Keeping Secrets Secret…

1. Keeping Secrets Secret… UNIVERSITY OF HOUSTON Summer III 2010 – 5297 E-Discovery

2. Presentation Outline • Quick overview of privilege • “New” rules on privilege (including 502) • Inadvertent disclosure issues • Practice pointers, including privilege logs • THE OVERARCHING THOUGHT: In today’s world, privileged documents are going to be produced at some point. The real issue is how you handle that prospect and that situation.

3. Attorney-client privilege • Elements of the attorney-client privilege are: • (1) legal advice of any kind is sought • (2) from a professional legal advisor in his capacity as such, • (3) the communications relating to that purpose, • (4) made in confidence • (5) by the client or attorney.

4. Attorney-Client Privilege • Privilege claims cannot prevent disclosure of information provided with the intent to further a continuing or future crime or a fraud. • It depends on law that provides the rule of decision. • Other privileges may be available: • Common interest or joint defense. • Husband –wife. • Priest-penitent. • Trade secret. • Where are the privileges found? • Evid. R. 500s.

6. Consider these scenarios • The VP, Corporate Secretary and General Counsel. • The Site Manager for a Business. • The transmission of the annual report.

7. Work Product Protection • Work product protection began with Hickman v. Taylor, 329 U.S. 495, 510 (1947). • A rule that protects materials prepared by a lawyer in preparation for trial from being seen and used by the adversary during discovery or trial. • Presently embodied in Federal Rule of Civil Procedure 26(b)(3).

9. Texas Rule of Civil Procedure 192.5 • (a) Work product comprises: • (1) material prepared or mental impressions developed in anticipation of litigation or for trial by or for a party or a party's representatives, including the party's attorneys, consultants, sureties, indemnitors, insurers, employees, or agents; or • (2) a communication made in anticipation of litigation or for trial between a party and the party's representatives or among a party's representatives, including the party's attorneys, consultants, sureties, indemnitors, insurers, employees, or agents.

10. Texas’s Protection of Work Product • (1) Protection of core work product--attorney mental processes. Core work product - the work product of an attorney or an attorney's representative that contains the attorney's or the attorney's representative's mental impressions, opinions, conclusions, or legal theories - is not discoverable.

11. Texas’s Protection of Work Product • (2) Protection of other work product. Any other work product is discoverable only upon a showing that the party seeking discovery has substantial need of the materials in the preparation of the party's case and that the party is unable without undue hardship to obtain the substantial equivalent of the material by other means.

12. Work Production Protection • The difference: Some courts have held that core (opinion) work product is absolutely privileged from discovery, while other (fact) work product may be discoverable under appropriate circumstances. • Some courts draw a distinction between the work product doctrine and the attorney-client privilege when addressing questions of waiver or loss. Others do not.

13. Quick Peek Agreement • To avoid the cost of a privilege review, but to minimize the risk of waiver of a privilege or work product protection, the Advisory Committee recognized that parties “may agree that the responding party will provide the requested materials for initial examination without waiving any privilege.” • When is this a good idea? The answer is not “never.”

14. Clawback Agreement • After reviewing information designated for production, “the producing party then asserts a privilege under Rule 26(b)(5)(a) describing the nature of documents or information not produced in a manner that allows other parties to assess the applicability of privilege or protection (even though the requesting party’s counsel will have already seen the document or information).” • What’s the best way to structure this review?

15. Clawback Agreement • “On other occasions, parties enter agreements – sometimes called ‘clawback agreements’ – providing that production without intent to waive privilege should not be a waiver so long as the producing party identifies the document mistakenly produced, and that the documents should be returned under those circumstances.” • When is this a good idea?

16. Hopson v. Mayor of Baltimore • Who’s the judge? What’s the year? Why do I care? • What are the underlying facts? • The focus: party agreements regarding non-waiver of privilege from inadvertent production, particularly as to third parties. • Approach: Encourage parties to develop solutions to avoid waiver and to ask that agreements addressing the issue be incorporated in scheduling orders.

17. Hopson v. Mayor of Baltimore • But these agreements do not occur in a vacuum: • Don’t assume that courts will approve non-waiver agreements without an party review, or that non-waiver agreements will be a magic bullet protecting haphazard document disclosure. • A non-waiver agreement must incorporate meaningful procedures to review for and remove privileged materials if it is to be given deference, even as between the very parties who entered into it. • Hopson: the parties directed to discuss the privilege review steps in order to qualify for non-waiver of privileges for materials that might unintentionally be produced.

18. Hopson v. Mayor of Baltimore • At a minimum, the parties should discuss: • the burdens and expenses that the producing party will face based on the Rule 26(b)(2) factors; • the amount of pre-production privilege review that is reasonable for the producing party to undertake, and measures to preserve post-production assertion of privilege within a reasonable time; and • any necessary protective orders or confidentiality orders regarding access to produced information.

