Johnson et al v. Ford Motor Company, No. 3:2013cv06529 - Document 426 (S.D.W. Va. 2015)
Court Description: MEMORANDUM OPINION AND ORDER denying Plaintiffs' 353 MOTION to Challenge Confidential Designation and to Compel and Ford is entitled to clawback the Logel document. Signed by Magistrate Judge Cheryl A. Eifert on 4/14/2015. (cc: attys; any unrepresented party) (mkw)
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Johnson et al v. Ford Motor Company Doc. 426 IN TH E U N ITED STATES D ISTRICT COU RT FOR TH E SOU TH ERN D ISTRICT OF W EST VIRGIN IA H U N TIN GTON D IVISION CH ARLES JOH N SON , e t al., Plain tiffs , v. Cas e N o .: 3 :13 -cv-0 6 52 9 FORD MOTOR COMPAN Y, D e fe n d an t. MEMORAN D U M OPIN ION an d ORD ER Pending before the Court is Plaintiffs’ Motion to Challenge Confidential Designation and to Com pel. (ECF No. 353). Defendant Ford Motor Com pany (“Ford”) has filed a m em orandum in opposition to the m otion, (ECF No. 370 ), and Plaintiffs have replied. (ECF No. 380 ). Plaintiffs’ m otion involves a four-page docum ent produced by Ford in the course of discovery, (ECF No. 351-1), which Ford now seeks to “clawback” as a privileged com m unication between attorney and client. On April 1, 20 15, the undersigned heard oral argum ent on the m otion and, after ruling that the docum ent was indeed a privileged com m unication, took under advisem ent the issue of whether Ford’s production of the docum ent was an inadvertent disclosure subject to clawback under Federal Rule of Evidence 50 2(b), or constituted a waiver of the privilege. Having fully considered the facts and the relevant law, the Court finds that Ford’s production of the docum ent was an inadvertent disclosure and Ford took reasonable steps to both protect 1 Dockets.Justia.com the document prior to production and to retrieve it once Ford learned it had been m istakenly produced. Accordingly, Plaintiffs’ Motion to Challenge Confidential Designation and to Com pel is D EN IED . I. Re le van t Facts These cases involve alleged events of sudden unintended acceleration in certain Ford vehicles m anufactured between 20 0 2 and 20 10 . In particular, Plaintiffs claim that their vehicles were equipped with defective Electronic Throttle Control (“ETC”) system s which were not fault tolerant, resulting in open throttle events during which the drivers of the vehicles lacked the ability to control the throttles. Plaintiffs assert that the m echanism s causing the throttles to open unexpectedly were num erous; included electrom agnetic interference, resistive shorts, and other voltage and resistance fluctuations; and these issues were known to Ford. However, despite having knowledge of the potential for sudden unexpected acceleration, Ford failed to properly design the ETC system to correct the events when they occurred, and further neglected to install fail-safes, such as a Brake Over Accelerator system , that would allow the drivers to physically prevent or m itigate sudden acceleration. In addition to the instant action, Ford is a defendant in cases pending in various state courts where drivers of Ford vehicles have alleged events of sudden unintended acceleration. Much of the discovery requested by plaintiffs in the state actions m irrors the discovery requested by Plaintiffs in these cases. In 20 0 9, Ford designated an attorney, J odi Munn Schebel, to serve as National Discovery Counsel for Ford on cases involving allegations of sudden unintended acceleration. (ECF No. 370 -2 at 1). In 20 12, Ford collected documents potentially responsive to discovery requests concerning its 20 10 developm ent of a Brake Over Accelerator system (“the BOA docum ents”). (Id. at 12 2). Included in the BOA docum ents was a four-page “Question and Answer” sheet prepared by Ford’s m edia departm ent, which addressed concerns related to sudden unexpected acceleration. The “Q&A” sheet was triggered by a highly-publicized, largescale vehicle recall by Toyota Motor Com pany after several of its vehicles were im plicated in fatal crashes thought to be connected with events of sudden, unintended, and uncontrollable acceleration. Anticipating that Toyota’s situation would open the floodgates of m edia attention on the issue of unintended acceleration, Ford decided to prepare for the inquiries. Once a Q&A sheet was drafted, the docum ent was circulated to a handful of Ford em ployees for review and com m ent. Included in that group of em ployees was J ay Logel, an attorney in Ford’s Office of the General Counsel. (ECF No. 370 -2 at 2). Mr. Logel reviewed the docum ent and m ade substantive alterations to the answers, providing com m entary and explanations with m any of the proposed changes. (ECF No. 351-1). Mr. Logel’s revision of the draft Q&A sheet (“the Logel docum ent”) is the docum ent at issue in Plaintiffs’ m otion. At least one other version of the Q&A sheet without Mr. Logel’s com m ents is included in the BOA docum ents. This Q&A sheet is neither designated as privileged, nor is the subject of a clawback effort. After the BOA docum ents were collected, they were provided to Xerox, Ford’s discovery vendor, for processing, m aintenance, and subsequent production. (ECF No. 370 -2 at 2). Xerox made the BOA documents available for pre-production review by Ford’s litigation counsel on a review platform , where they were exam ined by Ms. Schebel in late 20 12 for both relevancy and privilege. (Id.). During the review, Ms. Schebel identified the Logel docum ent as relevant, but also as privileged. Therefore, she designated the Logel docum ent as privileged, indicating to Xerox with that designation that the Logel docum ent was to be withheld from production in its entirety. (Id.). After 3 exam ining all of the BOA docum ents, Ms. Schebel created a privilege log that included the Logel docum ent. (Id.). Thereafter, Ford produced the BOA docum ents as part of larger docum ent productions in three separate lawsuits pending in various courts across the country. On October 16, 20 14, Ford produced