Waiver of Privilege

John Blumenschein

It’s the nightmare scenario that litigators hope will never happen to them: the waiver of privilege; however, this nightmare became a reality recently for a litigant in a case out of the Northern District of Illinois. United States Magistrate Judge Sidney Schenkier ruled that a party’s inadvertent disclosure waived their rights to maintain certain documents as privileged in Thorncreek Apartments III, LLC v. Village of Park Forest, 2011 WL 3489828 (N.D.Ill., August 9, 2011). A copy of the opinion can be found here.

Defendant Village of Park Forest was using a third party vendor, Kroll On-Track, to help manage e-discovery in litigation with Plaintiff Thorncreek. Together, the Village and Kroll developed a three step review process of the data, which was located on back-up tapes. The first step involved using both agreed upon and Court ordered search terms. The second step of the process involved On Kroll making all the search results available to a Village attorney to review for responsiveness and privilege. The third step of the process allowed counsel for Thorncreek to review the documents that were left after the Village attorney’s review.

The Village, however, did not realize an issue had arisen until counsel for Thorncreek attempted to use a privileged document in a deposition in December of 2009. The Village’s counsel objected to the use of the document at the deposition. Attorneys for the Village did not turn over a privilege log until April of 2010, which contained 159 documents. Parties were able to reduce this list to six documents.

The Court determined that parts of the remaining six documents were in fact privileged. The Court’s analysis then turned to determining whether the Village had waived disclosure. The issue to determine was whether the Village took reasonable steps after it was realized that documents were inadvertently produced, pursuant to FRE 502.

Judge Schenkier took issue with the process that the Village and On Kroll developed for the production of documents. “We have little confidence in the reasonableness of the Village’s precautions when the most the Village can say is that it ‘thought’ that marking documents as ‘privileged’ during its review would cause Kroll to withhold it from the production database that Thorncreek could later view.” Id. at 6. The Court suggested that the Village should have reviewed the database of documents which were going to be produced to Thorncreek before the database became available to the plaintiff. “Thus, the Village’s procedures for privilege review were completely ineffective, each and every document the Village sought to retain as privileged was inadvertently disclosed.” Id.

As this case demonstrates, organizations cannot simply delegate their e-discovery obligations to the services of a third-party vendor. Having a truly defendable, repeatable, in-house e-discovery process requires proactive and persistent involvement from both corporate legal and IT (see Patrick Zeller’s blog post on Creating a discovery response team), as well as having the right technology in place. While missteps and unforeseen events are bound to happen during the course of any litigation, having the right in-house technology enabling defensible collection and review makes you less likely to have a court find “little confidence” in your e-discovery, and avoid the nightmare scenario that took place in this case.

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