Inadvertent Production

Inadvertent Production

Every large production is assembled by people and software, and sooner or later a document the holder meant to withhold goes out with the rest. Two questions follow at once. The procedural question is what happens to the document while the parties dispute the claim. The substantive question is whether the mistake cost the holder its protection. Rule 26(b)(5)(B) answers the first, and Federal Rule of Evidence 502(b) answers the second; an answer that stops at getting the document back has handled only half the problem.

Rule 26(b)(5)(B) runs in sequence. If information produced in discovery is subject to a claim of privilege or of protection as trial-preparation material, the party making the claim may notify any party that received the information of the claim and the basis for it.¹ After being notified, a recipient must promptly return, sequester (set aside and keep apart), or destroy the specified information and any copies; must not use or disclose the information until the claim is resolved; and must take reasonable steps to retrieve the information if it disclosed it before notice. The recipient may also promptly present the information to the court under seal for a determination of the claim, and the producing party must preserve the information until the claim is resolved.² The December 2006 amendment to Rule 26(b)(5) supplied this uniform procedure for claims that inadvertently disclosed material is privileged or protected as work product or trial-preparation material.³

The rule freezes the situation because of what each side knows when the notice arrives. The notice is an assertion by the party that made the mistake, and the recipient may doubt it. If the recipient could read, copy, and use the document while that doubt was settled, the claim would be decided after the harm it was meant to prevent, because no lawyer can unlearn what a document says. A recipient made to set the document aside loses only time if the claim fails. So the rule takes the document out of use, sends the dispute to a court, and leaves the recipient free to argue that the claim should fail.

The freeze also marks the rule's limit. Its text speaks of a claim that must be “resolved” and of a court's “determination of the claim,” but it never says when the claim should succeed.⁴ Whether the mistake forfeited the protection is a separate question, and Rule 502(b) governs it. The subsections below follow the problem as it unfolds: the producing party's notice, the receiving party's duties once notice arrives, and the waiver inquiry that decides whether the protection survived.

Notice by the Producing Party

Notice is the producing party's task, and every other duty in the rule waits on it. The party making the claim “may notify any party that received the information of the claim and the basis for it,” and each recipient's duties (to return, sequester, or destroy the information, to refrain from using it, and to retrieve copies already passed along) begin only when that recipient is notified.⁵ The trigger sits with the producing party because a recipient cannot tell from the production which items were meant to be withheld; a document sent by mistake looks exactly like one sent on purpose. The notice turns the holder's private knowledge into a fact the other side must act on.

The notice makes two statements, and each does its own work. The first is the claim: whether the information is privileged, protected as trial-preparation material, or both. The label matters because the two protections rest on different elements and are overcome in different ways, as earlier sections of this chapter showed. The notice must also identify the information, because the recipient's duties attach to “the specified information” and its copies, and a message saying only that something in the production is protected leaves the recipient nothing to sequester. The second statement is the basis for the claim. It gives the recipient what it needs to decide whether to comply or to contest, and the rule lets a recipient contest by presenting the information to the court under seal.⁶ As with a log of withheld documents, a claim that cannot be assessed cannot be answered sensibly.

Notice goes to “any party that received the information,” and each recipient's duties run from its own notification. A producing party that wants every copy frozen must therefore notify every recipient.

The text of Rule 26(b)(5)(B) sets no deadline for notice, which can make timing look optional. It is not. Federal Rule of Evidence 502(b) treats an inadvertent disclosure as no waiver only if, among other conditions, the holder “promptly took reasonable steps to rectify the error, including (if applicable) following Federal Rule of Civil Procedure 26(b)(5)(B).”⁷ Notice is the first rectifying step, and the first one a court will look for. The practical reasons point the same way. Each day the recipient holds the information is a day on which it can be read, copied, forwarded, or used to question a witness, and the rule itself assumes that a recipient may have passed the information along before notice arrived.⁸

In Coburn Group v. Whitecap Advisors LLC, the holder gave notice as the rule contemplates. Whitecap's counsel learned that an e-mail had been produced when Coburn's counsel began questioning a Whitecap witness about it at a deposition on July 14, 2008, and he objected on the spot. The next day, at another deposition, he said the e-mail was privileged and work-product protected and asked for its return; he asked again two days later.⁹ Each step did its own work. The objection marked the document as contested the moment it surfaced, the next-day statement identified the e-mail and the protection claimed, and the request for return invoked the remedy.