the BOA docum ents to Plaintiffs in this action as part of a rolling production of docum ents. (ECF No. 370 -2 at 2). On October 23, 20 14, Ford supplied Plaintiffs with a copy of the privilege log, which included the Logel docum ent by description and Bates num ber. (Id. at 3). On Novem ber 11, 20 14, Plaintiffs requested the deposition of several Ford em ployees, including Said Deep, a press spokesperson for Ford who was listed as the contact person on the Q&A sheet. On J anuary 29, 20 15, the Court entered a Clawback Order. (ECF No. 316). The order states in relevant part: The inadvertent disclosure of a docum ent subject to a claim of privilege or of protection as trial-preparation m aterial, including electronically stored inform ation (“ESI”), shall not constitute a waiver of any privilege claim or protection to that docum ent if (a) the holder of the privilege or protection took reasonable steps to prevent disclosure and (b) the holder prom ptly took reasonable steps to rectify the error. For purposes of this Order, the term “prom ptly” shall m ean within 14 days of the discovery of the inadvertent disclosure. (ECF No. 316 at 1). On February 3, 20 15, Plaintiffs served Ford with Requests for Adm ission. (ECF No. 353-7). Som e of the requests specifically addressed topics and statem ents contained in the Logel docum ent and referenced the date the draft Q&A sheet was transm itted to Mr. Logal for review and com m ent. In addition, Plaintiffs requested the depositions of several em ployees involved in revising the Q&A sheet, including J ay Logel. (ECF No. 353 at 3). 4 On Sunday, February 15, 20 15, an attorney for Ford, Mr. Tracy Walker, was preparing to defend the deposition of Said Deep by reviewing all docum ents produced by Ford that m entioned Mr. Deep’s nam e. (ECF No. 370 -3 at 1). During this process, Mr. Walker cam e across the Logel docum ent. Noting that the docum ent had been labeled “privileged and confidential” and contained advice and com m ents from Ford’s in-house counsel, Mr. Walker im m ediately notified Ms. Schebel of his discovery. (Id. at 2). After learning that the Logel docum ent m ay have been produced with the BOA docum ents, Ms. Schebel confirm ed that the Logel docum ent was included on the privilege log and was designated to be withheld as a privileged com m unication. (ECF No. 370 -2 at 3). The following day, Ms. Schebel inform ed Plaintiffs’ counsel in this action, and in the three other cases in which the BOA docum ents had been produced, that the Logel docum ent had been inadvertently disclosed. (Id.). Ms. Schebel requested that Plaintiffs im m ediately return the docum ent pursuant to the Court’s Clawback Order. Ms. Schebel then contacted Xerox to determ ine how the Logel docum ent had been produced despite its privilege designation. Ultim ately, Xerox advised that a processing error on its part caused the privilege designation to be stripped from the Logel docum ent during preparation for production, resulting in its inadvertent disclosure. (Id.). Ms. Schebel subsequently learned that ten other privileged docum ents contained in later productions were subject to a sim ilar processing error and were erroneously disclosed. A written notification and request for clawback was im m ediately issued on those docum ents as well. (Id.). According to inform ation supplied by Xerox to Ford’s counsel, Ford has produced 26,244 docum ents in this litigation as of March 20 , 20 15, and eleven docum ents have been identified as being affected by the processing error. (Id. at 4). 5 II. D is cu s s io n Plaintiffs argue that the Logel docum ent is not privileged, because it is not a com m unication between attorney and client for the purpose of requesting and receiving legal advice. Ford argues to the contrary, asserting that the com m ents by Mr. Logel are plainly intended as legal advice and are labeled by him as “privileged and confidential.” Ford supplies for in cam era review a com panion e-m ail sent by Mr. Logel with the revised Q&A draft, which Ford contends will substantiate its position. Plaintiffs respond that even if the Logel docum ent is privileged, Ford waived the privilege by producing the docum ent and allowing Plaintiffs a substantial am ount of tim e to use it in preparation of their case. In particular, Plaintiffs served Requests for Adm ission based upon the Logel docum ent and have also used the docum ent as the basis for specific allegations in their am ended com plaint. Regardless, Ford m aintains that its production of the Logel docum ent was inadvertent and, under Fed. R. Evid. 50 2(b) and the Court’s Clawback Order, the production does not waive the attorney-client privilege. A. Th e Lo g e l D o cu m e n t is a Pr iv ile g e d Co m m u n ica t io n As a prelim inary m atter, the Court m ust consider which forum ’s law to apply. The rule for m atters of privilege in federal court is found at Fed. R. Evid. 50 1, which provides, inter alia, “in a civil case, state law governs privilege regarding a claim or defense for which state law supplies the rule of decision.” Here, the substantive claim s and defenses are largely m atters of state law; 1 accordingly, it follows that any inquiry into whether the Logel docum ent is privileged as a confidential attorney-client com m unication is a question of state law. However, given that the instant action 1 Plaintiffs have asserted an alleged violation of the Magnuson-Moss Warranty Act, 15 U.S.C. § 230 1, et seq.; however, the vast m ajority of the allegations involve violations of individual state consumer protection, trade practices, and warranty acts. 6 involves claim s from m ultiple states that have been consolidated for discovery, the choice of which state law to apply is not obvious. Conceivably, the law of all twenty-two 2 involved states could or should be consulted. Plaintiffs choose to resolve the dilem m a by citing to the law of West Virginia, the state in which this Court sits, and to federal law, and Ford did not object to that