Defendant Asks Court to Compel Plaintiff to Return Privileged Documents Inadvertently Produced During Discovery. Court Declines, Agreeing with Plaintiff that Inadvertent Production Twice Waived Privilege
In Irth Solutions, LLC v. Windstream Commc’ns, LLC, No. 2:16-cv-219 (S.D. Ohio 2017), a discovery dispute arose out of state court lawsuit filed in January 2016, involving allegations of breach of contract, balance due on an account, unjust enrichment, promissory estoppel, fraud, and violation of a license agreement.
The ensuing discovery dispute originated from the parties’ prior agreement concerning the production of electronically stored information (“ESI”), which agreement had been made during a July 15, 2016 telephone conference. An email memorializing this prior agreement stated that the producing party would provide a log listing all documents responsive to the receiving party’s discovery requests that were being withheld on the basis of attorney-client privilege, attorney work product, or other applicable protection.
Both parties also agreed that if a producing party discovered a privileged document had been inadvertently produced, the producing party would promptly notify the receiving party of the inadvertent production. Agreement was further made that upon such notification, the receiving party would promptly destroy or return all copies of the inadvertently-produced document. Both parties also agreed that inadvertent production of privileged documents would not operate as a waiver of that privilege.
Thereafter, Defendant’s January 27, 2017 made a partial production consisting of 2,200 pages of documents. Defense counsel reviewed the documents for privilege prior to the production. Although Defendant failed to provide a privilege log at the time of production, Defendant claimed that it had withheld between five and ten documents for privilege. The Court reviewed these documents in camera, which totalled only five pages. The Defendant’s attorney said she was preparing a privilege log covering these documents when she then realized that forty three privileged documents had already been given to Plaintiffs. She contacted Plaintiffs’ counsel the same day, requesting a clawback of those forty-three documents. Plaintiff’s counsel claims that by the time of the request—twelve days after the production—the 1,400 readable pages of those forty three documents had already een “thoroughly reviewed.”
Plaintiff’s counsel refused to return or destroy the documents but stated that once the dispute arose, they sequestered the documents and refrained from discussing them with their client.
Six weeks later, Defendant once again produced the forty-three privileged documents to Plaintiff. The second production contained the same 2,200 pages as the first production, 146 of which were of the same privileged information Defendant had produced previously. So, while arguing to this Court that it should protect Defendant’s attorney-client communications and award it fees and costs, defense counsel again produced the privileged documents.
The Court begins its opinion a review of the attorney-client privilege. The Court then goes on to confirm, as a threshold matter, that the forty-three documents at issue are privileged, and to state that the attorney-client privilege protects against any dissemination of information which arose from the confidential relationship. Upon its in camera review of the documents, the Court found the documents privileged, and further noted that several of the documents may also be protected by the work-product doctrine (an issue not raised by the parties.)
Next, the Court considered whether the privileged had been waived by behavior by the client or attorney that was inconsistent with the continued maintenance of the privilege. The Court further explained that the inconsistent behaviour, such as disclosure of privileged information, occurs in a federal proceeding and waives the attorney-client privilege or work-product protection, the waiver is effective only if it was intentional. When made in a federal proceeding, the disclosure does not operate as a waiver if it was inadvertent and the holder of the privilege took reasonable steps to prevent disclosure and promptly took reasonable steps to rectify the error.
The Court found that the Defendant had successfully established evidence of its inadvertence in making the waiver. The Court then looked to the impact of the parties’ clawback agreement on the question of waiver. The Court stated that if a clawback agreement exists, it always trumps the provisions in Rule 502(b), the clawback agreement trumps Rule 502(b) unless the document production itself was completely reckless, and a clawback agreement trumps Rule 502(b) if the agreement provides concrete directives regarding each prong of Rule 502(b).
The Court rejected the first part, saying it undermined the lawyer’s responsibility to protect the sanctity of the attorney-client privilege. The Court agreed to apply the second and third prongs, taking into account what it called the careless privilege review together with the perfunctory clawback agreement both parties agreed to. The Court concluded the Defendant waived the privilege.
In analyzing what constitutes complete recklessness the Court stated that various considerations come into play like the number of privileged documents inadvertently produced, the number of documents reviewed, and the type of review process engaged in by the producing party. Defendants had months to handle the production of documents and privilege log properly. The mistake was not because of a technical error. For all these reasons the Court viewed the document production as reckless, and therefore privilege as to the forty three documents produced was waived.