keywords - privileged information, inadvertent production, Victor Stanley , Waiver of Privilege, electronic documents, clawback, ESI, electronically stored information

The United States District Court for the District of Maryland has become the latest court to weigh in on the thorny issues surrounding the inadvertent production of privileged information in discovery. In the May 29, 2008, opinion in Victor Stanley, Inc. v. Creative Pipe, Inc., et al., Case No. MJG-06-2662 (D. Md.), Judge Grimm was confronted with the problem of whether the inadvertent production of 165 electronic documents by the defendants constituted a waiver of privilege, even where the defendants had utilized search terms to cull privilege documents and had conducted a document by document review. Judge Grimm concluded that privilege had been waived.

The Victor Stanley case highlights some common pitfalls in asserting a claim of privilege. In his opinion, Judge Grimm identifies several errors that can serve as warning signs for litigants seeking to preserve their privilege. The lessons learned from Victor Stanley include:

  • Whenever possible and practical, enter into a clawback agreement with opposing counsel to protect against inadvertent waiver and have it entered as an order of the Court ;

  • Carefully plan and document all decisions regarding privilege review;

  • Prepare a privilege log that meets the applicable legal standards unless an agreement is reached with opposing counsel on a different approach;

  • If a claim of privilege is challenged, provide sufficient evidentiary support for those claims, including affidavits, deposition transcripts, or other appropriate evidence; and

  • If inadvertent production occurs, prepare to have supporting affidavits from experts concerning the appropriateness of privileged review, including experts opining about the search technology utilized.

Tests for Waiver of Privilege

Historically, courts have applied one of three standards to answer the question of whether an inadvertent production of documents constitutes a waiver of privilege. Under the traditional standard, courts use a strict liability approach and hold attorneys responsible for maintaining the confidentiality of information. As such, an attorney who accidentally discloses a privileged document pays the price of waiver. On the contrary, under the intent-based approach, courts evaluate the attorney's intent, so an inadvertent production does not waive the privilege.

However, the modern trend is for courts to apply a balancing test that lies between these two extremes. Unlike the strict liability and intent-based approaches, the balancing test considers the totality of the circumstances surrounding the disclosure rather than applying a per se waiver rule.

Victor Stanley Decision

Judge Grimm applied the balancing test in Victor Stanley. The defendants identified a large volume of responsive electronically stored information (ESI), but, in March 2007, determined that they would be unable to conduct a privilege review in a timely fashion. Although they initially pursued entering into a "clawback agreement" with Plaintiffs – an agreement whereby the parties would agree that the inadvertent production of privileged information would not constitute a waiver – they abandoned those efforts when the court extended the discovery deadline by four months. Subsequently, they conducted a key-word search designed to identify potentially privileged documents. The results of this search were then reviewed by counsel. Counsel also reviewed the title pages of non-text searchable electronically stored information to determine if any of those were privileged. In spite of these efforts, 165 privileged documents were produced. The plaintiff sought an order from the court holding that any privilege in the documents had been waived by the production.

In considering the motion, Judge Grimm explained that the "Defendants & bear the burden of proving that their conduct was reasonable" and found the defendants had failed to do so. Victor Stanley slip op. at 18.

Defendants failed to provide the court with information regarding:

the keywords used; the rationale for their selection; the qualifications of [the defendant] and his 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.

Id. At 18-19. This failure to provide specific evidence in support of their contention that they conducted a reasonable search for privileged documents proved fatal to their claim. As the court explained,

When parties decide to use a particular ESI search and retrieval methodology, they need to be aware of literature describing the strengths and weaknesses of various methodologies, such as The Sedona Conference Best Practices & and select the one that they believe is most appropriate for its intended task. Should their selection be challenged by their adversary, and the court be called upon to make a ruling, then they should expect to support their position with affidavits or other equivalent information from persons with the requisite qualifications and experience based on sufficient facts or data and using reliable principles or methodology.

Id. at 22 n. 10.

Because defendants had not provided such evidence, the court found that they had not justified their claim of privilege, and found that it had been waived. In making its ruling, however, the court noted that the defendants had abandoned their request for a court-approved non-waiver agreement. Id. at 27. The court also noted that the large volume of documents weighed against finding in the defendants' favor. So, too, did the one-week "delay ... between production by the Defendants and the time of discovery by the Plaintiff of the disclosures -- a period during which the Defendants failed to discover the disclosure." Id. at 29. As an independent ground for granting the motion, Judge Grimm also found that defendants had failed to provide adequate evidentiary support for their underlying claims of privilege.

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