approach. Certainly, in cases of com plex litigation, federal courts have analyzed the applicability of the attorney-client privilege using federal law despite the language of Rule 50 1. See In re Vioxx Prods. Liab. Litig., 50 1 F.Supp.2d, 789, 795 (E.D.La. 20 0 7). Another option is to apply the law of the state with the m ost significant relationship to the com m unication. See In re Yasm in & Yaz (Drospirenone) Mktg, Sales Practices & Prods. Liab. Litig., No. 3:0 9-m d-0 210 0 -DRHPMF, 20 11 WL 13750 11, at *9 (S.D.Ill. Apr. 12, 20 11) (citing Section 139 of the Restatem ent (Second) of Conflict of Laws (1971)). In this case, that state would presum ably be Michigan as the em ployees involved in the com m unication were in Ford’s corporate headquarters located in Michigan. Fortunately, the federal law of privilege and the laws of West Virginia and Michigan are com patible. Both West Virginia and Michigan recognize that not all com m unications between an attorney and his or her client are privileged. Instead, the privilege attaches only to com m unications m ade for the purpose of obtaining legal advice. State v. Burton, 254 S.E.2d 129, 135 (W.Va. 1979); see also State ex rel. Montpelier U.S. Ins. Co. v. Bloom , 757 S.E.2d 788, 794 (W.Va. 20 14) (“In order to assert an attorney-client privilege, three m ain elem ents m ust be present: (1) both parties m ust contem plate that the attorney-client relationship does or will exist; (2) the advice m ust be sought by the client from the attorney in his capacity as a legal advisor; (3) the comm unication 2 Twenty-three states are involved in the proposed am ended com plaint. 7 between the attorney and client m ust be intended to be confidential.”); also Ravary v. Reed, 415 N.W.2d 240 , 243 (Mich.App. 1987) (“[T]he attorney-client privilege attaches to com m unications m ade by a client to his or her attorney acting as a legal adviser and m ade for the purpose of obtaining legal advice on som e right or obligation.”). “Confidential client com m unications, along with opinions, conclusions, and recom m endations based on those com m unications, are protected by the attorney-client privilege because they ‘are at the core of what is covered by the privilege.’” McCartney v. Attorney General, 587 N.W.2d 824, 830 (1998), quoting Hubka v. Pennfield Tw p., 494 N.W.2d 80 0 , 80 2 (1992). Because the attorney-client privilege prevents the disclosure of otherwise relevant inform ation, the privilege is narrow in scope. Reed Dairy Farm v. Consum ers Pow er Co., 576 N.W.2d 70 9, 711 (Mich.App. 1998). Moreover, “the burden of establishing the attorney-client privilege or the work product exception, in all their elem ents, always rests upon the person asserting it.” State ex rel. U.S. Fid. and Guar. Co. v. Canady , 460 S.E.2d 677, 684 (W.Va. 1995). Sim ilarly, under federal law, “[c]onfidential disclosures by a client to an attorney m ade in order to obtain legal assistance are privileged.” Fisher v. United States, 425 U.S. 391, 40 3, 96 S.Ct. 1569, 48 L.Ed.2d 39 (1976) (citing 8 Wigm ore, Evidence § 2292 (McNaughton rev. ed.1961)). The privilege “does not shield all inform ation that a client divulges to an attorney, or vice versa, but rather is lim ited to instances where legal advice is sought or rendered.” Deseret Mgm t. Corp. v. United States, 76 Fed.Cl. 88, 90 (20 0 7) (quoting Pac. Gas & Elec. Co. v. United States, 69 Fed.Cl. 784, 810 (20 0 6)). Under federal law, there is a presum ption that com m unications between a client and his or her attorney are for the purposes of requesting legal guidance, Yankee Atom ic Elec. Co. v. United States, 54 Fed.Cl. 30 6, 315 (20 0 2), although that presum ption m ay not 8 extend to com m unications with a corporation’s in-house counsel when counsel also holds an executive position with the com pany. See, e.g., United States v. ChevronTexaco Corp., 241 F.Supp.2d 10 65, 10 76 (N.D.Cal. 20 0 2). Much depends upon the role of the attorney in the organization. See Boca Investerings P'ship v. United States, 31 F.Supp.2d 9, 12 (D.D.C. 1998) (“There is a presum ption that a lawyer in the legal departm ent or working for the general counsel is m ost often giving legal advice, while the opposite presum ption applies to a lawyer ... who works for the Financial Group or som e other ... m anagem ent or business side of the house.”). Under federal law, the party asserting the privilege bears the burden of establishing its applicability. AAB Joint Venture v. United States, 75 Fed.Cl. 448, 456 (20 0 7)). Plaintiffs m aintain that the Logel docum ent is not privileged because the com m unications were not m ade for the purpose of giving or receiving legal advice. According to Plaintiffs, J ay Logel was on e of several em ployees asked to provide com m ents on a m edia-related docum ent. Consequently, when Mr. Logel responded, his suggestions were nothing m ore than business advice. However, it is clear to the Court after conducting an in cam era review of Ford’s Exhibit D3 that the com m unications contained in the Logel docum ent constitute legal advice. At the tim e Mr. Logel was asked to review the Q&A sheet, Ford was already involved in litigation related to unintended accelerations. In addition, the m assive Toyota recall had the real potential of expanding litigation exposure to Ford, while creating an industry-wide liability issue. Exhibit D corroborates Ford’s assertion that Mr. Logel was consulted in his role as an attorney because of ongoing and potential litigation, and his com m ents were intended to convey the legal perils and liabilities to Ford associated with m aking certain statem ents 3 Exhibit D was not available to Plaintiffs due to its privileged content. 