E-Discovery: Inadvertent Disclosure of Privileged Documents May Waive Attorney-Client Privilege

Posted on June 8, 2008 by Brian Wm. Higgins

     U.S. Chief Magistrate Judge Paul W. Grimm is a leading jurist in the field of electronic discovery. In Victor Stanley, Inc. v. Creative Pipe, Inc., No. 06-2662 (D. Md. May 29, 2008), Judge Grimm discusses the approach the U.S. District Court for the District of Maryland may take when deciding whether the inadvertent production to an adversary of attorney-client privileged or work-product protected materials constitutes a waiver.

Background

     In Victor, the parties entered into a joint protocol to search and retrieve relevant ESI responsive to Plaintiff’s Rule 34 requests.  After the protocol was used to retrieve responsive ESI, Defendants reviewed the documents to locate any that were privileged or attorney work-product prior to production to Plaintiff. Defendants had previously expressed concern that privilege review of the responsive documents would delay production unnecessarily and cause undue expense. To address this concern, Defendants gave their computer forensics expert a list of keywords to be used to search and retrieve privileged/protected documents. However, Defendants also acknowledged the possibility of inadvertent disclosure of privileged/protected documents, and requested that the court approve a “clawback agreement.” Later, Defendants notified the court that because Judge Garbis had extended the discovery deadline by four months, Defendants would be able to conduct a document-by-document privilege review, thereby making a clawback agreement unnecessary.

     After receiving Defendants’ ESI production in September, 2007, Plaintiff began their review of the materials. They soon discovered documents that potentially were privileged or work-product protected, and immediately segregated this information and notified Defendants.

Applicable Law

     As noted by Judge Grimm, courts have taken three different approaches when considering inadvertent production. The Fourth Circuit Court of Appeals has yet to decide which approach it will follow, although individual district courts within the circuit, Grimm notes, have adopted the intermediate balancing approach. Under the intermediate approach, the court balances a number of factors to determine whether the producing party exercised reasonable care under the circumstances to prevent against disclosure of privileged/protected information, and if so, there is no waiver. The intermediate test requires the court to balance the following factors to determine whether inadvertent production of attorney-client privileged materials waives the privilege:

(1) the reasonableness of the precautions taken to prevent inadvertent disclosure;

(2) the number of inadvertent disclosures;

(3) the extent of the disclosures;

(4) any delay in measures taken to rectify the disclosure; and

(5) overriding interests in injustice.

     Judge Grimm commented that decisions of the Fourth Circuit suggest that it is inclined to adopt the strict approach. Under the strict approach, there is a waiver because once disclosed there can no longer be any expectation of confidentiality.

Discussion

    Under the strict approach, Judge Grimm found there was no legitimate doubt that Defendants’ production of 165 asserted privileged/protected documents waived the attorney-client privilege and work-product protection.

     However, even under the intermediate test, the result would be the same, he said. Below are some of the key points in Victor.

     Keyword searches: Selection of the appropriate keyword search and information retrieval technique requires careful advance planning by persons qualified to design effective search methodology, Judge Grimm wrote. The implementation of the methodology selected should be tested for quality assurance; and the party selecting the methodology must be prepared to explain the rationale for the method chosen to the court, demonstrate that it is appropriate for the task, and show that it was properly implemented. Compliance with the Sedona Conference Best Practices for use of search and information retrieval will go a long way towards convincing the court that the method chosen was reasonable and reliable, which, in jurisdictions that have adopted the intermediate test for assessing privilege waiver based on inadvertent production, may very well prevent a finding that the privilege or work-product protection was waived.

     In Victor, Judge Grimm found that the Defendants failed to demonstrate that the keyword search they performed on the text-searchable ESI was reasonable. Defendants failed to provide the court with information regarding the keywords used; the rationale for their selection; the qualifications of Defendant and attorneys to design an effective and reliable search and information retrieval method; whether the search was a simple keyword search, or a more sophisticated one, such as one employing Boolean proximity operators;  or whether they analyzed the results of the search to assess its reliability, appropriateness for the task, and the quality of its implementation.

     Non-Waiver Agreement: As noted above, Defendants voluntarily abandoned their request for a court-approved non-waiver agreement, and advised the court that they did not need this protection. Instead, they elected to do a document-by-document privilege review. According to Judge Grimm, had Defendants not abandoned their request, they would have been protected from waiver. When they undertook an individualized review of the context-searchable ESI and determined that they could only review the title pages, they neither sought an extension of time from the court to complete an individualized review, nor did they reinstate their request for a court-approved non-waiver agreement, despite their awareness of how it would have provided protection against waiver.

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