Electronic Discovery: There's Only a Fine Line Between Inadvertent Disclosure and Carelessness
While electronic discovery has gone from a party crasher to an expected guest in litigation, lawyers are still learning where to seat it, what to feed it and how not to offend it. While lawyers are more familiar with e-discovery now than they were just five years ago, the consequences for failing to properly utilize, monitor and control electronic discovery could be fatal.
As e-mail has become the main form of communication, mastery of the nuances of electronic discovery will not only be recommended, but vital to success as a lawyer.
One of the inevitable occurrences that comes up during the course of a voluminous and complex e-discovery is the inadvertent disclosure of privileged documents. While the rules shield inadvertence, they condemn laziness.
In November, the Eastern District of Pennsylvania applied the newly adopted Federal Rule of Evidence 502 in Rhoads Industries Inc. v. Building Materials Corp. of
Facts
In February 2007, the plaintiff began preparing for litigation and retained consulting experts. In June 2007, it realized that extensive electronic discovery would be involved in this lawsuit. Therefore, it directed its IT consultant to research various software programs. After the IT consultant tested various programs, he purchased a computer program to perform the necessary electronic searches. According to plaintiff's counsel, who was conducting her first electronic document review, she and the IT consultant reasonably believed the computer program would screen out all privileged material, according to the opinion.
The plaintiff pursued settlement efforts prior to filing the lawsuit, which was eventually filed Nov. 13, 2007. In December 2007, plaintiff's counsel held several meetings about the scope of e-discovery and the relevant search terms that should be employed, the opinion said.
During January and February 2008, using the search terms received from the plaintiff's attorneys, the IT consultant identified 210,634 unique e-mail messages as being responsive to defendants' requests. To filter the privileged messages from this list, the IT consultant used several search terms that designated 2,000 e-mails as privileged. Accordingly, those e-mails were removed from the folder that was ultimately produced to defendants, the opinion said.
However, these e-mails were not placed on a privilege log at that time.
The IT consultant re-ran the search to be certain that all e-mails meeting the designated criteria had been removed, thus verifying the accuracy of the search.
Because of the large number of remaining documents, plaintiff's counsel revised the keyword search to arrive at 78,000 e-mail messages that she believed to be responsive and non-privileged as of Feb. 26, 2008, the opinion said. The attorney responsible for reviewing the electronic documents on the plaintiff's behalf conducted a separate manual review of e-mails from specific e-mail boxes and removed certain documents as privileged and properly logged them on to a privilege log.
However, the opinion said, plaintiff's counsel did not review the original 2,000 documents that were marked privileged from the first search, and therefore never produced a privilege log to opposing counsel for those documents.
On June 5, 2008, defense counsel notified plaintiff's counsel that certain documents that appeared to be privileged had been produced. The plaintiff immediately responded, stating that no privilege had been waived and that those documents had been inadvertently produced, according to the opinion. On or around June 23, 2008, roughly two-and-a-half weeks after the issue was raised, the plaintiff began reviewing the 78,000 e-mails and generated a new privilege log that identified 812 documents as privileged. The plaintiff produced the new privilege log on June 30, 2008.
Thus, the plaintiff had now produced three privilege logs: one concerning privileged electronic documents that had been produced on June 6; one concerning privileged non-electronic documents produced on June 6; and one concerning privileged electronic documents from the original search, produced on June 30.
On Aug. 19, after many depositions were taken, the defendant filed a motion to deem that the plaintiff had waived the privilege as to the approximately 800 inadvertently produced documents, according to the opinion. At the hearing on Nov. 5, the plaintiff's attorney responsible for the production of e-discovery testified that she believed that her manual review of e-mails contained in the specific mailboxes would have captured the original 2,000 e-mails originally set aside as privileged and thus would have appeared on her June 6 privilege log.
After the hearing, the plaintiff inspected the 2,000 e-mail documents set aside as a result of the search and created a fourth privilege log that was produced to defendants on Nov. 12. The plaintiff identified that of the 2,000 e-mails, 941 were duplicative. Of the remaining 1,059 documents, the plaintiff identified 548 documents being non-responsive and 511 being responsive. Of the 511 documents, 335 were labeled privileged and 176 were non-privileged. In addition, of the responsive, privileged documents, 215 of them had already been previously recorded on a privilege log. Plaintiff withheld the remaining 120 responsive, privileged documents from production, according to the opinion.
Analysis
There were two issues before the court: first, whether the plaintiff had waived the attorney-client privilege when it inadvertently produced the 812 privileged documents; and second, whether it had waived the attorney-client privilege for failure to provide a privilege log as to the remaining 120 responsive, privileged documents until Nov. 12, roughly four-and-a-half months after filing the June 30 privilege log.
The court ruled that the plaintiff did not waive the attorney-client privilege as it related to the 812 documents that were inadvertently produced to the defendants.
The court noted that recently enacted Federal Rule of Evidence 502 adopted a national standard that an inadvertent disclosure of privileged information does not waive the privilege if the holder of the privilege took reasonable steps to prevent disclosure and to rectify the error. In an advisory committee note to Rule 502, the stated factors for the court to consider, none of which are dispositive, are the reasonableness of precautions taken to rectify the error, the scope of discovery, the extent of disclosure and the overriding interest of fairness.