9 in light of the litigation. Plaintiffs argue that even if the Logel document contains legal advice, portions of the docum ent are still subject to disclosure to the extent that the portions relay facts. Plaintiffs contend that a fact does not becom e privileged sim ply because a client reveals it to his lawyer; therefore, while Mr. Logel’s advice m ay be subject to redaction, his statem ents of fact should be produced. Although Plaintiffs are correct that “the attorneyclient privilege ‘extends only to com m unications and not to facts,” it does not follow that the inclusion of facts in an attorney-client com m unication is fatal to the privilege that accom panies the com m unication. Continental Casualty Co. v. Am er. Hom e Assur. Co., Civil Action No.: 2:0 0 -0 260 , 20 10 WL 692942, at *5-6 (S.D.W.Va. Feb. 23, 20 10 ) (quoting State ex. rel. United Hosp. Center, Inc. v. Bedell, 484 S.E.2d 199, 20 9 (W.Va. 1997)). As this Court explained in Continental Casualty , a client m ay not be com pelled to disclose what he said or wrote to his attorney, but the client m ay be com pelled to disclose a relevant fact within his knowledge regardless of whether he com m unicated that fact to his attorney. However, that is not the circum stance here. In this case, facts are discussed by the attorney as an essential part of his advice. When factual m aterial is incorporated in an attorney-client com m unication, and the factual m aterial is “an integral part of the overall com m unication,” the entire com m unication rem ains privileged, including the factual content. Id. at 6. That is not to say that the privilege cloaks the facts under a blanket of non-disclosure; instead, the facts are protected only to the extent that they appear in and are an integral part of the privileged com m unication. This is so because attorneys give advice based upon certain factual scenarios. Thus, the attorney-client privilege is designed to protect “not only the giving of professional advice to those who can act on it but also the giving of inform ation to the 10 lawyer to enable him to give sound and inform ed advice.” Upjohn Com pany v. United States, 449 U.S. 383, 390 , 10 1 S.Ct. 677, 66 L.Ed.2d 584 (1981) (“The first step in the resolution of any legal problem is ascertaining the factual background and sifting through the facts with an eye to the legally relevant.”). Nevertheless, the client m ay not refuse to disclose the sam e factual m aterial if it appears in an unprivileged docum ent, or is available through the testim ony of a witness, because the facts, by them selves, are not privileged. In the instant action, the Logel docum ent contains som e factual statem ents. The statem ents are m ade by Mr. Logel to explain the reasons for his advice. As such, the factual inform ation is integral to the overall com m unication. Undoubtedly, the facts stated by Mr. Logel would have been comm unicated to him in his role as an attorney for Ford. This exchange of factual inform ation between corporate em ployees and the corporation’s lawyer in the course of providing legal advice is privileged. Id. at 395-96. However, Plaintiffs are not precluded from deposing corporate em ployees to discover their personal knowledge of the sam e facts. Id. at 396. B. Fo r d d id n o t W a iv e t h e Pr iv ile g e b y In a d v e r t e n t Pr o d u ct io n While the applicability of the privilege is governed by state law, waiver of the privilege is a m atter of federal law. Fed. R. Evid. 50 2(f); See, also, Sey ler v. T-Sy stem s North Am erica, Inc., 771 F.Supp.2d 284, 287-88 (S.D.N.Y. 20 11) (“Unlike the scope of the privilege, the waiver question is governed by Federal Rule of Evidence 50 2(a), which applies when a ‘disclosure is m ade in a Federal Proceeding.”). Rule 50 2 addresses the consequences that flow from the intentional or inadvertent disclosure of a privileged com m unication. Under Rule 50 2(b), when a privileged com m unication is accidently disclosed in a federal proceeding, the disclosure will not act as a waiver of the privilege if 11 three conditions are m et: (1) the disclosure is inadvertent; (2) the holder of the privilege took reasonable steps to prevent disclosure; and (3) the holder of the privilege prom ptly took reasonable steps to rectify the error. “All three prongs of Rule 50 2(b) m ust be m et in order to find that a disclosure of a privileged or protected docum ent does not result in a waiver.” Maxtena, Inc. v. Marks, 289 F.R.D. 427, 444 (D.Md. 20 12) (citing U.S. Hom e Corp. v. Settlers Crossing, LLC, No. DKC 0 8– 1863, 20 12 U.S. Dist. LEXIS 10 1778, at *29, 20 12 WL 30 25111 (D.Md. J uly 23, 20 12)). The requirem ents of Rule 50 2(b) m ay be superseded by an agreem ent between the parties, or by a clawback order, but only to the extent “such an order or agreem ent [provides] concrete directives regarding each prong of Rule 50 2(b)— i.e., (1) what constitutes inadvertence; (2) what precautionary m easures are required; and (3) what the privilege holder's post-production responsibilities are to escape waiver.” Id. (citing Mt. Haw ley Ins. Co. v. Felm an Prod., Inc., 271 F.R.D. 125, 130 , 133 (S.D.W.Va. 20 10 )). In areas where the order or agreem ent lacks specifics, Rule 50 2(b) will control. There is no serious dispute that Ford’s production of the Logel docum ent was inadvertent.4 Furtherm ore, Plaintiffs concede that Ford acted promptly and reasonably to rectify the error once it was discovered. Indeed, the Clawback Order entered by the Court allows the producing party fourteen days after discovery of the error to issue a written notification and seek clawback. Ford accom plished these tasks in twenty-four hours. Nevertheless, Plaintiffs argue that neither Rule 50 2(b), nor the Clawback Order, 4 Plaintiffs claim that Ford has not carried its burden to establish that production of the Logel document was inadvertent given that Ford has not provided any evidence of the processing error that resulted in the document’s disclosure, other than an affidavit from Ms. Schebel stating than an error occurred. The undersigned does not find this argum ent persuasive. In addition to the affidavit of Ms. Schebel, the Court notes that the Logel docum ent was included on Ford’s privilege log. Moreover, according to an affidavit from Mr. Walker, co-counsel for Ford, as soon as he realized that the Logel docum ent was included in a set of produced documents, he contacted Ms. Schebel. This call was m ade on a Sunday evening. The following day, Ms. Schebel issued written clawback requests. This evidence, taken as a whole, corroborates Ford’s representation to the Court that disclosure of the Logel docum ent was inadvertent. 