19. Some Other Cases… • Steadfast Ins. Co. v. Purdue Frederick Co., et al., 2005 WL 2433042 (Conn. Super. Ct. Sept. 7, 2005). • Atronic International GMBH v. SAI Semispecialists of America, Inc., 2005 WL 2738914 (E.D.N.Y. Oct. 18, 2005). • Amersham Biosciences Corp. v. PerkinElmer, Inc., 2007 WL 329290 (D.N.J. Jan. 31, 2007) (Hedges, J.). • These cases all involved attorney-client emails produced inadvertently, but only when the parties moved fast did the Court did find reasonable precautions. • The key: document your efforts after discovering the inadvertent production.

20. Rule 502 provisions • Changes the rules concerning waiver in all Federal and many State court cases (pp. 502 -503). • Section (a) limits subject-matter waiver of undisclosed documents to instances of intentional disclosure where similar subject communications “ought in fairness” be considered together. • Section (b) eliminates waiver for inadvertent disclosures when reasonable steps were taken to protect the privilege and to correct the error.

21. Rule 502 provisions • Changes the rules concerning waiver in all Federal and many State court cases (pp. 502 -503). • Section (c) prevents waiver when the disclosure made in a state court proceeding would not have been a waiver under that state’s rules governing waiver (or the federal rules of wavier). • Section (d) extends the protections of court-ordered non-waiver agreements to third parties.

22. Where does your waiver fall?

23. Limits on Rule 502 provisions • No impact on application of the attorney client privilege or work-product immunity. • Other common-law waiver doctrines may result in a finding of waiver even where there is no disclosure of privileged information or work product – reliance on an advice of counsel, defense; allegation of lawyer malpractice, etc. • Rule does not replace applicable waiver doctrine generally.

24. Rule 502 cases • Alcon Mfg. v. Apotex, Inc., 2008 U.S. Dist. LEXIS 96630, (S.D. Ind. Nov. 26, 2008). • Plaintiff inadvertently disclosed a privileged document electronically and later complied with the protective order by representing that the disclosure was inadvertent and taking prompt remedial action. • Judge found non-waiver EVEN THOUGH perhaps the situation at hand could have been avoided had Plaintiffs' counsel meticulously double or triple-checked all disclosures against the privilege log prior to any disclosures.

25. Rule 502 cases • Alcon Mfg. v. Apotex, Inc., 2008 U.S. Dist. LEXIS 96630, (S.D. Ind. Nov. 26, 2008). • Plaintiff inadvertently disclosed a privileged document electronically and later complied with the protective order by representing that the disclosure was inadvertent and taking prompt remedial action. • Judge found non-waiver EVEN THOUGH perhaps the situation at hand could have been avoided had Plaintiffs' counsel meticulously double or triple-checked all disclosures against the privilege log prior to any disclosures. Perfection is not the standard!

26. Rule 502 cases • Laethem Equip. Co. v. Deere & Co., 2008 U.S. Dist. LEXIS 107635 at 107728 (E.D. Mich. Nov. 21,2008). • Rhoads Industries, Inc. v. Building Materials Corp, 254 F.R.D. 216, 2008 WL 4916026 (E.D. Pa. 2008). • Am. Coal Sales Co. v. N.S. Power Inc., 2009 U.S. Dist. LEXIS 13550, (S.D. Ohio February 23, 2009). • Reckley v. City of Springfield, 2008 U.S. Dist. LEXIS 103663 (S.D. Ohio Dec. 12, 2008).

27. Rule 502 cases • On the other hand: Sitterson v. Evergreen Sch. Dist. No. 114, 147 Wn. App. 576 (Wash. Ct. App. 2008) • Applied five common law factors from Alldread v. Gren., 988 F.2d 1425, 1433 (5th Cir. Miss. 1993): • 1. the reasonableness of precautions taken to prevent disclosure; • » Counsel for the disclosing party “offered no evidence of any precautions he or his office took to prevent the disclosures.” • 2. the amount of time taken to remedy the error; • » The panel was troubled by the “disclosing party’s failure to notice or remedy the error until three years after it was made.”

28. Rule 502 cases • On the other hand: Sitterson v. Evergreen Sch. Dist. No. 114, 147 Wn. App. 576 (Wash. Ct. App. 2008) • Applied five common law factors from Alldread v. Gren., 988 F.2d 1425, 1433 (5th Cir. Miss. 1993): • 3. the scope of discovery; • » The court found such a small document production of 439 documents manageable and not the enormous quantity of documents that FRE 502 intended to correct by excusing an inadvertent production of privileged documents. • 4. the extent of the disclosure; and • 5. the overriding issue of fairness. • » The Court ruled that the issue of fairness favored neither party.