The claim also had substance. The court's in camera review showed that the e-mail was work product: it was sent on September 26, 2007, more than four months after the lawsuit was filed, and it passed along information about Whitecap's dealings with Coburn so that attorneys already representing Whitecap could respond to requests.¹⁰ Whitecap gave Coburn time to research the issue in return for counsel's promise to “quarantine” the documents and not use or disseminate them. On August 5, 2008, Coburn's counsel refused to return the documents but agreed to keep them secured until the court decided, and Whitecap filed its motion on September 5, 2008.¹¹ One term of the arrangement is revealing: Coburn's counsel agreed not to cite Whitecap's delay in bringing a motion as evidence that Whitecap did not regard the documents as protected. The concession shows that a recipient is otherwise free to make that argument.

Rhoads Industries v. Building Materials Corp. supplies the contrast. On June 5, 2008, a defendant's counsel e-mailed Rhoads's counsel that apparently privileged documents had been produced, and Rhoads replied at once that no privilege had been waived and that the production was likely inadvertent. Over the next two and a half weeks Rhoads took nine depositions and answered a motion to dismiss before it turned to the privilege question. It then identified 812 of the 78,000 e-mails it had produced as privileged and, on June 30, served a log with a letter invoking Rule 26(b)(5)(B) and asking the defendants to sequester the documents.¹² The quick reply was a general assertion; the step that named the documents and invoked the rule came twenty-five days after the warning. The court took up waiver as to those 812 documents under a multifactor analysis, and the interval was part of the record before it.¹³

The two disputes begin alike, with a holder who learns that protected material is in the other side's hands. In Coburn the holder acted within a day and put both the claim and the protection on the record. In Rhoads the holder gave a general reply and turned to other litigation tasks. A general reply does not take the place of a notice that identifies the information and states the claim and its basis, because the recipient's duties attach to the specified information. Delay did not decide Rhoads, as the discussion of Rule 502 below shows, but a holder who waits carries the interval into the waiver inquiry, where the other side can point to it.

Fact patterns usually set the trap at steps three and four. A stem that reports a quick, general protest followed by weeks of other litigation activity describes a holder who has not yet given the notice the rule describes, and the delay will count in the waiver analysis. A stem that reports an immediate objection, a request for return naming the document and the protection, and the recipient's agreement to hold the material describes notice working as designed. Notice starts the process of resolving the claim and leaves the result to a court, so an answer that stops at sending the notice has addressed only the first stage.

Receiving Party's Duties

Notice gives the recipient three duties and one option. Once notified, the recipient must promptly return, sequester, or destroy the specified information and any copies it has; must not use or disclose the information until the claim is resolved; and must take reasonable steps to retrieve the information if it disclosed it before notice. The option is to present the information promptly to the court under seal for a determination of the claim, and the producing party, for its part, must preserve the information until the claim is resolved.²⁰ These commands hold the information in place without deciding whether the claim is good. The restrictions last only until the claim is resolved, whether by agreement or by the court.²¹

The first duty offers three alternatives that share one effect: the information leaves the recipient's working file. Return puts the document back in the producing party's hands, and destruction ends the recipient's own copies. Sequestration, which means setting the information apart so that no one on the receiving side consults it, leaves the recipient holding the document without drawing on it. That matters most to a recipient that disputes the claim, because sequestration keeps the contested document available for the court. The duty reaches the specified information “and any copies,” so setting one copy aside while another stays in a review database does not satisfy it, and the word “promptly” reflects that each day of delay is a day on which the document can be read.

Coburn Group v. Whitecap Advisors LLC shows a recipient meeting these duties while still contesting the claim. After Whitecap asked for the e-mail's return, Coburn's counsel agreed to quarantine it and not use or disseminate it while researching the issues; on August 5, 2008, counsel wrote that Coburn would not return the document but would keep it secured until the court ruled, and asked whether Whitecap meant to present the issue to the court.²² Declining to return the e-mail fit within the rule's alternatives, because a document that is secured and unused is sequestered. Whitecap moved on September 5, 2008, and the court's in camera review showed that the e-mail was work product.²³ Whether the production waived that protection was a separate question, taken up below.

The bar on use and disclosure is where a mistaken production would otherwise become an advantage. Using the information can mean questioning a witness about it, building it into an expert's calculations, or citing it in a brief; disclosing it means passing it to anyone not already entitled to it. The recipient's belief that the claim will fail does not lift the bar. An attorney who receives material claimed to be privileged “may not use or disclose the information until the claim is resolved,” and the recipient's remedy is to ask the court to rule, for example by showing that the material is not privileged because it concerned business advice rather than legal advice.²⁴ The rule gives the recipient's disagreement a forum and withholds a license to act on it first.

