Failure to Discover Unintentional Production Despite Indications that “Something had Gone Profoundly Awry” Results in Waiver of Privilege

D’Onofrio v. Borough of Seaside Park, No. 09-6220 (AET), 2012 WL 1949854 (D.N.J. May 30, 2012)

Here, the court held that privilege was waived as to unintentionally produced, privileged documents where, despite the reasonableness of Defendants’ initial efforts to preclude production, subsequent warnings that something was “profoundly awry with their document production and privilege review” failed to result in Defendants’ discovery that privileged information had been produced.

In the course of discovery, Defendants’ counsel reviewed the contents of 14 boxes of documents for possible privilege.  Six of those boxes (the “Ryan/McKenna documents”) came from the files of Defendants’ prior counsel, and thus were reviewed by a partner.  The remaining eight boxes (the “Borough documents”) were reviewed by associate attorneys.  Following her review, the partner who reviewed the Ryan/McKenna documents instructed a clerical employee to separate the privileged and non-privileged documents, to have them separately Bates stamped, and to burn the non-privileged documents to a CD.  That CD was produced to the plaintiff following counsel’s review of “the final form”, but not the contents.  Unfortunately, the clerical employee failed to separate privileged and non-privileged documents in four of the boxes containing Ryan/McKenna documents, resulting in the production of privileged information.

Thereafter, a secretary assisting the partner in this matter realized that the CD produced to Plaintiff contained some of counsel’s electronic comments and also determined the information could be more efficiently organized.  Thus, the original CD was recalled, the comments were removed, the documents were re-organized, and the contents were again produced to Plaintiff, including the privileged Ryan/McKenna documents.  Counsel did not conduct a re-review of the contents of the new CD prior to production.

The next month, Plaintiff informed Defendants that the newly produced disc was unreadable.  Accordingly, Defendants recalled the disc and re-produced it, following a clerical employee’s “quality control audit” to “confirm that the same documents were being produced . . . .”  During this time, defense counsel also began the process of creating the necessary privilege logs, but failed to realize there were fewer entries for the Ryan/McKenna documents than there should have been.

Several months later, Plaintiff again informed Defendants of a problem with the production: the documents on the third CD were out of order.  The problem was confirmed by defense counsel but was determined to be limited to Borough documents (not Ryan/McKenna documents).  Prior to reproduction of the affected documents, counsel noticed that hundreds of privileged documents had previously been mistakenly included.  Thus, those documents were not included on the new disc and were instead added to the privilege log.  The discovery of mistakenly produced Borough documents did not result in a re-review of the Ryan/McKenna documents, however, and the presence of privileged documents in that production thus remained undetected.  In fact, the production of privileged Ryan/McKenna documents was not discovered until approximately eight months later, when several were attached as exhibits to Plaintiff’s briefing on an unrelated matter.  Upon investigation, defense counsel determined that approximately 1000 pages of privileged Ryan/McKenna documents had been produced and thereafter sought their return.

Taking up the question of waiver, the court indicated its reliance on Fed. R. Evid. 502(b) and its consideration of the following factors:

“‘(1) the reasonableness of the precautions taken to prevent inadvertent disclosure in view of the extent of the document production; (2) the number of inadvertent disclosures; (3) the extent of the disclosure; (4) any delay and measures taken to rectify the disclosure; and (5) whether the overriding interests of justice would or would not be served by relieving the party of its error.’”

Ultimately (and summarizing the analysis broadly in the interest of brevity), the court determined that the privilege had been waived as to the mistakenly produced Ryan/McKenna documents.  Specifically, although the court found that Defendants’ initial efforts to prevent disclosure were reasonable and that “the number and extent of the disclosures” were “neutral factors,” the court also concluded that Defendants “did not take reasonable steps to remedy their error.”  The court further concluded that “Defendants should have been aware that something was amiss with their document production long before Plaintiff relied on three privileged documents” in his brief and found that “the combination of the inadvertently produced attorney electronic comments and 728 pages of privileged Borough documents should have put [Defendants] on notice that something had gone awry with their production and privilege review.”  Moreover, the court indicated that it was not reasonable for Defendants to fail to re-review the Ryan/McKenna documents following the discovery that privileged Borough documents had been produced and found that “the problems experienced by the [Defendants] with their production of the Borough documents and Ryan/McKenna documents would have spurred a reasonable person to recheck the entire contents” of the disk on which the privileged Borough documents were initially discovered (the third disk produced by Defendants).  Indeed, although FRE 502(b) “‘does not require the producing party to engage in post-production review to determine whether any protected communication of information has been produced by mistake[,]’ it ‘does require the producing party to follow up on any obvious indications that a protected communication or information has been produced inadvertently.’”  As to the final factor, the court found that the interests of justice favored waiver.

Finally, while the court acknowledged that it “appear[ed] that Plaintiff’s counsel violated their duty under RPC 4.4(b)” to inform Defendants that they had produced privileged material and that such a violation weighed against a finding of waiver, the court determined that “on balance” it did not overcome Defendants’ “failure to re-review their entire production after it became clear that there was something amiss with their document production and review.”

Interestingly, in defining the narrow scope of Defendants’ waiver, the court noted that while it had determined that the disclosure “was not inadvertent, meaning the Borough Defendants shall not be permitted to reclaim the same, the Court has also determined that the Borough Defendants’ disclosure was unintentional.”  The difference between inadvertent and unintentional, however, was not a focus of the court’s opinion.