Magistrate Judge Orders Parties to Develop a Reasonable Electronic Discovery Plan Addressing Pre-and Post-Production Privilege Review

Hopson v. Mayor of Baltimore, 232 F.R.D. 228 (D. Md. 2005)

In this putative class action alleging race discrimination, plaintiffs served voluminous discovery requests that clearly identified their interest in discovering electronically stored information. When defendants raised boilerplate and conclusory objections, plaintiffs responded with multiple written communications and ultimately filed a motion to compel. Although an expedited hearing was held, “months had passed from the commencement of discovery while the dispute festered.”

Magistrate Judge Grimm of the District Court for the District of Maryland ruled:

Such delay is no longer acceptable, and it is the duty of the parties to initiate the negotiation process if the court has not ordered it. As I ordered during the hearing, the meeting that should have occurred months ago will be held within 30 days. A follow-up hearing with the court will be scheduled at which time a reasonable electronic discovery plan will be ordered.

2005 WL 3157949, at *16.

One of the issues the court directed the parties to discuss was the nature of privilege review defendants would undertake, both pre- and post-production. The court stated that the defendants would bear the burden of demonstrating with particularity the need for less than full pre-production privilege review, as well as of proposing reasonable alternatives. The court advised that at the follow-up hearings, it would issue an order that compelled production of electronic records within a specific time that is reasonable. The court also stated that it would independently determine, using the Rule 26(b)(2) factors, the amount of electronic discovery that would be permitted; whether less than full privilege review was reasonable given the extent of electronic discovery allowed and the time to do so and, if full privilege review was not feasible, whether the procedures agreed to by counsel are reasonable. If the court found that the procedures were reasonable, it would issue an order approving them that would include language that compliance with the approved procedures will not result in the waiver of any privilege or work product claim for any inadvertently produced privileged material. The court opined that the issuance of such an order was essential to protecting against subject matter waiver of attorney-client privileged or work product protected information.

The opinion supplements the magistrate’s oral ruling at the hearing, and sets out a detailed discussion on the issue of privilege in the context of production of electronically stored information, including privilege review, subject matter waiver, and agreements between parties regarding the inadvertent production of privileged material. He explained:

Specifically, this case highlights significant unresolved issues relating to the nature of privilege review that must be performed by a party producing electronically stored information, whether non-waiver agreements entered into by counsel to permit post-production assertion of privilege are permissible, and effective for their intended purpose, as well as the application of principles of substantive evidence law related to the waiver or privilege by inadvertent production. These issues, among the most talked about by lawyers, judges, and the parties who are affected by their resolution, have yet to be fully developed by the courts.

* * *
This case vividly illustrates one of the most challenging aspects of discovery of electronically stored information – how properly to conduct Rule 34 discovery within a reasonable pretrial schedule, while concomitantly insuring that requesting parties receive appropriate discovery, and that producing parties are not subjected to production timetables that create unreasonable burden, expense, and risk of waiver of attorney-client privilege and work product protection.

Id. at *2.

The court noted that the proposed changes to Rule 26(b)(5) of the Federal Rules of Civil Procedure would allow a party to raise post-production claims of privilege and work product protection for electronically stored information, and further establish a procedure for resolving disputes regarding such an assertion. Id. at *3. The court opined that the proposed rule changes “appear to be ideal, were it not for the following cautionary language in the comment:

The proposed amendment does not address the substantive questions whether privilege or work product protection has been waived or forfeited [by the procedures in the proposed amendment to Rule 26(b)(5) ]. Instead, the amendment sets up a procedure to allow the responding party to assert a claim of privilege or of work-product protection after production…. It is a nod to the pressures of litigating with the amount and nature of electronically stored information available in the present age, a procedural device for addressing the increasingly costly and time-consuming efforts to reduce the number of inevitable blunders … [Proposed] Rule 26(b)(5)(2) does not address whether the privilege or protection that is asserted after production was waived by the production. The courts have developed principles to determine whether, and under what circumstances, waiver results from inadvertent production of privileged or protected information.

Id. at *4. The court observed:

Thus, after nearly ten years of extensive study of the discovery rules by the Advisory Committee on the Federal Rules of Civil Procedure, the procedures proposed to address the burdens of privilege review associated with production of electronically stored information surely would ameliorate them, but at the price of risking waiver or forfeiture of privilege/work product protection, depending on the substantive law of the jurisdiction in which the litigation was pending. Absent a definitive ruling on the waiver issue, no prudent party would agree to follow the procedures recommended in the proposed rule.

Id. The court stated that, although the use of “non-waiver” agreements presently may be growing, and that, if the proposed changes to the discovery rules are adopted their use can be expected to increase significantly, “they certainly are not risk-free.” Id. at *5. The court cautioned that, because there is no uniform position taken by the courts on whether inadvertent production waives privilege/work product protection, care must be taken to identify the controlling law in each jurisdiction. It described the three distinct positions taken by the courts regarding the inadvertent production of privileged material: (1) the “strict accountability” approach followed by the Federal Circuit and the First Circuit (which almost always finds waiver, even if production was inadvertent, because “once confidentiality is lost, it can never be restored”); (2) the lenient/ “to err is human” approach, followed by the Eighth Circuit and a handful of district courts (which views waiver as requiring intentional and knowing relinquishment of the privilege, and finds waiver in circumstances of inadvertent disclosure only if caused by gross negligence; and (3) the “balancing test” approach that requires the court to make a case-by-case determination of whether the conduct is excusable so that it does not entail a necessary waiver. Id. (footnotes omitted).

