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Wal-Mart is Allowed to Clawback Inadvertent Disclosures, But Still Sanctioned Over What They Revealed: eDiscovery Case Law

In Bellamy v. Wal-Mart Stores, Texas, LLC, No. SA-18-CV-60-XR (W.D. Tex. Aug. 19, 2019), in a case that was discussed earlier this week at Relativity Fest, Texas District Judge Xavier Rodriguez ruled that the defendant was entitled to “claw back” the documents it inadvertently produced in the case, but still considered those documents in analyzing the plaintiff’s motion for sanctions and granted that motion to the extent that he ruled that the defendant could not assert any comparative negligence defense in this case, including arguing that the danger (of a pallet being left unattended in the store) was open and obvious.

Case Background

In this case involving a slip and fall, the plaintiff alleged that she sustained severe injuries to her knees and ankles when she tripped over a pallet in one of the defendant’s stores.  After the Magistrate Judge ordered the defendant to supplement its disclosures and discovery responses and provide the plaintiff with a privilege log as to any withheld documents as part of dismissing an earlier plaintiff motion for sanctions without prejudice, a paralegal in counsel for the defendant’s office inadvertently produced documents that the defendant claimed were privileged under the attorney-client privilege or work product. While arguing that some of the inadvertently produced documents were not privileged, the plaintiff also argued that the inadvertently produced documents demonstrated that defendant’s counsel acted in bad faith and engaged in discovery abuse.

Judge’s Ruling

While noting that “This Court encourages parties to enter into a Rule 502(d) Order” (which we have covered here previously), Judge Rodriguez also remarked that failing to request such an order “was the first of many mistakes by Defendant’s counsel in this case”, so he performed an analysis under Rule 502(b) to determine whether the defendant had waived privilege for the inadvertently disclosed documents.

Because the plaintiff ultimately conceded the documents were privileged after an in camera review by the Court, the Court decided not to “dwell on this issue”.  But, Judge Rodriguez did remark that “the privilege log was woefully deficient”, noting that he was “unable to ascertain the identities of various recipients of the emails in question.”  Nonetheless, finding that the disclosure was inadvertent, that the defendant took reasonable steps to prevent disclosure and that the defendant promptly took reasonable steps to rectify the error, Judge Rodriguez ruled that “Defendant is entitled to ‘claw back’ the documents it inadvertently produced” under Rule 502(b).

However, Judge Rodriguez also stated: “But that is not the end of this analysis. Although Plaintiff may not further use these documents in this case, preventing their use in analyzing the pending motion for sanctions would result in a perverse result, upending the rules of civil procedure and encouraging discovery abuse.”  In reviewing the inadvertently produced emails, Plaintiff’s counsel became aware of the following:

  • As early as July 23, 2018, Defendant’s counsel knew of the identity of the store manager who interviewed Plaintiff shortly after her accident;
  • As early as July 23, 2018, Defendant’s counsel knew of the identity of the employee who left the pallet unattended;
  • By August 6, 2018, counsel for Defendant knew of the addresses and phone numbers for these two persons; and
  • By February 9, 2019, counsel for Defendant knew the identity of the asset protection manager that was supposed to obtain the surveillance footage.

However, the defendant failed to list these individuals in their Rule 26(a)(1) initial disclosures and failed to timely list them in answers to interrogatories.  Judge Rodriguez stated: “It is apparent from a reading of the materials submitted either Defendant’s counsel was grossly negligent in fulfilling their discovery obligations or they realized they had an uncooperative manager who was refusing to assist in their investigation, and they did not want to disclose the identities of potentially ‘bad’ witnesses.”

In reviewing the inadvertently produced emails, Plaintiff’s counsel also became aware of the following:

  • On November 21, 2016, the manager completed a Document Preservation Directive requesting that surveillance video be collected, along with photos taken at the scene and the statement from the customer;
  • By January 16, 2018, Defendant was aware that the store lost the video and that the store manager was refusing to provide any statement;
  • Wal-Mart’s outside claim investigation agency reported that exposure on this claim was probable and suggested that the claim be “compromise[d] to avoid spoliation potential”; and
  • On June 29, 2018, one of Defendant’s outside counsel wrote an email to “Travis Rodmon-Legal” indicating that the claim file notes video from the scene was saved; “however, the Walmart discovery sources have not been able to provide a video to date.”

Judge Rodriguez stated: “Counsel for Defendant never disclosed to Plaintiff’s counsel that at one time video may have existed that was now lost. Rather, counsel merely kept repeating that video does not exist.”  It was also discovered that the defendant hired an investigator to conduct an undisclosed full social media/background check on the plaintiff on June 20, 2018.

While noting that the defendant had a duty to preserve the video, that it failed to take reasonable steps to preserve that video and that the video cannot be restored or replaced through additional discovery, Judge Rodriguez stated that “Rule 37(e)(2) is not applicable because Plaintiff has failed to establish that Wal-Mart acted with the intent to deprive her of the video.”  But he did rule that “Plaintiff has established prejudice under Rule 37(e)(1)” and, noting that “Defendant has raised a contributory negligence defense in this case” (arguing that the danger of the pallet was open and obvious), ruled that “Defendant may not assert any comparative negligence defense in this case, including arguing that the danger was open and obvious.”

So, what do you think?  Should inadvertently disclosed privileged documents be considered in ruling on sanctions motions?  Please let us know if 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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