Risks associated with the inadvertent disclosure of privileged or work-product evidence have grown recently but courts are divided in their response. Careful preparation and review of documents being produced in response to a discovery request remains the best way to avoid inadvertent waiver of privilege.
Accidentally producing privileged or work-product evidence is among a lawyer’s worst nightmares. The risk of this discovery pitfall has grown under the recent amendments to the Federal Rules of Civil Procedure, which expressly require production of electronic evidence. Knowing the relevant professional and procedural rules and case law regarding whether inadvertent production waives the attorney-client privilege will help you avoid this danger, or at least increase the likelihood of judicial relief should an error occur.
Professional responsibility and civil procedure rules put the lawyer inadvertently producing privileged evidence or work product in a position to address the problem. If an attorney receives privileged material the attorney “knows or reasonably should know … was inadvertently sent,” the lawyer is obligated by Minnesota Professional Conduct Rule 4.4 to notify the sender. Attorneys litigating in federal court have some additional protection. Federal Rule of Civil Procedure 26(b)(5)(B) requires a party notified that it has received information subject to a claim of privilege or work product to “promptly return, sequester, or destroy the specified information” and refrain from using it until the claim has been resolved.
Waiver of Privilege?
Once inadvertent production is apparent, is judicial relief available? Courts are divided on the issue of whether and under what circumstances accidental disclosure of privileged documents waives attorney-client or work-product protection (“privilege”). The federal courts fall into three camps. Under the “strict approach,” any disclosure, voluntary or inadvertent, defeats the privilege.1 Courts applying the “strict” standard reason that it is necessary to encourage parties to use greater care in labeling documents as privileged and in preserving their confidentiality.2
At the other extreme is the “lenient standard,” which finds waiver only if the disclosure was knowing.3 Jurisdictions adopting the “lenient” test argue that the client should not bear the burden of the lawyer’s negligence.4
The majority of courts, however, have followed an “intermediate approach.”5 This test considers five factors in determining whether the inadvertent dissemination of protected evidence works a waiver of the privilege:
1) the reasonableness of the precautions taken to prevent inadvertent disclosure;
2) the amount of time it took the producing party to recognize its error;
3) the scope of the production;
4) the extent of the inadvertent disclosure; and
5) the overriding interest of fairness and justice.6
The Law in Minnesota
Although the 8th Circuit has not addressed the standard it would follow in a federal question case, the court has expressed a preference for the intermediate approach. In ruling in Gray v. Bicknell, a diversity action, that the Missouri high court would apply the intermediate test, the court noted, “[t]he middle test is best suited to achieving a fair result. It accounts for the errors that inevitably occur in modern, document-intensive litigation, but treats carelessness with privileged material as an indication of waiver.”7
Taking Gray’s cue, Magistrate Judge Boylan used the intermediate approach in Starway v. Independent School District No. 625, 187 F.R.D. 595, 597 (D. Minn. 1999), a federal question case. InStarway, Judge Boylan ruled a school district that mistakenly produced a single memorandum its counsel sent to an administrator did not waive its attorney-client privilege. He noted the district produced a total of 541 pages of documents and an attorney, rather than staff, reviewed them for privilege. Moreover, defense counsel immediately asserted the privilege and demanded return of the document when it learned of the error. Judge Boylan rejected the plaintiff’s contention that justice required a waiver ruling, because the document could be used to impeach a defense witness, given that the plaintiff was not entitled to the document in the first place. He concluded that the district did not waive its privilege because it took reasonable precautions against error.
Starway is the only reported Minnesota case discussing a standard on whether inadvertent production waives the privilege. In Lundman v. McKown, 530 N.W.2d 807 (Minn. App. 1995), the Minnesota Court of Appeals affirmed an order excluding from evidence the handwritten notes from a client to his lawyer in an unrelated matter. The court simply stated that the attorney-client privilege protected the notes and that plaintiff produced them inadvertently. The Lundman court’s summary disposition of the issue may show the Court of Appeals favors the “lenient” test requiring knowing waiver of the privilege. However, Lundman is a 30-page opinion covering a multitude of legal issues. Its terse disposition of the question cannot be viewed as definitive.
At least one state district court is persuaded of the intermediate test’s value.8 The defendant in Thomason v. Sappi-Cloquet, LLC accidentally disclosed two documents prepared by counsel and protected by the work-product doctrine as part of a production in excess of 500 pages. Judge Macaulay had little difficulty holding that the defendant did not waive the privilege. He observed that the defendant sought a protective order as soon as it became aware of the disclosure. Citing Starway, he noted that justice concerns favored the defendant. On review, the Minnesota Court of Appeals affirmed without employing the inadvertent disclosure analysis.9 The court merely stated that the issue could be determined on the basis of attorney-client privilege alone.10 Its cursory citation to the privilege again raises the possibility that the court views waiver as limited to intentional production cases.
The Minnesota Supreme Court should follow the apparent lead of the 8th Circuit and adopt the intermediate test. The strict standard is unrealistic. Errors are unavoidable in complex contemporary litigation. On the other hand, the lenient test does not encourage lawyers to thoroughly protect privileged evidence. The intermediate standard accords the attorney-client privilege and work-product doctrines the value they deserve, while ensuring there are consequences when attorneys are careless.