12 protects Ford from its waiver of the privilege because (1) Ford did not act reasonably to protect the Logel docum ent from disclosure in the first place, and (2) fairness and justice dem ands waiver. The Clawback Order does not include any concrete terms explaining what precautions m ust be taken to m eet the reasonableness standard in the second prong of Rule 50 2(b); therefore, the Court will rely on Rule 50 2(b) to fill in the gaps. According to the Advisory Com m ittee Notes to Rule 50 2(b), m ultiple factors should be considered in determ ining whether the attorney-client privilege is waived by an inadvertent disclosure of a confidential com m unication. A five-factor test is often used in this circuit, Victor Stanley , Inc. v. Creative Pipe, Inc., 250 F.R.D. 251, 259 (D.Md. 20 0 8), and a sim ilar test has been adopted in the Sixth Circuit. See Evenflo Co. v. Hantec Agents Ltd., No. 3:0 5– CV– 346, 20 0 6 WL 2945440 , *6 (S.D.Ohio Oct.13, 20 0 6); Fox v. Massey – Ferguson, Inc., 172 F.R.D. 653, 671 (E.D.Mich. 1995). In Victor Stanley , the Court balanced the following factors to decide whether the privilege was waived: (1) the reasonableness of the precautions taken to prevent inadvertent disclosure; (2) the num ber of inadvertent disclosures; (3) the extent of the disclosures; (4) any delay in m easures taken to rectify the disclosure; and (5) overriding interests in justice. Id. at 259. The Advisory Com m ittee Notes to Rule 50 2(b) confirm that this type of m ulti-factor test is anticipated by the Rule, adding that “other considerations bearing on the reasonableness of the producing party’s efforts include the num ber of docum ents to be reviewed and the tim e constraints for production.” The Notes continue as follows: Depending on the circum stances, a party that uses advanced analytical software applications and linguistic tools in screening for privilege and work product m ay be found to have taken “reasonable steps” to prevent inadvertent disclosure. The im plem entation of an efficient system of records m anagem ent before litigation m ay also be relevant. 13 The rule does not require the producing party to engage in a postproduction review to determ ine whether any protected com m unication or inform ation has been produced by m istake. But the rule does require the producing party to follow up on any obvious indications that a protected com m unication or inform ation has been produced inadvertently. Id. Plaintiffs argue that Ford did not take reasonable steps to prevent inadvertent disclosure prim arily because Ford’s counsel did not review the docum ents after they were processed by Xerox, but before they were produced to plaintiffs in the four litigations. At the hearing, Ford’s counsel explained the docum ent collection and processing procedure as follows: Potentially relevant docum ents were gathered by Ford em ployees and sent to Xerox, where they were placed on a review platform . Ford’s counsel then reviewed the docum ents on Xerox’s platform and determ ined which were relevant. When exam ining the docum ents for relevancy, Ford’s counsel sim ultaneously conducted a privilege review. Relevant docum ents were m arked as such and were assigned a Bates-num ber range. The docum ents were electronically num bered within the range. Docum ents determ ined to contain privileged or protected com m unications were either redacted or designated as privileged in their entirety. Privileged docum ents were included on a privilege log, and Xerox was instructed to withhold from production all docum ents with a privilege designation. When Ford’s counsel responded to docum ent requests filed in individual cases and needed docum ents m aintained by Xerox, counsel contacted Xerox and requested that docum ents in certain Batesnum bered ranges be prepared. Xerox would then load the identified docum ents onto a CD and provide the CD to Ford’s counsel for production. For the m ost part, in order for Ford’s counsel to review the CD prior to producing it, counsel would have to load the CD 14 into a database, or load file, that could read the CD’s form atting. However, the CD containing the BOA docum ents was not form atted for a separate load file and could have been reviewed sim ply by inserting it into any com puter’s CD drive. The BOA production CD contained approxim ately 2,70 0 total docum ents, including the Logel docum ent. Going through the factors in the Victor Stanley test, Plaintiffs point out that Ford originally collected the docum ents in 20 12. Accordingly, there was a substantial am ount of tim e for Ford’s counsel to have checked the Xerox-processed docum ents for errors prior to producing them in October 20 14. Plaintiffs also stress that the production containing the Logel docum ent was not particularly large. According to Plaintiffs, although Ford argues that it has produced over 26,0 0 0 docum ents in the litigation, the particular production involving the Logel docum ent was relatively sm all, including only 2,70 0 docum ents. Plaintiffs claim that the disclosure in this case was com plete and extensive when considering that Plaintiffs had the entire Logel docum ent for four m onths and based written discovery, requests for depositions, and litigation strategy on statem ents contained in the docum ent. Plaintiffs argue that it is too late for Ford to “unring the bell.” They m aintain that the Logel docum ent has becom e intrinsic to their case, and they should not be expected to unlearn what they now know. Finally, Plaintiffs m aintain that it is both unfair and contrary to the interests of justice to allow Ford to clawback the Logel docum ent. For one thing, Plaintiffs