Thanksgiving eDiscovery Special! Privilege, Waiver and Logs: Still Tripping Up Counsel

22 November 2012 IT-Lex Technology Law Publication
Author(s): Melinda F. Levitt

IT-Lex Technology Law

Say the words “privilege log” and most litigators shudder. Say the words “privilege waiver” and most litigators quake. And as two recent judicial decisions show, there are very good reasons for those reactions – especially in the era of electronic documentation. Once again, these decisions demonstrate the extreme consequences that can result if privilege decisions are made hastily and show that cutting corners to save time or money can wind up having the opposite effect – and worse, can lead to findings that privilege has been waived.

1.  S.E.C. v. Welliver, No. 11-CV-3076 (D. Minn. Oct. 26, 2012) (Rau, Mag. J.)

Welliver shows that even under extreme situations when facing a government adversary, a rush to comply cannot be undertaken without giving thought to privilege consequences later on down the line. Here, a very determined SEC issued a pre-suit subpoena to defendants seeking a multitude of documents, with production to be made in just six days. Defendants produced the documents (a few days late), including over 200 documents between defendants and their attorney. The SEC then filed a complaint, and in response to discovery requests defendants again produced a large number of emails between themselves and counsel, some of then copies of what they previously had produced in response to the subpoena. Defendants then used at least two of these emails as exhibits during depositions. Nonetheless, five weeks later, and nine months after the documents were first produced, defendants sent a letter to the SEC claiming inadvertent disclosure of privilege documents and seeking their return or destruction.

The Magistrate examined the factors under Rule of Evidence 502, as well as prevailing case law in the jurisdiction (which he found had been “folded into” Rule 502(b)) and determined that waiver had occurred as to all such documents produced. Yikes! Specifically, the Magistrate noted that the record was completely devoid of any explanation about what steps were taken – or even if any steps were taken at all – to avoid this inadvertent error. Slip Op. at 14. There was nothing said about “the depth of the document review, when such a review occurred, what documents were reviewed, how much time Defendants took to review the documents” or “even a bare allegation that a review was conducted.” Id.. Likewise, the court noted that while defendants claimed that their conduct should be excused because of the aggressive and unreasonable time frames imposed by the SEC for production, defendants never requested an extension of time or sought any other accommodations to maintain privilege. Id. Moreover, the court explained that even with a six-day response time, defendants could have taken “reasonable steps” to prevent disclosure, including running very basic key-word searches to identity potentially privileged documents and withholding them until either a Rule 502(e) agreement was reached with the SEC or relief was sought from a court. Id.

The court contrasted defendants’ conduct with circumstances in other cases where, for example, the inadvertent disclosure occurred “where only a handful of privileged documents slipped through otherwise robust screening procedures. Id. at 15 (citing Edelen v. Campbell Soup Co., 265 F.R.D. 676, 698 (N.D. Ga. 2010)). Here, the court found that the 200 documents that defendants produced should have been caught had even a cursory review been undertaken given that they were from or two defendants’ counsel or included her name, and that a failure to employ basic screening procedures was not excusable. Id.

Defendants’ delay in raising the claim of inadvertent disclosure also persuaded the court that waiver had occurred. As the court explained, the delay relevant to an inadvertent disclosure analysis is the time between the disclosing party’s realization of the error and their efforts to correct that error. Id. at 16 (citing Clarke v. J.P. Morgan Chase & Co., 2009 WL 970940, at * 5-6 (S.D.N.Y. Apr. 20, 2009) (waiver found where inadvertent disclosure claim raised two months after defendant learned or should have learned of production of privilege material)). In short, delay in finding the disclosure or raising the claim in the first place can lead to a finding that all privilege claims have been waived.

The Welliver decision does not break new ground or establish a new judicial standard. What it does do, however, is remind practitioners that even when pressed to the wall by an extremely aggressive adversary – including a seemingly all powerful government agency – privilege caution cannot and should not be tossed to the wind. Rather, a party should use the most basic, albeit imperfect, techniques, such as elementary key word searching, to identify at least some, if not all, privileged communications. When in doubt, a party should withhold privileged documents from production and seek to come to an agreement with opposing counsel or seek judicial review under Rule of Evidence 502, even if such actions risk angering the other side. If documents are produced under extreme circumstances, a party should conduct very quickly thereafter a much more thorough privilege screen and should contact the other side immediately about possible inadvertent production. Finally, a party should expect to have at the ready a thorough description of the steps that were taken to review the documents in an effort to avoid privilege disclosure. This is not to say that taking any one or all of these steps would have ensured a decision in defendants’ favor on waiver, but taking none virtually guaranteed that waiver would be found.

2.  Chevron Corp. v. The Weinberg Group, [opinion] Misc. Action No. 11-409, 2012 U.S. Dist. LEXIS 137826 (D.D.C. Sept. 26, 2012) (Facciola, Mag. J.)

Chevron Corp. v. The Weinberg Group allowed Magistrate Judge Facciola, one of the country’s well-recognized ediscovery jurists, to return to one of his pet peeves – inadequate privilege logs.