The court concluded that, despite the uncertainty regarding which approach to inadvertent disclosure of attorney-client privileged material would be adopted by the Fourth Circuit, there is a viable method of dealing with the practical challenges to privilege review of electronically stored information without running an unacceptable risk of subject-matter waiver:

It t lies with the courts issuing scheduling orders under Fed. R. Civ. P. 16, protective orders under Fed. R. Civ. P. 26(c), or discovery management orders under Fed. R. Civ. P. 26(b)(2) that incorporate procedures under which electronic records will be produced without waiving privilege or work product that the courts have determined to be reasonable given the nature of the case, and that have been agreed to by the parties. This practice, already commonly followed in cases where discovery of electronic records is anticipated, is specifically encouraged by the proposed rule changes to the discovery rules now under review by the Supreme Court. As will be seen, it is essential to the success of this approach in avoiding waiver that the production of inadvertently produced privileged electronic data must be at the compulsion of the court, rather than solely by the voluntary act of the producing party, and that the procedures agreed to by the parties and ordered by the court demonstrate that reasonable measures were taken to protect against waiver of privilege and work product protection.

Id. at *8.

The court offered two “valuable lessons to apply to the challenges presented in this, and most cases, regarding the discovery of electronically stored information.” First, to the extent that parties already are negotiating “non-waiver” electronic records production agreements, a practice encouraged by the proposed changes to Rule 16(f), they would be unwise to assume that such agreements will excuse them from undertaking any pre-production privilege review, or doing less of a pre-production review than is reasonable under the circumstances. Id. at *14. The court noted that in circuits that have adopted the “strict waiver” approach to inadvertent production, such an agreement would be fatal. And, even in those jurisdictions that have adopted the more lenient “balancing test,” the producing party still must show that reasonable measures were taken to screen for privileged information. The court stated that “the better approach” is to assume that complete pre-production privilege review is required, unless it can be demonstrated with particularity that it would be unduly burdensome or expensive to do so.

The court stated that the cost-benefit balancing factors listed in Rule 26(b)(2) provide “useful analytical tools to enable a producing party to marshal the specific facts that would justify less than full pre-production privilege review.” It stated that the amount of discovery of electronically stored information that should be permitted in a particular case will be a function of the issues in the litigation, the resources of the parties, whether the discovery sought is available from alternative sources that are less burdensome, and the importance of the evidence sought to be discovered by the requesting party to its ability to prove its claims. The court observed that “courts have nearly limitless ability under Rule 26(b)(2) to fashion reasonable limits to potentially burdensome discovery requests, but the parties must get beyond the posturing that all too often takes place and provide the court with particularized information and reasonable suggestions how to do so.”

Second, the court stated that parties should not defer good faith discussion of how to approach discovery of electronic records until after a motion to compel has been fully briefed. Rather, as the proposed changes to Rule 16(f) make clear, counsel have a duty to take the initiative in meeting and conferring to plan for appropriate discovery of electronically stored information at the commencement of any case in which electronic records will be sought. “In the absence of any guidance in the court’s scheduling order, or in the local rules of court, the parties are not without resources that will assist them in determining what to discuss at their meeting.” The court noted that the newly revised Civil Discovery Standards for the American Bar Association Section on Litigation contain detailed information about the issues that the parties should discus in their effort to agree upon an electronic records discovery plan.

At a minimum, they should discuss: the type of information technology systems in use and the persons most knowledgeable in their operation; preservation of electronically stored information that may be relevant to the litigation; the scope of the electronic records sought (i.e. e-mail, voice mail, archived data, back-up or disaster recovery data, laptops, personal computers, PDA’s, deleted data) the format in which production will occur (will records be produced in “native” or searchable format, or image only; is metadata sought); whether the requesting party seeks to conduct any testing or sampling of the producing party’s IT system; the burdens and expenses that the producing party will face based on the Rule 26(b)(2) factors, and how they may be reduced (i.e. limiting the time period for which discovery is sought, limiting the amount of hours the producing party must spend searching, compiling and reviewing electronic records, using sampling to search, rather than searching all records, shifting to the producing party some of the production costs); the amount of pre-production privilege review that is reasonable for the producing party to undertake, and measures to preserve post-production assertion of privilege within a reasonable time; and any protective orders or confidentiality orders that should be in place regarding who may have access to information that is produced.

Id. at *15. The court concluded:

It cannot be emphasized enough that the goal of the meeting to discuss discovery is to reach an agreement that then can be proposed to the court. The days when the requesting party can expect to “get it all” and the producing party to produce whatever they feel like producing are long gone. In many cases, such as employment discrimination cases or civil rights cases, electronic discovery is not played on a level field. The plaintiff typically has relatively few electronically stored records, while the defendant often has an immense volume of it. In such cases, it is incumbent upon the plaintiff to have reasonable expectations as to what should be produced by the defendant.

Id.