assert that Ford had m any opportunities to realize its m istake soon after the Logel docum ent was disclosed and thus could have corrected the error before Plaintiffs cam e to rely on the docum ent. For exam ple, Plaintiffs indicate that they requested Said Deep’s deposition within a few weeks of receiving the Logel docum ent. Ford’s counsel expressed confusion regarding the request in view of Mr. Deep’s role as a corporate spokesperson, yet apparently m ade 15 no effort to review the docum ents that had been produced with references to Mr. Deep. Had Ford taken this sim ple step, the inadvertent disclosure would have been found m onths earlier. Even after receiving requests for adm ission derived from the Logel docum ent and a request for J ay Logel’s deposition, it was still nearly two weeks before Ford recognized its m istake. In addition, Plaintiffs claim that justice will be im peded unless the privilege is deem ed to be waived. Plaintiffs argue that the factual adm issions m ade by Mr. Logel are crucial to their case. Ford has denied requests for adm ission based specifically on the statem ents in the Logel docum ent, and despite Plaintiffs’ efforts, they have not found com parable adm issions in any of the other docum ents produced by Ford. Consequently, in Plaintiff’s view, justice requires the docum ent to be disclosed. 1. Re as o n able n e s s o f p re cau tio n s The first factor in most m ulti-factor tests is whether the disclosing party took reasonable precautions to protect the confidential com m unication from disclosure. Plaintiffs rely heavily on this Court’s analysis in Mt Haw ley Insur. Co. v. Felm an Prod., Inc., 271 F.R.D. 125 (S.D.W.Va. 20 10 ) for their assertion that Ford’s failure to perform a quality control review of the BOA docum ents processed by Xerox prior to producing them was unreasonable. Although the analysis in Mt. Haw ley offers constructive guidance, the Court disagrees that the conclusions reached in that case are transferrable to the present circumstance given the fundam ental differences in their factual scenarios. In Mt. Hawley, potentially relevant electronically stored inform ation (“ESI”) was collected based upon pre-selected search term s, and then potentially privileged docum ents were culled and separated based upon another set of search term s. The rem aining 346 gigabytes of ESI was produced without being reviewed by anyone and 16 without sam pling for relevancy, over-inclusiveness, or under-inclusiveness. Id. at 135. As a result, thirty percent of the m illion-page production was determ ined to be “junk,” and at least 377 privileged docum ents not harvested by the search term s were disclosed. Som e of these docum ents were listed on a privilege log, and som e were not listed. Som e of these docum ents were the focus of clawback efforts, and som e were not, largely depending upon whether the adverse party had brought the issue to the attention of Felm an Production, Inc. (“Felm an”), the party producing the ESI. To m ake m atters worse, Felm an had stam ped every docum ent in the 346-gigabyte production as “Confidential,” regardless of whether the docum ent deserved that designation. Moreover, after learning of the inadvertent disclosure of privileged docum ents, Felm an was slow to respond and failed to retrieve all copies. In finding that Felm an did not undertake reasonable precautions to protect the privileged docum ents, the Court was particularly im pressed with Felm an’s indifference and rather sloppy approach to the discovery process. Felm an’s failure to test the reliability of the word searches, its gross overproduction of irrelevant m aterials, and the substantial num ber of privileged docum ents that were disclosed were all key factors in the Court’s conclusion that the privilege was waived. Id. at 136. In contrast, there is no issue here regarding the adequacy of search term s, the failure to sam ple collections, or the lack of an “eyes-on” review of the docum ents prior to their production. To the contrary, there was a two-tiered review. First, em ployees of Ford collected all potentially germ ane docum ents and forwarded them to Xerox. Second, the docum ents were reviewed by an attorney, who confirm ed the relevancy of the docum ents and identified, redacted, and designated privileged and protected m aterials. This type of review is com m on and generally accepted as reasonable. See U.S. 17 ex rel. Bagley v. TRW , Inc., 20 4 F.R.D. 170 , 179 (C.D.Cal., 20 0 1) (“A two-layer system of pre-production review—in which relatively m inisterial determ inations are m ade by em ployees of the producing party or by clerks, paralegals, or inexperienced associates em ployed by a law firm , and in which the final decision about what docum ents should or should not be produced is m ade by experienced in-house or outside lawyers—is not unusual.”). As the Court in Bagley noted, “[i]n addition to providing m eaningful protection for privileged documents, such an approach reduces the transaction costs of litigation by allowing individuals with less experience and training ... to perform the m ost tim e-consum ing and routine tasks. Punishing defendant for adopting this com m on, reasonable, and cost-effective strategy would not m ake sense.” Id.; see also BN P Paribas Mortg. Corp. v. Bank of Am erica, N.A., Nos. 0 9 Civ. 9783(RWS), 0 9 Civ. 9784(RWS), 20 13 WL 2322678, at *5 (S.D.N.Y. May 21, 20 13) (finding that the process of collecting docum ents, loading them into an online docum ent review platform m aintained by an external vendor, and having attorneys review prior to production was a com m on practice previously considered by courts to be reasonable); Jacob v. Duane Reade, Inc., No. 11 Civ. 0 160 (J MO)(THK), 20 12 WL 651536, at *4 (S.D.N.Y. Feb. 28, 20 12) (finding that reasonable m easures were em ployed where defendants hired “an outside vendor to host the electronic data retrieved. They then retained a team of between ten and fifteen contract attorneys, working under the