileged, showing its procedures for privilege were utterly ineffective.
- Scope of production
- Although one attorney was charged with reviewing 250,000 documents in the case, the attorney had six months to do so. Therefore, the court did not find the scope of discovery weighed in Defendants' favor.
- Timely rectifying of the error
- Not surprisingly, the court found Defendants failed to timely rectify the inadvertent disclosures. For nine months, Defendants had no inkling of the inadvertent disclosures and did not learn of them until the deposition where two privileged documents were used. Defendants had access to the electronic database, but the court found they were not paying any attention whatsoever to the documents Plaintiffs were selecting and reviewing in the electronic database.
- In addition, if Defendants had timely prepared a privilege log, they would have known of the problem with its production.
- Overall fairness
- The court did not find any fairness issue with holding Defendants "responsible for its failure to take reasonable care to safeguard the privilege or rectify the inadvertent error once it occurred."
- Attorneys must take precautions to protect electronic disclosure of privileged documents and should never presume that merely marking documents as privileged in an electronic database will prevent their production.
- Attorneys should produce privilege logs close to the time when a production is made. It will act as a check on whether documents have inadvertently been produced and alert opposing counsel to a document's privileged status.
- Where an inadvertent production of privileged documents has occurred, counsel must immediately take steps to rectify the error in order to protect and maintain privilege.
If you have any questions, please contact Charles Harper at (312) 715-5076 / firstname.lastname@example.org or your Quarles & Brady attorney.