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Defendants’ “Completely Ineffective” Review Procedure and Failure to Rectify the Inadvertent Disclosure in a Timely Way Results in Finding of Waiver

Posted in CASE SUMMARIES

Thorncreek Apartments III, LLC v. Vill. of Park Forest, Nos. 8 C 1225, 08-C-0869, 08-C-4303, 2011 WL 3489828 (N.D. Ill. Aug. 9, 2011)

The court held that privilege was waived as to inadvertently produced documents where defendants failed to take reasonable steps to prevent disclosure and failed to rectify the error in a timely way.  In so finding, the court cited defendants’ failure to conduct a final check before production, the failure of the process to protect any privilege (all privileged documents were produced), the nine months between production and discovery of the disclosure, and the failure to timely produce a privilege log, among other things.

Defendants had a three-step process to respond to discovery.  First, backup tapes were searched using agreed upon and court-ordered search terms.  The documents identified by the search were then placed by a vendor into an online database for review by defense counsel.  Following that review, documents released by defendants were placed in an online production database for plaintiffs to access.  It was intended that plaintiffs would have access to both responsive and non-responsive documents.  However, defense counsel was “‘under the impression’ that documents . . . marked ‘privileged’ . . . would be automatically withheld from the production database . . . .”

Nine months after production began (and at least two months after it ended), the inadvertent production came to the attention of defendants when plaintiffs attempted to use two privileged documents at deposition, to which defense counsel objected.  Following that deposition, defense counsel contacted plaintiffs’ counsel to inform him that certain privileged documents had been inadvertently produced.  Four months later, defendants produced a privilege log for the first time, which identified 159 documents that had been inadvertently produced.  No other documents were identified as withheld from production.  Thus, it was presumed that all documents identified as privileged during the review had been inadvertently produced.  Plaintiffs claimed that privilege had been waived and the parties were able to independently resolve their disputes as to all but six documents.

Taking up the question of whether privilege was waived, the court first established that a portion of all six documents was subject to attorney-client privilege protection.  The court next established that the framework of Fed. R. Evid. 502(b) was applicable, and therefore turned to the threshold question of whether production was inadvertent.  The court determined that it was, citing, for example, that defense counsel "was under the impression” that documents identified as privileged would be withheld from production.

Next, the court turned to whether the steps taken to prevent disclosure were reasonable and determined that they were not.  Supporting this finding were: the lack of an adequate explanation of the review process; defendants’ failure to check the production database before releasing it to plaintiffs (a “verification check” “one would have expected the Village to perform”); and, “most telling,” “the abject failure of the . . . process to protect allegedly privileged documents (where defendants “did not succeed in identifying and withholding from production even a single privileged document”).  The court also noted its lack of confidence in the reasonableness of defendants’ precautions “when the most the Village can say is that it ‘thought’ that marking a document as ‘privileged’” would cause the vendor to withhold it from production.

The court also found that defendants failed to rectify the problem in a timely way where nine months passed between production and discovery of the disclosure:

[T]hat means that the Village was notpayingany [sic] attention whatsoever to what documents its opponent in the litigation was selecting from the database.  Perhaps Thorncreek simply selected all of them; the parties’ briefs do not tell us if this is so.  But, even if that were the case, a single visit to the production database could have alerted the Village to the problem.

Additionally, the court noted that the Village “would have been clued into the problem had it prepared a privilege log at any time” during production and that the failure to do so weighed in favor of waiver.  Finally, the court found “no unfairness” in allowing plaintiffs continued access to the documents, “thus holding the Village responsible for its failure to take reasonable care to safeguard the privilege or to rectify the inadvertent error once it occurred.”