The rule also looks backward, because the information may have travelled before the notice arrived. A recipient that reviewed the production, saw nothing marking a document as privileged, and sent it to a staffer or an expert must, once notified, take reasonable steps to retrieve it.²⁵ Without that duty, a freeze on the recipient's own use would mean little while copies in other hands stayed in use. Because the rule's duties begin on notice, the earlier circulation is not what the rule condemns. It requires a reasonable effort to undo the spread.

Two provisions let a court decide the claim. A recipient that disputes the claim may promptly present the information to the court under seal, because a judge cannot rule on a label and must see what the document says; a sealed submission puts the document before the judge without placing it in the public record or in wider circulation. The option is permissive, so a recipient may instead wait for the producing party to move, as Whitecap did in Coburn.²⁶ On the other side of the freeze, the producing party must preserve the information until the claim is resolved. The recipient may have returned or destroyed every copy it held, and if the producing party also discarded its own, nothing would remain for the court to examine and the claim could never be tested. The duty lasts only until resolution, which is also when the restrictions on the recipient end.

Fact patterns usually set the trap at step four. A stem in which the recipient insists the claim is meritless and goes on to use the document describes a breach, because the bar on use runs until the claim is resolved and does not depend on the recipient's view of the merits. A stem in which the recipient forwarded the document to an expert before any notice describes the retrieval duty, which calls for reasonable steps to recover the document and does not treat the earlier forwarding as a breach. A stem in which the recipient declines to return the document but keeps it locked away and unused describes compliance, since sequestration is one of the rule's three alternatives. Whether the protection survived the mistake is a separate question, which the next subsection takes up under Rule 502(b).

Waiver Under Rule 502

Rule 26(b)(5)(B) holds a mistakenly produced document in place while a court decides the claim, and its text never says when the claim should succeed.³¹ That question belongs to Federal Rule of Evidence 502(b), which the court in Coburn Group v. Whitecap Advisors LLC quoted in full. When a disclosure of information covered by the attorney-client privilege or work-product protection is made in a federal proceeding or to a federal office or agency, it does not operate as a waiver in a federal or state proceeding if the disclosure was inadvertent, the holder took reasonable steps to prevent disclosure, and the holder promptly took reasonable steps to rectify the error, including, where it applies, following Rule 26(b)(5)(B).³² Because the text names both shields, one three-part test governs the mistaken production of either.

Each requirement answers a different problem. Inadvertence separates a mistake from a choice: a holder who meant to hand over a document surrendered the protection on purpose, and the rule has nothing to rescue. The prevention requirement rewards real diligence in screening without punishing every error in a production that may run to tens of thousands of documents. The rectification requirement looks at conduct after the mistake surfaces, which is why the notice discussed above matters beyond its own procedure: notice under Rule 26(b)(5)(B) is the first rectifying step a court will look for.

The requirements overlap in practice. Rule 502 does not define “inadvertent,” and courts have looked to the circumstances of the production, including the number of documents produced and the care taken in review before production.³³ The same facts then recur under the prevention requirement and in any later balancing. A hurried review of a large production can therefore be argued under more than one heading, and an answer should weigh it once instead of counting it as three independent defects.

The problem is sharpest in discovery of massive electronic document collections, where courts vary significantly in how they approach waiver.³⁴ There the prevention requirement carries most of the weight, because privilege screening often rests on keyword and name searches. Such searches are widely used, but they are not foolproof.³⁵ A party that reasonably uses search terms likely to find relevant data while screening out privileged documents may show that it took “reasonable steps” to prevent a mistaken disclosure, and so may an efficient records-management system put in place before litigation arises.³⁶

In Victor Stanley, Inc. v. Creative Pipe, Inc. the producer sent out 165 privileged electronic documents, and the plaintiff, not the producer, noticed the error and gave notice of it.³⁷ The court found waiver because the producer supplied no information about the seventy keywords it used, why it chose them, whether the lawyers who designed the search were qualified to do so, whether the search used Boolean operators, or whether anyone tested the results for quality.³⁸ The other considerations also ran against the producer: 165 documents is not a single document slipping through, the files included numerous communications with counsel so that redress would come too late, the plaintiff and not the producer found the problem, and nothing in the interests of justice excused the consequence.³⁹ The decision came before Rule 502 was adopted and placed on the producer the burden of proving that its review was reasonable. It remains a reference point for the proposition that screening with search software is an important factor in judging precautions and that the search terms deserve careful thought.⁴⁰

