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Software Glitch Does Not Waive Privilege

In Datel Holdings Ltd. v. Microsoft Corp., the court was faced with a Motion by the Plaintiff to Compel the production of several document’s inadvertently produced by the Defendant and admitted into evidence at a deposition, that the Defendant now claims are protected by the attorney-client privilege. In this case, the Defendant produced several abbreviated versions of an email chain that did not contain the initial email message from in-house counsel to a non-lawyer program manager, although the following reply emails were entirely among non-lawyers, and discussed the results of computer testing and did not transmit legal advice.

The Plaintiff at a deposition utilized the documents in question where the Defendant did not immediately object in response to Plaintiff’s counsel’s request that an unredacted version of one of the documents be marked for identification.  A few hours later, however, after obtaining and reviewing the complete emails, Defendant’s counsel asserted on the record, at the deposition, that the documents were privileged and the full versions showed that the entire thread should be privileged.

In their defense, the Defendant argued that the documents that were produced were produced inadvertently to the Plaintiff within the meaning of Federal Rule of Evidence 502(b), which governs the inadvertent production of documents. In particular, the Defendant argued that before being reviewed, the potentially responsive documents were collected from custodians and were loaded into a computerized document processing system known as “Clearwell.” During their processing, for reasons still unknown to the Defendant, Clearwell truncated some “Re-auth” documents.

In response, the Plaintiff argued that the documents were not privileged, and even if they were, any privilege or protection has been waived because the Defendant did not take the steps necessary to avoid waiver under Rule 502(b).

The defendant agreed to produce all non-privileged portions of the documents including some of the later portions of the “Re-auth” email chain because they acknowledge that the discussions eventually shifted to business topics. Still in question was the initial email sent between the Defendant’s in-house counsel and program manager.

In reaching its conclusion, the court reviewed FRE 502(b), which states that the disclosure of a privileged document normally operates as a waiver unless three conditions are satisfied:

(1)   the disclosure is inadvertent;

(2)   the holder of the privilege or protection took reasonable steps to prevent disclosure; and

(3)   the holder promptly took reasonable steps to rectify the error.

The court noted that these three requirements are separate and should not be conflated in the analysis; in particular, inadvertence under the first prong does not turn on the reasonable steps taken to prevent mistaken disclosure addressed in the second prong. The court also noted that the burden of proving that the attorney-client privilege applies rests with the party asserting the privilege, in this case, the Defendant.

In examining the first prong – whether disclosure was inadvertent – the court considered the fact that the Defendant’s employed a team of contract attorneys to conduct an initial screening for privilege and carefully reviewed all documents. This mistake was the result of a computer glitch that truncated the documents, removing the portion conveying the request from counsel to conduct a factual investigation. The technical glitch was a mistake, which occurred accidentally and unintentionally, and the Court found that under those circumstances, production of the documents was inadvertent.

Next, the court considered if the Defendant took reasonable steps to prevent the disclosure.  The court found that the inadvertent production of a relatively low proportion of documents in a large production (1.2 Million documents) under a short timetable due to mistake should be, and usually is excused.  Again, the Court fund that the Defendant took ‘reasonable steps’ to prevent inadvertent disclosure by hiring a team of attorneys to review the documents before they were produced.

Finally, the Court examined whether the Defendant promptly took reasonable steps to rectify the error. The Court took notice that when the Defendant first learned the nature of the truncated emails, counsel looked at the complete documents during the deposition. The court found that the Defendant did not appreciate the true nature of the full text when they were marked at the deposition, and as soon as the Defendant obtained the entire text of the emails while the deposition was still ongoing, the Defendant interrupted the deposition to put its privilege assertion on the record.

The court found that, where a producing party utilized a vendor and contract lawyers to ensure a robust privilege screening process, the production of privileged emails resulting from a vendor’s software glitch was inadvertent and did not waive privilege.  The court rejected Datel’s demand for “perfection,” and stated “[P]erfection or anything close based on the clairvoyance of hindsight cannot be the standard; otherwise, the time and expense required to avoid mistakes to safeguard against waiver would be exorbitant, and complex cases could take years to ready for trial.”

Author Bio: James is a student at Seton Hall Law School receiving his J.D in May 2012. Prior to Law School, he received his B.S. in both Legal Studies and Psychology from Roger Williams University.  James’ experiences include working at a matrimonial law firm where he would like to continue to work full time after graduating. 

 

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