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Finding Waiver of Attorney-Client Privilege and Work Product Protection, Court Orders Production of Attorney Notes of Employee Interviews Concerning Intel’s Compliance with Evidence Preservation Obligations

Posted in CASE SUMMARIES

In re Intel Corp. Microprocessor Antitrust Litig., 2008 WL 2310288 (D. Del. June 4, 2008)

In this decision, the district court adopted the Special Master’s Report and Recommendation concerning the Motion of AMD and Class Plaintiffs to compel Intel to produce notes of its counsel’s investigation interviews of designated employees concerning Intel’s compliance with its evidence preservation obligations (the “Weil Materials”).  The Weil Materials included notes taken during and after the custodian interviews, meeting notices, emails between attorneys regarding the interviews, etc.  The court ordered Intel to produce the requested Weil Materials, as redacted by the Special Master.

Intel’s Preservation Efforts

On June 27, 2005, AMD filed its complaint against Intel.  On the same date, upon learning of the filing of the complaint, Intel assembled a team to put into place a process to "identify and preserve relevant paper and electronic documents" across six different continents.  Intel described its document retention plan as being tiered and having multiple layers of retention, including:

• The day after the complaint was filed, Intel began to preserve a company-wide snapshot of email and other electronic documents stored in Intel servers as of the week the Complaint was filed ("Complaint Freeze Tapes").

• Two days after the complaint was filed, Intel sent a hold notice bulletin to 4,000 sales and marketing group employees with instructions to retain documents related to competition with AMD and competition concerning the sale of CPUs generally.

• Four days after the complaint was filed, Intel distributed a more detailed litigation hold notice to 629 employees, and eventually provided such notices to approximately 1,500 employees.

• Within days of the filing of the complaint, Intel began collecting the electronic and hard copy documents from certain employees.

• In the Fall of 2005, Intel began a process of preserving, on a weekly basis, the backup tapes containing emails of employees identified as having potential relevance to the lawsuit.  These tapes were not the primary preservation method, but rather a mechanism to fall back on in the event documents could not be obtained directly from the individual employees who originally generated or received emails.

Missing from Intel’s preservation activities was a decision to suspend the "auto delete" function of its email system, which automatically deleted emails remaining in an employees mailbox after 35 days.  Intel claimed that the ongoing operation of auto delete would not interfere with its preservation obligations because:  (1) it had instructed all custodians subject to the hold to preserve all relevant emails and (2) Intel would move all custodians to a group of isolated exchange servers that would backup on a regular weekly interval and would, in turn, preserve backup tapes through the litigation.

Recognizing that the litigation could be the "largest electronic production in history," resulting in Intel’s production of "somewhere in the neighborhood of a pile 137 miles high," the parties negotiated and ultimately agreed to a three-step approach to the production of documents:

Step 1 — AMD and Intel were required to exchange custodian lists accompanied by a representation that after reasonable investigation, the individuals on the list comprised all of their personnel in possession of an "appreciable quantity of non-duplicative documents and things responsive to [the party's document request]" ("Custodian List").  Intel guaranteed that its Custodian List would include no fewer than 1,000 custodians and AMD guaranteed that its Custodian List would include no fewer than 400 custodians. 

Step 2 — Each party then agreed to designate no fewer than 20% of the custodians on its own Custodian List "whose paper and electronic files will be reviewed and produced in the first instance in response to the other parties’ initial document requests" ("Party Designated Production Custodian List"). 

Step 3 — Following the exchange of the Party Designated Production Custodian Lists, the parties would cooperate in and complete an informal discovery process to allow each side to collect additional information so they could designate additional custodians for production from the other side’s list.  Each side was entitled to select not more than 15% of the persons identified in the other’s Custodian List ("Adverse Party Designated Production Custodian List").  Intel could request production from up to 50 additional custodians in AMD’s custodian list and AMD could request up to 100 additional custodians from Intel’s custodian list.

In the fall of 2006, Intel discovered some lapses in the plan.  Intel subsequently hired attorneys at Weil Gotshal & Manges, LLC, who began the then undisclosed process of interviewing each of Intel’s 1,023 custodians for the purpose of determining their email preservation habits and their level of compliance with Intel’s litigation hold notices/instructions.

