Courts and litigants have been searching for ways in which to contain the ever-increasing costs of discovery and the production of electronic documents in particular. One such effort can be found in a recent amendment to the Rules for the Commercial Division of the State of New York changing the practice regarding privilege logs and how privilege assertions will be made. The new rule, 22 N.Y.C.R.R. § 202.70(g), commonly referred to as Rule 11-b, revises the practice of preparing privilege logs in New York’s Commercial Division, and will go into effect on Sept. 2, 2014. It encourages attorneys to use categorical designations in privilege logs instead of an itemized list of each individual document a party is withholding from disclosure based on a claim of privilege.
Despite some litigant’s concerns, there is no more opportunity for abuse when using the categorical approach to privilege logs than the present system. In the past, written, privileged communications would be located in a few letters or memoranda. The proliferation of
email, of course, increased the volume of privileged communications significantly, leading to lists of thousands of supposedly privileged communications. These lists or “privilege logs” can be costly, cumbersome and often relatively unhelpful in resolving privilege disputes.
When followed in good faith, in addition to reducing the costs incurred in the preparation of privilege logs significantly, the categorical approach will allow the parties to identify and frame legal issues requiring the court’s attention more clearly. Accordingly, a rule largely designed to contain costs has the potential to positively impact the efficiency of the dispute resolution process as well.
Brief History and Summary of the Categorical Approach
In June 2012, the chief judge’s Task Force on Commercial Litigation in the 21st Century issued a report that recommended, among other things, reexamining the practice of preparing privilege logs in the litigation process in response to ballooning costs and an expanding scope of document review in the age of electronic discovery. Pursuant to the task force’s recommendation, the Commercial Division Advisory Counsel drafted Rule 11-b, which, following a public comment period, was signed by Chief Administrative Judge Gail Prudenti on July 8, 2014.
The new rule instructs parties to meet and confer at the beginning of a case during the Commercial Division Rule 8 conference — and as needed throughout the course of the litigation — to address the scope of discovery and related privilege issues, including discussion of the use of categorical privilege logs. The rule establishes a “preference” in the Commercial Division for the use of “categorical designations” in privilege logs rather than logs that contain an entry and description for each individual document, and instructs parties “to agree, where possible, to employ a categorical approach to privilege designations.”
Additionally, the rule states that, upon a finding of good cause by the court, a party that objects to the categorical approach and insists upon a document-by-document approach may be subject to the costs, including attorneys' fees, associated with such an undertaking. Finally, the new rule encourages litigants to share the costs of hiring a special master to address and resolve any issues that arise during the privilege designation process.
The categorical approach to privilege logs is not a new concept and has been adopted or endorsed in other jurisdictions. In 1993, the advisory committee, when amending Federal Rule of Civil Procedure 26, stated in their notes that document-by-document “[d]etails concerning time, persons, general subject matter, etc., may be appropriate if only a few items are withheld, but may be unduly burdensome when voluminous documents are claimed to be privileged or protected, particularly if the items can be described by categories.”
When confronted with the issue, many jurisdictions have turned to this advisory committee note for justification for allowing categorical descriptions of the privileged documents in lieu of a log of each individual document. For example, in 1996, the Southern District of New York, which handles a large volume of commercial litigation disputes, cited the advisory committee note and held that privilege logs separated by categories are acceptable if a document-by-document listing would be unduly burdensome. Later cases in the Southern District of New York have adopted and reinforced this approach.
SDNY Local Rule 26.2(c) now expressly addresses the issue, stating that “when asserting privilege on the same basis with respect to multiple documents, it is presumptively proper to provide the information required by this rule by group or category.” Similar language can be found in the Delaware Chancery Court Practice Guidelines.
The new rule’s “preference” for categorical approach to privilege logs addresses and attempts to remedy the problems inherent in the document-by-document approach. Under the current requirements, parties are required to serve formal notice of their intention to withhold documents otherwise responsive to discovery demands on the basis of privilege, and to prepare a privilege log that sets forth the basic identifying or “pedigree” information and specific privilege or immunity relevant for each individual document being withheld from production.
Often, especially in complex commercial litigation, the number of documents involved in a privilege review will be extremely voluminous, and the process of listing each individual document can be tedious, trying and exceedingly costly. Rule 11-b attempts to alleviate the need for attorneys to devote uncountable hours recording details and information about each document over which a privilege is being claimed.
The Commercial Division Advisory Council’s proposal for the amendment specifically recognized that the “segregation, review, redaction, and document-by-document logging of privileged communications is both time-consuming and costly,” and resulted in the parties having to weigh these costs against the costs of preserving the privilege. It was determined that the “rule [amendment was] necessary to at least stem the expenses that parties incur by forcing parties to analyze the relative benefits [of] an item-by-item log.”
This new rule has not been immune from criticism. For example, one commentator opined that the “categorized approach to privilege designations could translate to fewer details about specific documents, making it ‘more difficult for the challenging party.’” Additionally, Justice Ira Warshawsky, former justice of the Supreme Court of the State of New York, Nassau County, has stated that “a dispute regarding categorization of documents” may result in “New York Commercial Division judges ... themselves
spending substantial time doing in-camera review of privilege log entries.”
Potential Impact of Rule 11-b
While it may take time for the judiciary and litigants to get used to the categorical approach, it should reduce costs and be a positive development in substantively addressing privilege disputes. Current criticisms should be alleviated as the new rule is applied in practice.
As an initial matter, there are certain safeguards built into the process. The rule requires that a “responsible attorney (i.e., not a newly minted attorney or paralegal)” be responsible for “actively overseeing the privilege review,” and that the litigants submit a certification, pursuant to Part 130 of the Rules of the Chief Administrator, “certifying to the facts supporting the privileged or protected status of the information included within the category.” This safeguard should address the concern that the categorical entries themselves will not contain enough information for opposing counsel to conduct a meaningful review and challenge privilege assertions to the extent necessary.
Also, the categorical approach still requires a litigant to provide sufficient information to explain and support the privilege being asserted. Under the old approach, when the litigant merely lists thousands of communications and the surrounding facts, the legal basis for withholding the document, including how that particular communication is related to the issues in dispute, is sometimes difficult to discern. Under the categorical approach, the parties and the court or the special master (as the case may be) will be focusing on relatively few entries, requiring the party asserting the privilege to provide enough information to support the privilege assertion over the category of documents.
Other jurisdictions have begun to develop the information that must be provided in order to accomplish this goal, including details such as the time periods of the documents, the number of documents included in each category, a listing of the individuals involved in the communications across the category, and a representation of the specific privilege asserted. When properly presented, this information, as refined through practice in the Commercial Division, will allow the parties to identify, effectively meet and confer regarding, and (if necessary) present to the court more clearly and efficiently the privilege-related issues in dispute. In addition to being more cost-effective, this should be an improvement over the prior practice of voluminous and often confusing privilege logs.