In addition, the advisory committee notes state, "[a] party that uses advanced analytical software applications and linguistic tools in screening for privilege and work product may be found to have taken 'reasonable steps' to prevent inadvertent disclosure." Moreover, "[t]he implementation of an efficient system of records management before litigation may also be relevant."
While the 3rd U.S. Circuit Court of Appeals has yet to address a specific test for determining an inadvertent disclosure of privileged material, Judge Michael M. Baylson noted in Rhoads that the following factors have been deemed relevant on the issue of inadvertent disclosure of privileged material in the Eastern District of Pennsylvania: the reasonableness of the precautions taken to prevent inadvertent disclosures in view of the extent of the document production; the number of inadvertent disclosures; the extent of the disclosure; any delay and measures taken to rectify the disclosure; and whether the overriding interest of justice would or would not be served by relieving the party of its errors.
The court ruled that because the plaintiff retained a consultant who recommended and used a fairly sophisticated screening device, it demonstrated substantial compliance with Rule 502. However, the court found that, although the plaintiff took steps to prevent disclosure and to rectify the error, its efforts were, at least to some extent, unreasonable.
Specifically, the court found that the plaintiff failed to take reasonable precautions to prevent an inadvertent disclosure. The court noted the plaintiff should have used additional search terms to weed out potentially privileged documents, especially the names of all of its attorneys.
Moreover, the attorney responsible for the electronic document review on the plaintiff's behalf had no prior experience doing a privilege review; thus, the court found that her supervising attorneys did not provide detailed oversight. Also, the plaintiff's search for privileged documents was limited to e-mail address lines, as opposed to the body of each e-mail, the opinion said.
In sum, the court concluded that the plaintiff produced documents that even its limited search should have caught and it failed to test the reliability of its own search.
The court also found that the plaintiff's disclosures were sufficient enough to waive the privilege. The plaintiff inadvertently produced an estimated 920 privileged documents and then failed to take reasonable measures to rectify the disclosure. Specifically, the plaintiff was never aware of its error; on the contrary, it was the defendants who notified the plaintiff of the disclosure. Once the plaintiff was aware of the mistake, it took more than three weeks for it to produce an updated privilege log, according to the opinion.
The plaintiffs also never offered suggestions to rectify the inadvertent production until October, after many depositions had been taken.
Additionally, the June 30 privilege log required defendants to cross-reference each document produced to them against the log to check whether documents were in fact privileged; and the plaintiff did not offer the defendants a cleansed hard drive until September 2008, the opinion said.
With all of that said, however, the court held that the overriding interest of justice would be served by relieving the plaintiff of its errors. The court noted that the plaintiff had shown general compliance with Rule 502; the loss of privilege over the 812 documents would be highly prejudicial to plaintiff in this high-stakes, hard-fought litigation; and the defendants had failed to demonstrate that they had suffered substantial unfairness because of their inability to review the privileged documents beyond having to cross-reference them against the June 30 privilege log.
Although the court ruled that the plaintiff did not waive the attorney-client privilege with respect to the 812 electronic documents, it warned that an understandable desire to minimize costs of litigation and to be frugal in spending a client's money cannot be an after-the-fact excuse for a failed screening of privileged documents.
While the court ruled that the plaintiff did not waive the privilege with respect to the 812 privileged documents that it produced, the court nonetheless held that it waived the privilege for any electronic documents that were not logged in the June 30 privilege log. The court held that the obligation to log privileged documents is mandatory under the specific terms of Federal Rule of Civil Procedure 26(b)(5). Thus, plaintiff's failure to log all of its inadvertently privileged documents by June 30 was not acceptable.
The court reasoned that the time lapse from June 30 to Nov. 12 , the date the plaintiff finally logged all of its privileged documents, was too long and inexcusable. The court ordered the 120 privileged documents that were not identified on a privilege log until Nov. 12 to be produced to defendants because of the plaintiff's inexcusable delay, which operated as a constructive waiver of the privilege.
Implications
Rhoads was the first case in the Eastern District of Pennsylvania to apply the newly enacted Federal Rule of Evidence 502 to inadvertent disclosures of privileged electronic communications. As such, the court signifies that although an IT consultant and software program are crucial to adhering to Rule 502, it is not enough to rely upon technology. It is the lawyer's responsibility to check for privileged documents.
Similarly, as the court made clear in its opinion, skimping on costs is like cutting corners: a mistake. Discovery in a complex case is simply not the time for a client to be frugal. Indeed, legal time and fees spent in avoiding mountains of motions and discovery disputes are worth the investment.
Along the same lines, experienced lawyers must dedicate an appropriate amount of time teaching inexperienced lawyers the nuances of electronic document review. The stakes are too high and the potential consequences too grave to not do so. Much like the BlackBerry has changed the face of communication, so too has e-discovery changed the face of litigation.
Moreover, it is crucial to always be mindful of the judge's role in discovery disputes. For the most part, a judge wants the parties to work out discovery issues between themselves. As such, it is crucial for attorneys to work with one another and demonstrate to the judge that they are both competent and diligent.
In Rhoads, the court took issue with but forgave the plaintiff for taking more than three weeks to produce an updated privilege log.
However, the court did not accept an updated privilege log that was supplied five months after the previous one. Accordingly, it is clear that electronic discovery and the privilege logs generated there from must be completed with scrupulous care and in a timely manner.
This article was originally published in The Legal Intelligencer. For more information on this publication, please visit www.law.com.