The buck stops here.
In Thorncreek Apartments III, LLC v. Village of Park Forest (N.D. Ill. Aug. 9, 2011), the Northern District of Illinois held that a litigant that was negligent throughout the discovery process and failed “to check the production database created by the [third-party e-discovery vendor] before it went live online and became available to [opposing] counsel” waived privilege with respect to inadvertently produced documents. (emphasis in original). It is noteworthy that the court never called into question the conduct of the e-discovery vendor. Rather, the first line of defense in such cases clearly lies with the litigant who claims privilege.
Looking forward, the necessary re-review of any production database may involve tens of thousands of documents marked as privileged. In this case, a lengthy review of 250,000 documents yielded 159 documents claimed as privileged, all of which were produced inadvertently. (Such a review thus would have been easy.) However, the set of documents that might be turned over to opposing counsel is as voluminous as those designated as privileged or otherwise non-responsive. The risks are real; the responsibility imposed on counsel will require serious effort; and the stakes are enormous.
The district court agreed with the plaintiff’s request for an Order finding that six of the 159 documents produced inadvertently by the defendant were not protected from disclosure and that privilege had thereby been waived.
Electronic discovery here was conducted by a major vendor and proceeded in three steps:
- Backup tapes were searched based on parameters agreed upon by both the parties and, in some cases, ordered by the court.
- The vendor placed the documents into an online database where they were secured for the defendant’s sole use. The defendant then designated them as privileged, responsive, or non-responsive.
- The vendor placed those documents labeled for production into a database where the plaintiffs could review them.
Things then went awry. The defendant claimed that the production database also contained and thus allowed the plaintiffs to review privileged documents. Although this was true, the defendant—and no one else—soon found itself in hot water with the court.
Discovery in this matter rolled over the course of seven months during which the defendant exhibited what charitably might be described as a laissez-faire approach. The court stated:
At no time during this seven-month production did the [defendant] contact [the plaintiff] to state that privileged documents had been inadvertently produced. At no time during this period did the [defendant] produce a privilege log, an act that would have disclosed that the [defendant] had intended to withhold documents on the basis of privilege. [Plaintiff’s] counsel has submitted an unrebuked affidavit that she had at least three telephone conversations between June and September 2009 with the [defendant’s] counsel, during which she asked whether any documents had been withheld from the [defendant’s] production. According to [plaintiff’s] counsel, the [defendant’s] counsel replied that it was not withholding any documents, and as a result [the plaintiff] did not expect to receive a privilege log.
The defendant subsequently did in fact produce its first privilege log — ten months after discovery began. It identified 159 documents that were placed in the production database notwithstanding the fact that it had designated them as privileged. The parties resolved all privilege disputes as to those documents except for the six documents that the plaintiff brought to the court’s attention.
The court applied relevant Seventh Circuit precedent (with heavy reliance on the Sixth Circuit) as well as Federal Rule of Evidence 502, which establishes when the disclosure of privileged information results in waiver. The court emphasized that the plaintiff here bore the burden of proving non-waiver in the face of inadvertent disclosure. The court agreed that the disclosure was inadvertent, which left the question of waiver. The defendant pointed its finger at someone else—its e-discovery vendor—arguing that it thought that that merely marking documents as privileged was sufficient to puts its vendor on notice that those documents should be withheld from production. Not so fast, said the court, stating that it had “little confidence in the reasonableness of the [defendant’s] precautions.” Those are hardly reassuring words, but the court didn’t stop there:
It would have been a simple matter for the [defendant] to check the production database created by [the e-discovery vendor]—before it went live online and became available to [the plaintiff]—to verify that privileged documents were not disclosed. Plainly, [the defendant] did not do so. Given the importance that parties typically attach to protecting even arguably privileged communications, one would have expected the [defendant] to perform such a verification check. The failure to do so is strong evidence of the inadequacy of the [defendant’s] precautions.
The court added that over the course of nine months from the start of discovery until the defendant finally served its privilege log, every single one of the documents on that log had already been produced. The court’s frank assessment? The defendant had “no inkling” as to which documents were in the production database and “was not paying any attention whatsoever” to what documents its opponent in the litigation was selecting from the database. No need to mince words. Not surprisingly, privilege was waived.
Thorncreek may produce a sigh of relief among e-discovery vendors, at least based on these facts. There are myriad scenarios that are equally plausible and would probably result in a different outcome, but the courts will address them if and when they arise. In the meantime, counsel has been warned: electronic discovery is not the bailiwick of third-party vendors alone. Absent active involvement in—and indeed control of—the e-discovery process, serious repercussions may ensue.