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Clawback Agreement Doesn’t Save Documents Inadvertently Produced Twice from Privilege Waiver: eDiscovery Case Law

This is another case from earlier this year that we never got around to covering.  Why are we catching up on covering cases this week?  Find out tomorrow… :o)

In Irth Solutions, LLC v. Windstream Communications LLC, No. 2:16-CV-219 (S.D. Ohio Aug. 2, 2017), Ohio Magistrate Judge Kimberly A. Jolson, rejecting the idea that a clawback agreement always protects against waiver of privilege for inadvertently disclosed materials, found that privilege was waived by the defendant’s inadvertent but “completely reckless” production of privileged materials – not once, but twice.

Case Background

In this breach of contract case, the parties “agreed that a formal court order under Fed. R. Evid. 502(d) was not necessary based on the scale of the case”, but did enter into a clawback agreement that included a provision that “[i]nadvertent production of privileged documents does not operate as a waiver of that privilege.”  During discovery, the defendant produced 2,200 hundred pages which inadvertently included 43 privileged documents totaling 146 pages.  Defense counsel realized the mistake twelve days later while preparing a privilege log and immediately sought to claw the documents back, but plaintiff’s counsel refused to return or destroy the documents; however, they did represent that once the dispute arose, they sequestered the documents and refrained from discussing them with their client.

As requested by the Court, defense counsel submitted the 43 documents for in camera inspection, which revealed that nearly a third of them (14 documents) contained the word “legal” and the signature block of in-house counsel was referenced in two others.  Nonetheless, defense counsel insisted the documents had been reviewed for privilege.

Then, six weeks later, while dispute over the first production “ensued”, the defendant once again produced the 43 privileged documents to the plaintiff as part of re-producing the same 2,200 pages because the first production wasn’t text searchable.  Defense counsel indicated that they performed a “spot check” of the documents before they were produced via FTP, but did not observe that they contained the same privileged documents from the original production.

Judge’s Ruling

Judge Jolson, while noting that she did not get to hear from the “second-year associate who allegedly performed the privilege review prior to the first production and the litigation support staff member who allegedly erred during the second production”, nonetheless assumed arguendo, that Defendant has met its burden of showing that the two productions qualify as inadvertent.”

Judge Jolson then turned to the “impact” of the parties’ clawback agreement on the question of waiver, citing three frameworks applied by other courts: “(1) if a clawback is in place, it always trumps Rule 502(b); (2) a clawback agreement trumps Rule 502(b) unless the document production itself was completely reckless; and (3) a clawback agreement trumps Rule 502(b) only if the agreement provides concrete directives regarding each prong of Rule 502(b)”.

Rejecting the first approach as it would “undermine the lawyer’s responsibility to protect the sanctity of the attorney-client privilege”, Judge Jolson then considered the second and third frameworks.  Determining that defense counsel “reviewed a limited number of documents and made critical and reckless mistakes”, Judge Jolson stated that she “need not choose” between the second and third frameworks because “when taking into account the careless privilege review, coupled with the brief and perfunctory clawback agreement, following either approach leads to the same result: Defendant has waived the privilege.”  As a result, Judge Jolson ruled that the defendant had waived privileged on the twice inadvertently produced documents.

So, what do you think?  Should clawback agreements protect parties from any inadvertent disclosure?  Would a 502(d) order have protected the defendant here?  Please share any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of eDiscovery Assistant.

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