The court in Rhoads Industries v. Building Materials Corp. faced a comparable electronic production under the new rule and worked in two steps. It first asks whether the producing party has at least minimally complied with the three requirements. When the production was plainly inadvertent, as everyone agreed it was there, but the reasonableness of the holder's steps is contested, it moves on to the traditional five-factor test, a sequence it took from the committee note to Rule 502.⁴¹ The traditional test, which the court drew from an earlier decision on inadvertently disclosed documents, weighs five considerations:⁴²

1. The reasonableness of the precautions taken, in view of the extent of the production.
2. The number of inadvertent disclosures.
3. The extent of the disclosure.
4. Any delay and the measures taken to rectify the disclosure.
5. The overriding interests of justice.

Rhoads shows how the weighing works when the screening was imperfect. The producer had bought special software, had a technical consultant test it before the purchase, and put an attorney through more than forty hours of privilege review, yet 812 privileged e-mails, just over one percent of the 78,000 produced, got through.⁴³ The defendants answered that the search covered address lines and not message bodies, that its only testing was to run the same search again, that the reviewing attorney had never done a privilege review and received no detailed supervision, and that documents the search should have caught were produced anyway with no explanation.⁴⁴ The court found that the first four factors favored the defendants. It treated as most significant the producer's failure to prepare, far enough ahead of a production bound to be large, for segregating and reviewing privileged documents, and it said that a wish to save the client money is no after-the-fact excuse.⁴⁵ It still found no waiver for the privileged documents logged by June 30, 2008, because the fifth factor strongly favored the producer: loss of privilege in high-stakes litigation is a severe sanction, the defendants had no right to expect the communications, merits discovery had been abundant, and the defendants, as the party challenging the claim, bore the burden of proof and had not carried it.⁴⁶

The two decisions involve similar facts, a few hundred privileged files within a large electronic production, so the different results call for explanation. Rhoads declined to treat Victor Stanley as controlling because it saw in that analysis more hindsight than it thought appropriate: an after-the-fact critic can always conclude that a better job could have been done, and the court applied the rule's reasonableness standard objectively.⁴⁷ The burden also ran in opposite directions. Victor Stanley made the producer prove that its review was reasonable, while Rhoads required the party claiming waiver to prove it, a rule the court noted had no endorsement from the Third Circuit but good support in district court decisions.⁴⁸ The records differed as well, because the Rhoads court heard witnesses describe what the producer had done, while the Victor Stanley producer left the court without basic information about its keywords and testing.⁴⁹ Because courts vary significantly in how they treat waiver by inadvertent disclosure, the five factors work as a discretionary balance and not as a head count.⁵⁰

Coburn shows the result when the holder clears Rule 502(b). The court's in camera review showed that the e-mail was work product, and the court then found, pursuant to Rule 502, that Whitecap did not waive the protection.⁵¹ That finding did not end the dispute, because protected work product remains open to a requester who shows substantial need and undue hardship. The court examined Coburn's showing and found it wanting: Coburn wanted the e-mail itself to pursue sanctions and to show a pattern of untruthfulness, and did not claim that it had been unable to get discovery about the investors.⁵² Avoiding waiver keeps the shield in place, and the need analysis from earlier in this chapter then applies as it would to any other work product.

Parties can also settle the question in advance. A nonwaiver agreement can provide more protection than Rule 502(b) itself, but under Rule 502(e) it does not bind outsiders unless “incorporated in a court order,” so an outsider in related or later litigation may claim that the disclosure waived the protection. Litigants therefore present their agreements to the court for incorporation in an order, and an order under Rule 502(d) means that the disclosure is not a waiver in any other federal or state proceeding. Courts may enter such orders even without party agreement.⁵³ Even a binding agreement leaves the recipient free to argue that the material was never privileged, as with business advice, and until the court rules the recipient remains bound by Rule 26(b)(5).⁵⁴

The facts a stem emphasizes usually identify which requirement is under test. A very large production with a thin screening protocol points to the prevention requirement and the five-factor weighing, a gap between discovering the error and sending notice points to the rectification requirement, and a stipulated order entered at the outset points to Rule 502(d) and removes the case from the reasonableness inquiry. An answer that stops at getting the document back has handled the procedure and left the waiver question open.