Intel first advised AMD and the Class Plaintiffs of the lapses during a telephone conversation that was followed up by email in February 2007.  In addition to describing what Intel had been doing to address issues implicated by the disclosure lapses, Intel assured AMD that, "In any event, we certainly want to provide you with complete information and full cooperation."

By letter dated March 5, 2007, and in anticipation of a March 7, 2007 status conference, Intel advised the court that it had:

identified a number of inadvertent mistakes in the implementation of [its] described preservation process.  These document retention issues are the result of human errors in implementation, and include the following: some employees’ retention practices were incomplete on an individual level, some employees were not given timely notice to retain materials, some terminated employees’ documents may not have been saved and the fail-safe plan to prepare back-up tapes missed some employees.

Intel detailed the lapses and its remediation efforts to that date.  Intel proposed that it continue its remediation efforts, complete its review in a short period of time and report back to the court.  Intel also advised the court that it "made it clear to counsel for AMD and the [Class Plaintiffs] that it is prepared to share information regarding Intel’s efforts in that regard and to work with them going forward in addressing the issues and minimizing any potential losses, if any, of information."

AMD filed a Status Conference Statement on March 5, 2007, and described Intel’s document retention issues as follows:

Through what appears to be a combination of gross communication failures, an ill-conceived plan of document retention and lackluster oversight by outside counsel, Intel has apparently allowed evidence to be destroyed. . . .

Intel chose to adopt and rely on a highly-risky system of document preservation . . . From [what] AMD can tell, Intel’s preservation strategy:

• Allowed the continued, automatic purge on a 35 day (or longer) schedule of all e-mail communications to, from and within the company;
• Relied exclusively on a move-it-or-lose-it "honor system" that required individual custodians to correctly identify, segregate and proactively move relevant evidence to media or their local computer before that data was destroyed by a network purge;
• Backstopped this "honor system" beginning in October 2005 with a weekly back-up of e-mail that required Intel’s IT personnel to identify and correctly migrate custodian’s data to dedicated servers subject to backup.

[T]his "honor system" was defeated by a combination of apparently erroneous unclear or incomplete "litigation hold" instructions, lack of adequate monitoring to ensure those instructions were understood and followed and a wholesale failure [to] timely . . . deliver any preservation instructions to a third of the employee-custodians Intel itself identified.

The parties ultimately stipulated to a disclosure order, on March 16, 2007, which provided:

6.  On April 17, 2007 Intel shall submit in writing an updated and final report regarding 239 Intel Custodians for which Intel provided preliminary information to AMD on February 22, 2007, which will reflect Intel’s best information gathered after reasonable investigation and which shall contain the following information for each such Intel custodian:

a. The Intel Custodian’s name;
b. A detailed written description of the preservation issues affecting the Intel Custodian, including the nature, scope and duration of any preservation issue(s). . . . 

7.  On April 27, 2007, Intel shall provide the same information identified in paragraph 6 for those custodians identified in paragraph 2. ( "Paragraph 7 Summaries").

8.  With respect to the remainder of Intel’s Custodians not on the list of 239 Intel custodians referred to in Paragraphs 6 and 7, commencing after April 27, 2007, Intel shall provide the same information called for by Paragraph 6 in a reasonable time frame, on a rolling basis and prioritizing those Intel custodians in senior positions.  ("Paragraph 8 Summaries").

As required by the disclosure order, from April 27, 2007 through March 24, 2008, Intel filed one Paragraph 7 Summary and over 1,000 Paragraph 8 Summaries in spreadsheet fashion.  Intel claimed that it "spent many hours preparing roughly 400 pages of custodian-specific retention reports which drew upon thousands of pages of attorney notes, as well as other information."

