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Court Declines to Order Re-production in Electronic Format; Finds No Waiver of Privilege from Inadvertent Disclosure

Posted in CASE SUMMARIES

Laethem Equip. Co. v. Deere & Co., 2008 WL 4997932 (E.D. Mich. Nov. 21, 2008)

In this case involving breach of contract and other claims, the court ordered the defendant to return inadvertently produced, privileged, electronically stored information (“ESI”) to the plaintiffs, and ordered the parties to secure all relevant ESI in their possession and file a written outline of the secured data (“data log”) with opposing counsel and the court.  Upon receipt of plaintiffs’ data log, defendant filed a motion to compel the production of all of the data outlined therein, to compel an explanation regarding allegedly spoliated, missing, or altered documents, for an order that all privilege as to the inadvertently produced documents had been waived as a result of plaintiffs’ “misconduct”, and for a finding that plaintiffs were in violation of the civil rules and a prior order of the court, among other things.  Some of these issues were referred to the magistrate judge for hearing and determination with all other issues reserved for a future hearing.

As to plaintiffs’ production of all identified ESI, the defendant argued that plaintiffs’ log showed that plaintiffs had withheld “massive quantities” of relevant evidence and that the log provided no indication of what had already been produced, what media had been searched, or the volume of the ESI identified.

Plaintiffs responded that the defendant was asking to re-examine, in electronic format, thousands of documents already produced in hard copy and that the electronic information generally fell into two categories:  duplicates and privileged documents.  Plaintiffs estimated the cost for review and production at over $250,000.00.

The court denied defendant’s request to compel production of all ESI, but ordered plaintiffs to produce an amended log indicating what information had been previously produced and providing an explanation for anything withheld.

Regarding defendant’s motion to compel an explanation from plaintiffs regarding allegedly spoliated or missing evidence, the court was generally satisfied with plaintiffs’ explanations, but ordered plaintiffs to provide proof as to their attempts to search or access devices claimed to be inaccessible.

Addressing defendant’s request that plaintiffs’ claims of privilege as to inadvertently produced disks (part of the information previously ordered returned) be waived due to misconduct, the court first turned to newly enacted Evidence Rule 502.  Because the production of the disks was inadvertent, the Court determined that the first factor leading to a finding of no waiver under the rule was satisfied.

The court found plaintiffs satisfied the second factor, taking reasonable steps to prevent disclosure, because the disks were the only privileged matters inadvertently disclosed despite “voluminous discovery.”  The court also pointed out that the inadvertent production occurred when the defendant copied the materials outside of the scope of the “inspect and copy” procedures established by the parties that would have given plaintiffs’ counsel an opportunity to review the data prior to production of the disks.

Turning finally to the third factor, which requires reasonable steps to rectify the error of inadvertent production, the court found that plaintiffs’ actions, including lodging an objection to the use of the information at depositions, sending a letter demanding the return of the materials, and securing a court order compelling their return were sufficient to satisfy the requirements of the rule.  Thus, the court found that under Rule 502(b), the inadvertent production did not result in waiver.

The court further concluded that even absent the applicability of Rule 502, no waiver would have been found because Michigan law provided even greater protection.

Finally, the court concluded that defendant’s failed to establish plaintiffs’ violation of Rules 26 and/or 37 of the Federal Rules of Civil Procedure.