Court Remands to Magistrate Judge Question of Whether Privileged Emails Printed and Produced by E-Discovery Vendor Should Be Returned

Amersham Biosciences Corp. v. PerkinElmer, Inc., 2007 WL 329290 (D.N.J. Jan. 31, 2007 (Unpublished)

In this case, plaintiff claimed that it inadvertently produced over 500 privileged emails that had been deleted from a single Lotus Notes DVD, but were nonetheless printed and produced by its outside e-discovery vendor. According to plaintiff, the privileged emails (and other non-responsive emails) had been segregated into subfolders, and these subfolders had been deleted prior to the submission of the DVD to a vendor for processing. Plaintiff blamed this inadvertent production on the fact that in the Lotus Notes application (as distinguished from Microsoft Outlook and other email platforms), even though emails had been moved and segregated into separately labeled subfolders, and said folders subsequently deleted, a copy of these emails still remained in the larger folder structure. As such, when Applied Discovery converted the emails from their native form into single page image files, the emails which plaintiff had allegedly segregated into a “privileged” subfolder, and subsequently deleted, actually remained in the larger folder structure, and were thus produced to the defendant.

After having discovered the error in April 2005, plaintiff contacted defendant to inform it of the error.  Plaintiff subsequently sought the return of the inadvertently produced documents, which defendant opposed.  Defendant claimed that, although it was notified in April 2005 that certain documents had been inadvertently produced, it was not notified as to specifically which documents comprised the inadvertently produced documents until July 2005.  Thus, defendant argued that plaintiff’s application for the return of the documents should be denied because plaintiff violated the terms of the parties’ Protective Order by failing to make its best efforts in identifying such privileged emails, and secondly, because prompt notice was not given to the defendant as to the inadvertent disclosure of same.

The parties also disagreed on whether plaintiff should be able to recover a separate group of 37 electronic documents (the “Non-Lotus Notes Documents”) which had been allegedly inadvertently produced by plaintiff, again as a result of actions taken by its e-discovery vendor.

Magistrate Judge Ronald J. Hedges concluded that plaintiff had not waived any privilege applicable to the Lotus Notes Documents, and was thus entitled to their return.  In reaching this decision, Magistrate Judge Hedges noted that the inadvertently produced Lotus Notes Documents “were imbedded in metadata and were not apparent on the face of the documents, [and as a result] Perkinelmer knew or should have known that the information which was retrieved from the metadata was not intended for disclosure.”  As to the Non-Lotus Notes Documents, Magistrate Judge Hedges determined that plaintiff had waived any privilege that may have protected them.

The parties appealed the rulings, and District Court Judge Jose L. Linares reviewed de novo the magistrate’s application of law to the facts of the case.  With respect to the Lotus Notes Documents, the court found that Magistrate Judge Hedges had based his conclusion on a misunderstanding of fact, since he had found that plaintiff’s counsel was not able to detect the error before the material was produced.  Based on this factual error, Magistrate Judge Hedges had concluded that plaintiff’s four-step review process constituted a sufficiently reasonable precaution, and that defendant necessarily “went beyond the confines of the face of the documents and [wrongfully] uncovered hidden information.” 

In fact, in its briefings before the district judge, plaintiff admitted that the error (i.e., the production of documents which had been segregated and removed from the line of production) was, in fact, apparent on the face of the documents – they were, on their face, privileged.  Further, each of the Lotus Notes Documents had been Bates-stamped, and were stamped with the level of confidentiality chosen by plaintiff.  The court found that the magistrate’s legal conclusions were based upon a critical factual misunderstanding.  Accordingly, the court reversed and remanded the matter to the magistrate for a re-evaluation of whether plaintiff preserved the privilege with respect to the Lotus Notes Documents and was thus entitled to their return.

With respect to the 37 Non-Lotus Notes Documents, the district judge upheld the magistrate’s decision that any privilege had been waived.  Unlike the detailed explanation as to how the Lotus Notes Documents came to be inadvertently produced, plaintiff submitted that, “[o]ur investigation of these additional 37 documents is not conclusive, but we believe the most likely explanation for production of these additional [documents] is that the CDs and DVDs produced to us contained email archives or other files that the attorney reviewer marked as ‘unreadable’ which were then processed (i.e., TIFFed) by our outside vendors and produced.”  At the hearing before the magistrate, plaintiff’s counsel further explained:

Well, I think-we don’t have a full explanation for those either, Your Honor. Those appear to be a case of true inadvertence.  We were able to determine that a number of them had been initially unreadable files, meaning the-the CDs that were sent to us from the clients that contained native electronic files, also contained certain additional files that were in software that are-was unavailable to us.  These were all coming from Whales and-and the U .K.  When we sent them to the vendor for processing, they were processed, because the vendor had the appropriate software, and not deleted; and, therefore, they were produced.

(Citation to the record omitted.)  The court found that Magistrate Judge Hedges did not abuse his discretion in determining that plaintiff had not taken sufficiently reasonable precautions to avoid the inadvertent disclosure of any such privileged documents, nor was such a finding contrary to law.  It concluded:  “Accordingly, because the Court agrees that turning over unintelligible or unreadable documents to an adversary evidences a lack of reasonable precaution, [the order as to the Non-Lotus Notes Documents] is hereby affirmed.”