Facts: Kmart Corporation (“Kmart”) sought indemnification from Foodstar, Inc. (“Foodstar”) and its insurer, Liberty Mutual Fire Insurance Company (“Liberty Mutual”) for an underlying personal injury lawsuit. Liberty Mutual inadvertently produced five privileged documents totaling 130 pages out of its 4500-page production.
e-Discovery Issue: If privileged documents are inadvertently produced during an electronic document production, what is the governing law? Could you be unable to “claw back” the documents?
Law: Inadvertent disclosures are controlled by Rule 502 of the Federal Rule of Evidence. Inadvertent disclosures will not result in waiver so long as: 1) the disclosure was inadvertent; 2) the disclosing party took reasonable steps to protect the privilege and prevent disclosure; and 3) the disclosing party took reasonable steps to rectify the error.
Holding: Liberty Mutual could not “claw back” the documents under Rule 502. It provided the court with no facts to show it took reasonable steps to prevent the disclosure. For example, Liberty Mutual could have discussed a “software used to prevent disclosure,” a “records management system,” or any other facts to prove a “screening process” was in place. It did not do so. Furthermore, Liberty Mutual did not take prompt reasonable steps to rectify the error. It waited 12 days to file its motion for a protective order and did not even send a letter to opposing counsel prior to the motion.
Takeaway Points: Make sure you have a screening process in place and take advantage of software and record management systems to prevent inadvertent disclosures. If privileged information is disclosed despite the screening mechanisms, take prompt action as soon as you have notice by sending out a letter immediately and filing a motion for a protective order within a few days — or as soon as possible. Make certain to include the screening mechanisms in your motion for a protective order because it is part of the moving party’s burden under Rule 502.
See also Mt. Hawley Ins. Co. v. Felman Production, Inc., 2010 WL 1990555 (S.D.W.Va. May 18, 2010) (Plaintiff that inadvertently produced 980 privileged communications in a large-scale production was unable to “claw back” smoking gun privileged document despite numerous screening mechanisms in place, an agreement and stipulation for returning inadvertently produced documents, and prompt notice of recall).
Additional Point: Inadvertent disclosure will not result in a subject matter waiver under FRE 502. Subject matter waivers are limited to those rare instances when a party partially discloses privileged information intentionally to obtain an unfair tactical advantage. Fed. R. Evid 502 advisory committee’s note (a).
Access the full Kmart opinion here.
Access the full Mt. Hawley opinion here.