The underlying action involves long-standing claims against Chevron for environmental damage occurring in Ecuador. At issue here were documents ordered to be produced by the Weinberg Group (defendants’ experts) to Chevron as part of Chevron’s effort to prevent an Ecuadorian judgment against it from being executed in this country. Although some documents were produced, many were withheld on the grounds of privilege and/or work product, with a privilege log provided.

Magistrate Facciola examined the log and found it wanting. First, he noted that a proper entry would read something like “Letter from Client X to Lawyer Y seeking advise about whether certain transaction was taxable.” Chevron, 2012 U.S. Dist. LEXIS 137826 at * 6. He explained that an entry with this level of detail would allow the reader to determine that the document properly was withheld since it shows a communication from a client, intended to be confidential, that sought legal advise. Id. However, the Magistrate pointed out that all too typically logs simply state “Letter from client to lawyer – attorney client privilege” – and that such entries are not sufficient for the reader to determine if the communication was intended to be confidential or whether the claim of privilege is proper at all. Id. In particular, the Magistrate noted that claims of privilege “may well be premised on the incorrect notion that all communications between lawyer and client are privileged . . .” and that an insufficient log entry does not warn the reader of that possibility. Id. at * 8.

The court then turned to what has occurred in the “era of ‘big data,’ in which storage is cheap and several bankers’ boxes of data an be stored with a key-stroke on a three inch thumb drive.” Id. Specifically, Magistrate Facciola described the mechanically produced privilege log where a party’s database automatically generates separate privilege log fields for the document date, the sender, the recipient, the type of document and the basis for the privilege claim. The Magistrate explained, however, that the problem with such automated privilege logs is that the document descriptor field has become generic – “it is not created by a human being evaluating the actual, specific contents that particular document . . . . [i]nstead, the human being creates one description and the software repeats that description for all entries for which the human being believes that description is appropriate.” Id. at * 9. According to Magistrate Facciola, the resulting log “raises the term ‘boilerplate’ to an art form, resulting in the modern privilege log being as expensive as it is useless.” Id. at 10.

The court found that such “uselessness” resulted in log entries that read “E-mail between and among Ecuadorian Plaintiffs’ consulting experts prepared in furtherance of litigation regarding rebuttal report and attaching same” – which, the court pointed out, could mean an email containing substantive comments or simply a transmittal email saying only “Here is the rebuttal report. I would appreciate your comments.” Magistrate Facciola explained that while a substantive discussion may legitimately contain protected work product language, the latter mere transmittal email would “trivialize” a claim of privilege or protection. Id.

Noting that in the past world of hard-copy documents, the insufficiency of a log could be determined by a judge through an in camera review, the Magistrate explained that in the new world of “big data,” it was neither practical nor realistic to expect a judge to review, as in this case, a log and the 9,171 pages of documents that log claimed to be privileged. Id. at 11 (“a judge unlike lawyers . . . cannot use technology-assisted review to do the review more efficiently.”)

Based on these findings, the court then addressed different categories of documents claimed to be protected – i.e., work product material; attorney-client documents; documents relating to expert compensation and documents used by experts – and made general rulings. He then ordered, among other things, that where defendants wished to claim work-product, counsel was to redact from each document only opinion work product; make a production of such redacted documents at a pace of 100 documents a day until completed; and, supply a report that for each redacted document explains why the redacted portion qualifies as opinion work product. Magistrate Facciola then stated:

I hope by this process to accomplish several things. First, the discipline I am imposing . . . will, I hope, lead to [claims of] privilege only where it is justified, i.e., when it would be a useful expenditure of the parties and this Court’s resources to devote any more effort to the document. I also hope that [defendant] will see the wisdom of abandoning any claim of privilege as to meaningless documents that might be technically privileged but which are insignificant. To that end, I will gladly issue, on its application, an order pursuant to Rule 502(d) . . . that would alleviate any concern [defendant] has about such a disclosure constituting a waiver in any other state or federal proceeding.

Id. at *15-16.

As a final warning, Magistrate Facciola concluded:

I know that this opinion has made clear how tired I am of mechanically produce boilerplate privilege logs. I expect specific and clear claims of privilege as to each redaction made. I will hold counsel to their [Rule] 26(g) obligations ruthlessly, and, at a minimum, hold that privilege is waived whenever the obligations that I am imposing are disobeyed.
Id. at *17.

Whew! This decision clearly shows one exasperated magistrate who is trying to insert some level of discipline and reality back into the tedious, expensive, annoying, but oh so important, world of privilege logs. The take-away here is that as tempting as it is to employ as many automated database bells and whistles to create a privilege log, attorneys should understand that there is a risk if they sacrifice judgment or analysis in favor of an overly heavy reliance on technology in order to achieve cost-savings. Magistrate Facciola, who is no enemy to the use of advanced technological tools when it comes to discovery, is looking for a new balance between old-fashioned lawyering and technology enhancements, and attorneys should expect that he is not alone among magistrates and judges wanting to avoid new era battles over privilege claims and privilege logs.

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