supervision of a Project Manager and litigation counsel ... [and] prepared lists of nam es and attorneys whose com m unications should be privileged, em ployed search filters, and quality control reviews.”). The glitch that resulted in the inadvertent disclosure of the Logel docum ent occurred after the “eyes-on” attorney review, when the selected docum ents were being prepared by a vendor. Courts, considering disclosures due to processing errors that 18 occurred after attorney review, selection, and segregation of confidential m aterials, have em phasized that the core elem ent of the first factor is the reasonableness of the review procedure, not the precision of post-review processing. See, e.g., Heriot v. By rne, 257 F.R.D. 645, 660 (N.D.Ill. 20 0 9). In Heriot, m uch like the present case, highly confidential docum ents were disclosed through a post-review processing error by a docum ent vendor. The error was not recognized until two m onths later when the producing party was preparing for a deposition. The following day, the producing party issued a notice and attem pted to clawback the privileged documents. Finding that the inadvertent production was not a waiver of the privilege, the Court stated, “[p]laintiffs had no duty to re-review the docum ents after providing them to the Vendor. That would be duplicative, wasteful, and against the spirit of FRE 50 2. Additionally, im posing on disclosing parties a duty to re-review would chill the use of e-vendors, which parties com m only em ploy to com ply with onerous electronic discovery.” Id. (citations om itted); see also D'Onofrio v. Borough of Seaside Park, Civil Action No. 0 9– 6220 (AET), 20 12 WL 1949854, at *11 (D.N.J . May 30 , 20 12) (holding that the producing party had no duty to review document CD prepared by vendor to insure accuracy of production prior to supplying it to the requesting party). In D’Onofrio, after com pleting the review and designation process, the responsible attorney delegated to a non-attorney, clerical em ployee the task of separating the flagged docum ents from the rem aining docum ent production and sending the non-flagged, non-privileged information to a docum ent vendor to be scanned onto a CD. The resulting CD was produced without prior review. Later, the producing party discovered that the CD erroneously contained several of the docum ents that had been flagged by the attorney as confidential. Finding that the producing party’s failure to exam ine the CD prior to production was not unreasonable, 19 the Court explained: Indeed, as explicitly noted in FRE 50 2(b)’s Explanatory Note, “[t]he rule does not require the producing party to engage in a post-production review to determ ine whether any protected com m unication or inform ation has been produced by m istake.” Thus, having im plem ented reasonable steps to prevent the inadvertent disclosure of privileged inform ation, the Borough Defendants were perm itted to rely on sam e, at least until there were “any obvious indications that a protected com m unication or inform ation ha[d] been produced inadvertently.” Explanatory Note, FRE 50 2(b). Reasonable precautions are not necessarily foolproof. “Carelessness should not be inferred m erely because an inadvertent production of privileged docum ents occurred. The reasonableness of the precautions adopted by the producing party m ust be viewed principally from the standpoint of custom ary practice in the legal profession at the tim e and in the location of the production, not with the 20 – 20 vision of hindsight.” U.S. ex rel. Bagley , 20 4 F.R.D. at 179-80 . Having considered the steps taken by Ford to prevent disclosure of the Logel docum ent, the undersigned finds that, while not perfect, the precautions taken by Ford fell within the range of reasonable. Therefore, this factor weighs in favor of preserving the privilege. 2 . N u m be r o f in ad ve rte n t d is clo s u re s The second factor to consider is the num ber of inadvertent disclosures. Out of the 2,70 0 BOA docum ents produced, the Logel docum ent is the only inadvertent disclosure. A single error is not extrem e and certainly is not indicative of a lax process. Since learning of Xerox’s error, Ford and Xerox have conducted an investigation of all of Ford’s docum ent productions and discovered that out of roughly 26,0 0 0 docum ents produced, ten additional docum ents fell victim to a sim ilar processing error and were m istakenly disclosed. Even still, that total am ounts to only four one hundredths of the 20 total production. Many courts would find this error rate to be well within a reasonable range. See, e.g., In re Grand Jury Investigation, 142 F.R.D. 276, 280 -81 (M.D.N.C. 1992) (Production of 18 confidential docum ents out of 22,0 0 0 docum ents produced was not evidence of lax procedures); Therm oset Corp. v. Building Materials Corp. of Am erica, No. 14– 60 268– CIV, 20 15 WL 1565310 , at *8 (S.D.Fla. Apr. 8, 20 15) (One docum ent out of 1,0 0 0 pages was not a basis for waiver); Sm ith v. Allstate Ins. Co., 912 F.Supp.2d 242, 248 (W.D.Pa. 20 12) (Production of seven docum ents containing privileged inform ation out of 1,20 0 pages produced was considered a sm all num ber of inadvertent disclosures); Am erican Coal Sales Co. v. Nova Scotia Pow er Inc., No. 2:0 6– cv– 94, 20 0 9 WL 467576, at *17 (S.D.Ohio Feb. 23, 20 0 9) (One inadvertent disclosure in 2,0 0 0 produced docum ents was not significant); Lazar v. Mauney , 192 F.R.D. 324, 330 (N.D.Ga. 20 0 0 ) (the privilege was not waived when three privileged docum ents were included in a production of 1,0 0 0 docum ents); Lois Sportsw ear, U.S.A., Inc. v. Levi Strauss & Co., 10 4 F.R.D. 10 3, 10 5 (S.D.N.Y. 1985) (The inadvertent production of 22 privileged docum ents with 16,0 0 0 other docum ents did not result in waiver of privilege). Accordingly, this factor weighs in favor of preserving the privilege. 