Court Finds Non-Party’s Claims of Privilege Waived, Rejects Assertions of Undue Burden, Grants Defendant’s Motions to Compel

Seger v. Ernest-Spencer, Inc., 2010 WL 378113 (D. Neb. Jan. 26, 2010)

In this personal injury case, the court found a non-party had waived its claims of privilege as to already-produced documents and granted defendant’s motion to compel their production upon finding that disclosure was “knowing and intentional” as evidenced by the non-party’s failure to establish reasonable precautions to prevent disclosure and its failure to timely assert a claim of privilege, among other things.  Rejecting claims of undue burden, the court also granted defendant’s motion to compel the non-party’s production of emails after reducing defendant’s proposed search terms to eliminate those deemed irrelevant or overly broad.

Upon receipt of a subpoena for documents, non-party Valmont Industries, Inc (“Valmont”) retained counsel to review documents and identify those that were privileged.  Relying on counsel’s determinations, Valmont then produced responsive discovery to the defendant.  Six months later, Valmont produced its privilege log.  Upon receipt of that log, defendant notified Valmont that certain documents identified as privileged had already been produced.  Valmont responded by declaring the documents privileged and seeking the return of at least one particularly sensitive document.  Valmont received no response to its attempts to negotiate (via correspondence) the return of the documents but did not seek judicial intervention.  Defendant eventually sought to compel production of the disputed documents.

The court took the “middle of the road approach” to its determination of waiver and identified the appropriate five-step analysis:

These considerations are (1) the reasonableness of the precautions taken to prevent inadvertent disclosure in view of the extent of document production, (2) the number of inadvertent disclosures, (3) the extent of the disclosures, (4) the promptness of measures taken to rectify the disclosure, and (5) whether the overriding interest of justice would be served by relieving the party of its error.

Taking each consideration in turn, the court found that Valmont’s claims of privilege had been waived and granted defendant’s motion to compel:

Reliance on a law firm to advise a client about privilege is an insufficient basis to find inadvertent disclosure.  Many documents in this case were disclosed in error according to Valmont.  This factor, despite the large volume of documents, weighs in favor of waiver. Valmont argues prompt measures were taken to remedy the inadvertence once current counsel became aware of the disclosures.  However, no initial claim of privilege for any document was made prior to June, 2009, the disclosed documents had been circulated by the defendants for approximately six months prior to any claim of privilege, and Valmont never sought court assistance to protect the documents.  Valmont shows no overriding interest of justice would be served by relieving it of the errors. In fact, Valmont sought to enforce the privilege with regard to only two documents in negotiations with the defendants.  Accordingly, the court finds the evidence shows Valmont’s disclosure of documents for which privilege was later claimed was knowing and intentional.  Therefore, Burns & McDonnell’s motion to compel is granted.

The court next addressed defendant’s motion to compel production of emails in response to its subpoena.  Valmont claimed the requests were overly broad and that responding would be unduly burdensome.  As to the first disputed request, the court rejected Valmont’s assertions upon its determination that the burden was “overstated.”  For example, the initial estimate of six to nine hours “per user” included “several hours for manual activities because [the Director of Information Technology Architecture for Valmont] does not trust the margin of error in the software (estimating two to three hours as opposed to one to several minutes) and organizing the CD after copying the information (estimating one to two hours as opposed to minutes)”.  The estimate also included “processing time by the computer for which the technician need not be involved.”  As to the second disputed request in which defendant sought production of all emails containing any one of 24 specified terms, the court held that defendant “failed to meet its burden of showing the searches are relevant and not overly broad” and reduced the number of search terms to 11.  The motion to compel was otherwise granted.

Regarding costs and defendant’s prior offer to pay for the retention of an independent consultant to cull the requested data as a means of decreasing the burden to Valmont, the court left the details to the parties but noted its willingness to resolve any issues upon appropriate motion.