29. Rule 502 Lessons • Get a protective order with a clawback provision signed so that it is can be enforced in both state and federal jurisdictions under FRE 502(d).

30. Rule 502 Lessons • Will Rule 502 reduce review costs? • Yes, but probably not too too much. • Natural “risk avoidance” behavior of attorneys • Professional responsibility to protect client confidences • Informed consent of client • You still can’t un-ring the bell.

31. Rule 502 Lessons • A record retention program with a well thought out and tested protocol to identify and segregate privileged documents, well in advance of litigation, may help company counsel utilize FRE 502 to combat the tremendous discovery costs associated with privilege reviews.

32. Privilege logs • From FRCP 26(b)(5): • the nature of the documents, communications, or things not produced or disclosed in a manner that, without revealing information itself privileged or protected, will enable other parties to assess the applicability of the privilege or protection. • But this can be a HUGE undertaking… with literally thousand of entries.

33. Privilege log contents • In re Universal Service Fund Telephone Billing Practices Litigation, 2005 WL 3725615 (D. Kan. July 26, 2005) privilege log should include: • A description of the document explaining whether the document is a memorandum, letter, e-mail, etc.; • The date upon which the document was prepared; • The date of the document (if different from above); • The person who prepared the document; • The person for whom the document was prepared, as well as the identities of those to whom the document and copies of the document were directed, information “supporting any assertion that the document was created under the supervision of an attorney;"

34. Privilege log contents • In re Universal Service Fund Telephone Billing Practices Litigation, 2005 WL 3725615 (D. Kan. July 26, 2005) privilege log should include: • The purpose of preparing the document, including information demonstrating that the document • was prepared in the course of adversarial litigation or in anticipation of a threat of adversarial litigation; • relates to seeking or giving legal advice; and • does not merely contain or incorporate non-privileged underlying facts; • The number of pages of the document; • The basis for withholding the document (i.e., the specific privilege or protection being asserted); and • Any other pertinent information necessary to establish the elements of each asserted privilege.

35. Privilege log issues • Check the local rules for their specifications (e.g. Mississippi and Oklahoma). • In Texas state court, you need to ask for it. • Negotiate a lag between production and the privilege log.

36. Privilege log issues • Discuss the requirements with your e-discovery vendor from the start – before you hire them. • Note that some courts insist each email to be listed separately – as opposed to the chain as one entry. Rhoads Industries, Inc. v. Building Materials Corp., 254 F.R.D. 216 (E.D. Pa. 2008). just about all

37. Employees’ Email on Employer’s Servers • Former employee’s e-mails to her attorney prior to resigning and filing suit for hostile work environment, using a personal, password protected, web-based e-mail account, from a company issued laptop using the company network, during business hours, are not protected by the attorney-client privilege. • Stengart v. Loving Care Agency, Inc., No. BER-L-858-08 (NJ Superior Court, Law Div., March 6, 2009).

38. Employees’ Email on Employer’s Servers • Employees generally have no basis for objecting on privacy grounds to discovery of e-mail on the corporate computer system. • Employees generally have no privacy right that prevents the company from reviewing electronic files, such as e-mail, stored on its data processing equipment. • McLaren v. Microsoft Corp., 1999 WL 339015 (Tex. App. 1999).

39. Exceptions? • Employee’s communications with his/her attorney via the company computer system. • In re Asia Global Crossing, Ltd., 322 B.R. 247 (S.D.N.Y. 2005) -- absent further information about the debtor’s company e-mail policy, the court could not decide whether employees waived their attorney-client privilege by communicating with their personal attorneys via the company e-mail system.

40. Exceptions? • Employee’s communications with his/her attorney via the company computer system. • Curto v. Medical World Communications, 2006 WL 1318387 (E.D.N.Y. May 15, 2006) -- plaintiff’s use of company-owned computer at home to communicate with her attorney did not waive her attorney-client privilege claim; defendants ordered to return documents; court reserved decision on whether documents are in fact privileged.

41. Other Exceptions • Employee may have an expectation of privacy in information stored on a company computer for 4th amendment purposes. See United States v. Ziegler, 474 F.3d 184 (9th Cir. 2007) (but employer could validly consent to a search of the company computer). • International issues as well… the right to privacy is much more significant in other countries.

42. Other Exceptions • What about work-related e-mail or documents stored on an employee’s personal home PC or in an employee’s personal e-mail account? • Contractual provisions could prohibit disclosure of information. • HIPAA . • Other personal information is referenced in a company document, e.g. names and social security numbers.

43. Keeping Secrets Secret… UNIVERSITY OF HOUSTON Summer III 2010 – 5297 E-Discovery