3 . Exte n t o f d is clo s u re The third factor refers to the degree to which inadvertently disclosed docum ents have “worked their way into the fabric of the case.” In re Grand Jury Investigation, 142 F.R.D. at 281. “The concern of the court, and the reason for consideration of this factor, is whether any m eaningful confidentiality can be restored.” Id. Although Plaintiffs claim that the disclosure in this case was com plete, and they have relied on the Logel docum ent as a basis for discovery and deposition requests, for litigation strategy, and in form ulating som e of the allegations in their am ended com plaint, the docum ent has not 21 been m ade a part of the record, or used in any deposition. Moreover, although Ford produced the Logel docum ent in four different cases, the docum ent reportedly has not been openly and explicitly incorporated in any of the other proceedings. Therefore, despite com plete disclosure of the Logel docum ent to Plaintiffs, disclosure has not occurred outside of the closed environm ent of discovery. For all practical purposes, the effect of the inadvertent disclosure can be greatly m inim ized, or even elim inated. The Logel docum ent should be returned and not m ade a part of the record, provided to experts or used as a basis or their opinions, or tendered to witnesses during deposition and trial testim ony. As such, the Logel docum ent should have no affect on the outcom e of the litigation. Consequently, this factor is neutral. 4 . Re as o n able n e s s o f e ffo rts to re ctify e rro r The parties agree that there was no m easurable delay on Ford’s part in attem pting to rectify the error once the m istake was known. Plaintiffs suggest that Ford should have realized its error sooner in view of som e of its discovery requests, but this particular factor focuses on the actions of the producing party after it discovers the inadvertent disclosure. See S.E.C. v. Badian, No. 0 6 Civ. 2621 (LTS)(DFE), 20 0 9 WL 222783, at *4 (S.D.N.Y. J an. 26, 20 0 9) (citing Aram ony v. United W ay of Am erica, 969 F.Supp 226, 237 (S.D.N.Y. 1997); Haw kins v. Anheuser-Busch, Inc., No. 2:0 5-cv-688 20 0 6 WL 3230 756, at *2 (S.D.Ohio J une 19, 20 0 6) (citing Lois Sportsw ear, U.S.A., Inc. v. Levi Strauss & Co., 10 4 F.R.D. 10 3 (S.D.N.Y. 1985); My ers v. City of Highland Village, Texas, 212 F.R.D. 324, 327 (E.D.Tex. 20 0 3). Here, Ford’s counsel discovered the potential inadvertent disclosure of the Logel docum ent on a Sunday evening. The following day, co-counsel confirm ed the error and im m ediately sought clawback of the docum ent by written notification and request to all 22 known recipients of the BOA docum ents. Therefore, this factor weighs in favor of preserving the privilege. 5. Ju s tice an d fairn e s s Finally, Plaintiffs believe that the Logel docum ent supplies crucial factual inform ation that they m ay not be able to duplicate through other evidence. Nonetheless, this type of consideration is not a factor in the waiver analysis. The overriding interests of fairness and justice “m ust not be confused with the benefit that the receiving party would enjoy from the waiver. Instead ‘[t]he prejudice factor focuses only on whether the act of restoring im m unity to an inadvertently disclosed docum ent would be unfair, not whether the privilege itself deprives parties of pertinent inform ation.’” N ilaver v. Mercy Health Sy stem s-W estern Ohio, No. 3:99cv612, 20 0 4 WL 5345311, at *6 (S.D. Ohio Mar. 22, 20 0 4) (quoting Bank Brussels Lam bert v. Credit Ly onnais (Suisse) S.A., 160 F.R.D. 437, 446 (S.D.N.Y. 1995). Otherwise, the fifth factor “would always favor the receiving party.” U.S. ex rel. Bagley , 20 4 F.R.D. at 184. Moreover, “in determ ining whether an inadvertent production of privileged m aterial am ounts to a waiver, the im portance of the attorney-client privilege should not be ignored. ... A party to whom privileged docum ents are produced inadvertently, by contrast, has no inherent ‘fairness’ interest in keeping them , unless the producing party waited so long to address the problem after having been inform ed of it that the receiving party reasonably changed its position in reliance upon their continued availability.” Id. at 181-82 (citing Kansas City Pow er & Light Co. v. Pittsburg & Midw ay Coal Mining Co., 133 F.R.D. 171, 174 (D.Kan.1989) (“Defendant fortuitously obtained the privileged documents. It could not have expected to obtain them and could not have reasonably relied on them . To the extent defendant did rely on them , it did so without plaintiffs' knowledge or consent.”). 23 Although the length of tim e Plaintiffs had possession of the Logel docum ent weighs som ewhat in favor of waiver, there was no reason for Ford to suspect that the docum ent had been produced by its vendor against the express instructions of Ford’s litigation counsel until the docum ent was discovered during deposition preparation. Plaintiffs’ contention that Ford’s counsel should have suspected disclosure when Ford received Plaintiffs’ request for the deposition of Said Deep presum es a duty on Ford’s counsel to im m ediately collect Mr. Deep’s docum ents sim ply because his deposition was requested, even though it was not yet scheduled. That presum ption is not realistic given the dem ands and tim e constraints of large-scale litigation, as well as the m utable dem ands m ade by parties during the discovery process. For these reasons, the undersigned finds this factor to be neutral. III. Co n clu s io n Having found the Logel docum ent to be privileged, the Court further finds that it was inadvertently disclosed through a vendor’s error. The Court has analyzed the factors under Fed. R. Evid. 50 2(b) and the Clawback Order, and finds three factors to weigh in favor of preserving the privilege, while two factors are neutral. Therefore, the Court concludes that Plaintiffs’ m otion should be D EN IED , and Ford is entitled to clawback the Logel docum ent. The Clerk is directed to provide a copy of this Order to counsel of record and any unrepresented party. EN TERED : April 14, 20 15 24
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