The Intermediate Test
As in Starway, the many jurisdictions adopting the intermediate test give great weight to the degree of care the lawyer uses in document review and production. The number of inadvertently produced privileged documents and the quantity of the overall production also influence the courts. In Amgen Inc. v. Hoeschst Marion Roussel, Inc., 190 F.R.D. 287, 292 (D. Mass. 2000), the defendant’s lawyers identified as privileged 3,000 of 200,000 pages of documents to be produced. The defendant boxed the privileged documents and placed them on a shelf separate from the nonprivileged documents.Based on a paralegal’s error, the copy vendor copied the privileged documents with the other documents. As a result, the defendant produced all of its privileged documents to the plaintiff. The court commented that review of the copied documents by a knowledgeable lawyer or paralegal would have revealed the error. In addition, defense counsel did not discover the error for five days. Accordingly, under the intermediate test, defendant’s precautions were inadequate given the breadth of the inadvertent disclosure.
Similarly, in Pucket v. Hot Springs School District No. 23-2, No. 03-5-33-KES, 2006 WL 3861001 (12/19/06), the South Dakota Federal District Court focused on the scope of disclosure and counsel’s precautions in ruling that defendant did not waive the attorney-client privilege through mistaken disclosure. Defendant accidentally produced a one-sided copy of a two-sided document. Later, counsel produced a file containing the two-sided document, thinking it was identical to the previously produced document. The second side of the document contained attorney-client communications. The defendant persuaded the court that it took appropriate precautions, in part because an attorney and paralegal had reviewed the file before production. The court also recognized that the disclosure was narrow, involving 66 text lines in a 13-page document.11
Prevention is the best medicine. As Starway’s approach counsels, lawyers should always carefully train staff performing document review and use attorney personnel whenever possible. Supervising the document reviewers is equally important. It is also critical to inspect the copied documents before producing them, even if only on a spot-check basis for mass productions. However, no document production is flawless. Federal Rule of Civil Procedure 26(f)(4), as amended in December 2006, provides an alternative preventive measure: a prediscovery “claw-back” agreement. Rule 26(f)(4) allows the parties to incorporate any stipulation on a procedure to assert privilege claims after production in their discovery plan and to ask the court to include it in an order. Negotiating a claw-back agreement in which the parties consent to return privileged material mistakenly produced and refrain from using it largely prevents any harm caused by this inherent discovery risk.
1 See Texaco Puerto Rico, Inc. v. Dep’t of Consumer Affairs, 60 F.3d 867, 883-84 (1st Cir. 1995); In re Sealed Case, 877 F.2d 976, 980 (D.C. Cir. 1989); Ares-Serono, Inc. v. Organon Internat’l B.V., 160 F.R.D. 1, *4 (D. Mass. 1994).
2 See In re Sealed Case, 877 F.2d at 980.
3 See Redland Soccer Club, Inc. v. Dep’t of Army, 55 F.3d 827, 856 (3d Cir. 1995); Transam. Comp. Co. v. Internat’l Bus. Mach. Corp., 573 F.2d 646, 651 (9th Cir. 1978); In re Southeast Banking Corp. Sec. and Loan Loss Res. Lit., 212 B.R. 386, 392 (Bankr. S.D. Fla. 1997).
4 Georgetown Manor, Inc. v. Ethan Allen, Inc., 753 F.Supp. 936, 939 (S.D. Fla. 1991).
5 See, e.g. Alldread v. City of Grenada, 988 F.2d 1425, 1434 (5th Cir. 1993); Amgen Inc. v. Hoescht Marion Roussel, Inc., 190 F.R.D. 287, 292 (D. Mass. 2000); Snap-On Inc. v. Hunter Engineering Co., 29 F.Supp.2d 965, 971 (E.D. Wis. 1998); U.S. v. Gangi, 1 F.Supp.2d 256, 264 (S.D. N.Y. 1998).
6 Gray v. Bicknell, 86 F.3d 1472, 1483-84 (8th Cir. 1996), citing Hydraflow, Inc. v. Enidine Inc., 145 F.R.D. 626, 637 (W.D. N.Y. 1993).
7 Id. at 1494-84. Accord Alldread, 988 F.2d at 1434.
8 See Thomason v. Sappi-Cloquet, LLC, C7-03-87, 2004 WL 5150465 (6th Dist. 07/23/04).
9 See Thomason v. Sappi-Cloquet, LLC, A05-2031, 2006 WL 1985474 (Minn. App. 07/18/06).
10 Id. at *1 n.1.
11 Pucket v. Hot Springs School District No. 23-2, No. 03-5-33-KES, 2006 WL 3861001 (12/19/06) at *11. See also U.S. v. Gangi, 1 F.Supp.2d 256, 265 (S.D. N.Y. 1998); Georgetown Manor, Inc. v. Ethan Allen, Inc., 753 F.Supp. 936, 939 (S.D. Fla 1991); Long Island Lighting Co. v. Allianz Underwriters Ins. Co., 749 N.Y.S.2d 488, 496 (N.Y. App. Div. 2002); PacifiCorp v. Dep’t of Revenue, 838 P.2d 914, 919 (Mont. 1992).
SARAH MORRIS is an attorney with the law firm of Lind Jensen Sullivan & Peterson PA in Minneapolis, concentrating her practice in labor & employment law and insurance coverage. She is a 1991 graduate of the University of Minnesota Law School.