Defendants filed a motion to compel Adaptix to re-produce documents that Adaptix had clawed back on the grounds of privilege. Adaptix had early produced the documents in several productions. The Defendants argued in the motion that even if Adaptix could demonstrate the documents are privileged, Adaptix waived the privilege because Defendants had notified Adaptix that they were relying on the documents at least nine months before Adaptix sent its clawback letter. Defendants pointed out that they had relied on information disclosed in the documents in depositions, expert reports, and briefing, all without any objection from Adaptix.

In response, Adaptix asserted that its data vendor erroneously produced the documents to Defendants without Adaptix knowledge even though they had been properly tagged as privileged. Adaptix also asserted that the documents fell within the protections of the attorney client work product doctrine because they pertained to testing that was performed for purposes of litigation at the direction of Adaptix's attorneys. Adaptix then argued that it was only in March of 2015 that it "eventually realized the error of Defendants' access to the documents at issue and promptly sent a letter clawing them back."

In analyzing the waiver issue, the district court explained that before Rule 502(b) was signed into law, courts in the Fifth Circuit considered a five-factor test in determining whether disclosure of privileged information was inadvertent: (1) the reasonableness of precautions taken to prevent disclosure; (2) the amount of time taken to remedy the error; (3) the scope of discovery; (4) the extent of the disclosure; and (5) the overriding issue of fairness. Alldread v. City of Grenada, 988 F.2d 1425, 1433 (5th Cir.1993). In determining whether the inadvertent disclosure exception is satisfied under the new Rule 502(b), the Rule's Advisory Committee Notes state Rule 502(b) "does not explicitly codify that test, because it is really a set of non-determinative guidelines that vary from case to case." First American, 2010 WL 4975566, at *3 (quoting FED. R. EVID. 502, Advisory Committee Notes). The Advisory Committee Notes also state the "rule is flexible enough to accommodate any of those listed factors." Id.

The district court also noted that "[i]n First American, relied upon by Defendants, the court declined to apply the five-factor analysis, not as a blanket rule, but due to the factual circumstances of the case. The court noted the five-factor test was designed primarily to cope with the 'increasingly common problem in massive discovery where thousands or millions of documents are produced and a few privileged documents are inadvertently disclosed along with the millions of other documents,' a problem Adaptix asserts is an issue here. First American, 2010 WL 4975566, at *4. However, approximately two years later in Zapmedia, the court applied FED. R. EVID. 502 without the five-factor test. Although the court held privilege was not waived as to documents that were clawed back two hours after a deposition, the court held the privilege had been waived as to documents clawed back one week later and also as to documents clawed back more than eight months after a deposition in which the documents had been used. 2010 WL 5140672, at *2."

Applying this case law, the district court concluded that Adaptix had waived the privilege as to the documents it had clawed back. "Here, Adaptix produced the documents as early as April 2013. It examined the documents during Mr. Dodd's deposition in June of 2014 and was further made aware of the disclosure in Defendants' non-infringement expert reports in August and September of 2014. Because Adaptix did not promptly seek return of the clawed back documents, any privilege attaching to the documents has been waived. See Apex Mun. Fund v. N-Group Secs., 841 F.Supp. 1423, 1433 (S.D.Tex.1993)('Simply put, a one-year delay in taking any action to attempt to preserve the privilege exemplifies carelessness.')."

The district court reached the same conclusion applying the five-factor test. "First, as the party with the burden of proof, Adaptix has not shown with evidence the privilege applies. Adaptix merely states the documents were generated as part of testing performed for preparing for the lawsuits against Defendants. Nor has Adaptix established the reasonableness of the precautions taken to prevent disclosure. There is no declaration by the vendor or anyone else to support Adaptix's assertion it took reasonable steps to prevent disclosure of the clawed back documents. Adaptix attached a declaration by one of its lawyers to support its allegations, but the declaration merely provides that Adaptix reviewed over several hundred thousand documents during discovery; produced over nine million pages of documents during discovery; and tagged over ten thousand documents as privileged during the course of its review for these cases. Additionally, Adaptix has not shown it attempted to remedy the disclosure in an adequate amount of time. By failing to claw back its documents for months after being put on notice, Adaptix has failed to act promptly. The Court finds any privilege or work product protection that may have applied to the clawed back documents has been waived by Adaptix."

Accordingly, the district court granted the motion to compel the re-production of the documents.

Adaptix v. Alcatel-Lucent USA, Inc., et al., Case No. 6:12-cv-22 (E.D. Tex. May 2015)