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Failure to Test Keywords by Sampling a Prominent Consideration in Court’s Finding of Waiver

Posted in CASE SUMMARIES

Mt. Hawley Ins. Co. v. Felman Prod., Inc., 2010 WL 1990555 (S.D. W. Va. May 18, 2010)

Where plaintiff (Felman Production, Inc.) failed to take sufficiently reasonable precautions to prevent the disclosure of a privileged email, privilege was waived.

In this case, the court addressed a number of issues, including the parties’ compliance with their clawback agreement and the applicability of the crime-fraud exception to 377 inadvertently produced, privileged emails.  The primary focus of this summary, however, is the court’s analysis of whether the privilege was waived as to one specific email, “the May 14th email”, and in particular, its analysis of the reasonableness of plaintiff’s precautions to prevent such disclosure.

The May 14th email was inadvertently produced by the plaintiff amidst “a massive disclosure of e-discovery”.  Plaintiff learned of the email’s production several months later when defendants attached the email to a motion to amend their answer.  Three days later, plaintiff sent a letter noting that the email had been listed on plaintiff’s privilege log and demanding the email’s return.  Thereafter, disagreement arose between the parties and the question of waiver was brought before the court.

Taking up the issue, the court first highlighted the five-factor test established in Victor Stanley, Inc. v. Creative Pipe, Inc., 250 F.R.D. 251 (D. Md. 2008):  1) the reasonableness of the precautions taken to prevent inadvertent disclosure; 2) the number of inadvertent disclosures; 3) the extent of the disclosures; 4) any delay in measures taken to rectify the disclosure; and 5) overriding interests in justice.  Next, the court laid out the relevant provisions of Fed. R. Evid. 502(b) and indicated its intent to “apply Rule 502(b), considering Victor Stanley and similar cases as to reasonableness.”  The court then quickly determined that the production was inadvertent and that plaintiff promptly took reasonable steps to seek the email’s return.  Accordingly, the remaining issue for consideration was the reasonableness of plaintiff’s efforts to prevent such production in the first place.

Following a brief discussion highlighting factors for consideration, including the volume of documents produced, any applicable time constraints, the use of analytical software applications and linguistic tools, and fairness, the court then noted Judge Grimm’s remarks in Victor Stanley, namely, that “[t]he only prudent way to test the reliability of the keyword search is to perform some appropriate sampling of the documents determined to be privileged and those determined not to be in order to arrive at a comfort level that the categories are neither over-inclusive nor under-inclusive.”  The court also pointed out the very interesting detail that plaintiff’s counsel had “participated in the Victor Stanley case ‘after all the events that are relevant…had taken place.’”

The court next provided a lengthy list of the steps taken by plaintiff and counsel to produce relevant documents while protecting privilege, including using “privileged search terms” to identify materials for individual review and conducting an “eyes on” review of those documents.  The court also found that an unexplained glitch in the vendor-created database files contributed to plaintiff’s failure to identify the inadvertently disclosed email(s) where the file from which many of the inadvertently produced documents originated failed to build a complete index of potentially privileged materials.

Nonetheless, the court was unwilling to find that the inadvertent production of 377 privileged documents (plus the email primarily at issue in this summary) was “solely attributable” to the technological glitch and found that plaintiff and counsel “failed to perform critical quality control sampling to determine whether their production was appropriate and neither over inclusive nor under-inclusive, even though that firm was counsel in the Victor Stanley case”, among other things.

Applying the five-factor test established in Victor Stanley “in the context of [the court’s] findings and the commentary to the rules”, the court found that plaintiff and counsel did not take reasonable steps to prevent disclosure and that the privilege was therefore waived:

First, the precautions taken to prevent inadvertent disclosure were not reasonable.  As warned in Victor Stanley, 250 F.R.D. at 257, the failure to test the reliability of keyword searches by appropriate sampling is imprudent.  Second, the number of inadvertent disclosures is large, more than double the number discussed in Victor Stanley, a number which underscores the lack of care taken in the review process.  The May 14 email resonates throughout this case–a bell which cannot be unrung.  Its content has had great influence on Defendants’ discovery requests and deposition questions.  Confidentiality cannot be restored to that document.  Third, the extent of the disclosures is not known to the Court because the 377 documents have not been submitted in camera.  Fourth, there has been delay in measures taken to rectify the disclosure of the documents. It is an important fact that identification of privileged documents which were disclosed to Defendants was made by the Defendants, not Felman or its counsel.  Finally, as in Victor Stanley, id. at 263, Felman has "pointed to no overriding interests in justice that would excuse them from the consequences of producing privileged/protected materials."

  • http://www.HowieConsulting.com Joe Howie

    It appears that one of the factors indicating inadequate screening that the court didn’t explicitly recognize was the failure to consolidate duplicate records for review — note that one copy of the email was on the privilege log but another (the one that resulted in waiver) was produced. It appears there were multiple instances of that.

    The failure to dedupe properly could have also accounted for a good part of the the large volume of records that the defendant alleged were dumped on them.

    The ACC article on “Ethics and Ediscovery Review” (available on the eDiscoveryInstitute.org website) takes the position that reviewing multiple copies of the same records for the same purposes is double-billing, i.e. is unethical under the ABA MRPC 1.5 governing reasonable fees.