AMD and the Class Plaintiffs sought production of the material underlying the summaries, arguing that, in order to test Intel’s assertions that the lapses in its document preservation efforts were "misunderstandings or errors by individual employees" and that its "investigation has revealed no instance of deliberate deletion to deny AMD access to any information responsive to the allegations in the Complaint," AMD and the Class Plaintiffs needed to review the "notes of investigation interviews conducted by Intel’s counsel concerning Intel’s [custodian] employees’ compliance with their evidence preservation obligations."  Conversely, Intel argued that the attorney client privilege and work-product doctrine shielded the Weil Materials.

Attorney Client Privilege

The Special Master first determined that Intel had waived any privilege that had attached to the materials, setting out its specific conclusions:

• The waiver of the privilege was a result of Intel’s claim to the Plaintiffs and to the Court that its retention lapses are the result of human error and not the result of deliberate deletion.  Further, Intel took the affirmative step of providing to AMD, the Class Plaintiff and to the Court the Paragraph 8 Summaries–which in no small measure forms the leitmotif of Intel’s position.

• There is no question that the protected information, namely the custodian’s information given to Intel through Weil attorneys describing in "detail . . . the preservation issues affecting [each] Intel custodian including the nature, scope and duration of any preservation issue(s)," is at issue.  Indeed, the parties and the Special Master have spent and will continue to spend a significant amount of time and resources focused on the question of spoliation and, if appropriate, sanctions.

• An application of the privilege would effectively deny AMD and the Class Plaintiffs the opportunity to fully test Intel’s positions and would ultimately deprive the Court from having the benefit of having been informed by the adversarial process prior to making any judgment on the issue of spoliation.

Work Product Doctrine

Having reviewed the Weil Materials in camera, the Special Master found that they contained both core and non-core (or "fact") work-product.  However, the Special Master also found that the core work-product was not so intertwined with fact information that their entirety should be treated as core.  Rather, the facts could be easily separated from any core work-product.

Further, the Special Master ruled that Intel had waived work product protection, noting that Intel had agreed to produce, "detailed written description[s] of the preservation issues affecting [every] Intel Custodian, including the nature, scope and duration of any preservation issue(s)."  The Special Master continued:

Intel could have left AMD and the Class Plaintiffs to their own devices, forcing them down the path of protracted world-wide preservation depositions.  It did not.  Rather it trumpeted its willingness to have AMD, the Class Plaintiffs and the Court informed as to fact work-product gathered and provided "a detailed written description of the information provided by each custodian [to Weil] during the interviews."

Therefore, the Special Master concluded that Intel could not "mask" its agreed-to discovery of custodian information by asserting work product protection with respect to fact work product which, in the Special Master’s view, was at the heart of Intel’s position on its preservation issues.

The Special Master concluded that AMD and the Class Plaintiffs had demonstrated "substantial need" for the Weil Materials to meet Intel’s case on preservation issues:

• First, there can be no question that AMD and the Class Plaintiffs are entitled to test Intel’s version of what went wrong.

• Second, AMD and the Class Plaintiffs cannot be forced to rely on Intel’s description of what the custodians reported.

• Third, AMD and the Class Plaintiffs, as they play their critically important role of informing the Court through the adversary process can not be restricted to Intel’s assertions of what was the custodians’ report.

Finally, addressing the issue of undue hardship, the Special Master agreed with AMD and the Class Plaintiffs that "Plaintiffs merely seek an efficient mechanism to get the whole story out without embarking on a world tour of costly … preservation depositions."  Thus, the Special Master concluded AMD and the Class Plaintiffs should not be saddled with the prospect of deposing over 1,000 custodians, nor should it be forced to settle for something less in the form of a sampling of the custodian pool.

Accordingly, the Special Master concluded that Intel must produce the Weil Materials as redacted by the Special Master.

Additional pleadings that provide more background are available below:

Intel’s March 5, 2007 letter to the court regarding preservation lapses

Stipulated Order Regarding Intel’s Evidence Preservation Issues (signed by the Special Master March 16, 2007)

Intel’s 44-page Report and Proposed Remediation Plan (filed April 23, 2007)

 

  • http://ralphlosey.wordpress.com Ralph Losey

    Another excellent report. Good detail.

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  • http://www.seyfarth.com Richard D Lutkus

    Excellent summary of the case that discusses the extent of privilege attachment to preservation efforts.