Opinion
Civil No. 03-1485 (JAG/GAG).
July 11, 2006
OPINION AND ORDER
Before the Court is defendant's Esso Standard Oil Company of Puerto Rico ("Esso") Motion for Protective Order Requiring the Return of Inadvertently Produced Privileged Documents (Docket No. 450). Specifically, Esso asks the court to direct plaintiffs and their respective counsel to: (1) return all copies of inadvertently produced privileged documents to Esso, and, (2) destroy the relevant portions of documents or computer files containing summaries of, or quotations from, the inadvertently produced documents. Finally, Esso asks that plaintiffs refrain from mentioning, using, or disclosing the documents or their contents in any way or for any purpose. After carefully reviewing and considering the pleadings and applicable law, the Court hereby DENIES Esso's Motion.
I. FACTUAL BACKGROUND
On March 14, 2006, third-party Carlos Belgodere filed a motion for permission to file a counterclaim against Esso.See Docket Nos. 356 and 357. Attached to the proposed counterclaim were several documents that were stamped with the prefix "VEGAC." Said documents had been disclosed by Esso during the months of November and December 2005.
Mr. Belgodere has since been dismissed with prejudice as third party defendant. See Docket No. 516.
Three days later, Esso recognized the exhibits as privileged and claimed that they were inadvertently produced due to an "errant mouse click." Esso contends that in 2005, an electronic file was created for all documents with a VEGAC prefix that were responsive to plaintiffs' written discovery requests. Similarly, a separate electronic file was created for documents with a VEGAC prefix that were either privileged or not responsive to plaintiffs' written discovery. In the rush to meet the court's discovery deadline, the two files were unintentionally merged. As a result, approximately 1500 potentially privileged documents were inadvertently produced. See Esso's Emergency Motion for Temporary Protective Order. Docket No. 359 at page 2.
The documents at issue total approximately two-thousand pages and consist mostly of, but are not limited to, e-mails, letters, notes, pictures, and receipts. None of these items had been previously disclosed to plaintiffs or identified as privileged material on a privilege log.
Attached to Esso's Emergency Motion for Temporary Protective Order (which the Court granted) is a list of Potentially Privileged Documents which appear to be all of the documents that had been assigned a VEGAC prefix. See Docket No. 359. On May 15, 2006, Esso filed its Log of Inadvertently Produced Privileged Documents addressing which files were in fact privileged, and the content of the same. See Docket No. 450 Exhibit 4.
II. LEGAL ANALYSIS
The Court must determine whether Esso waived any confidentiality privilege by its inadvertent disclosure of the documents in question. Esso seeks to make the protective order permanent, and further requests a ruling by this court to the effect that plaintiffs return and/or destroy the documents. See Esso's Motion for Protective Order Requiring the Return of Inadvertently Produced Privileged Documents (Docket No. 450).
Courts which have faced the issue of whether the attorney-client privilege is waived by the inadvertent disclosure of a document that would in fact have been otherwise protected have employed three different tests to determine if the privilege was waived: (1) the "never waived," (2) the "totality of circumstances," and, (3) the "strict waiver" test.
Under the "never waived" approach, a disclosure that was merely negligent can never effect a waiver because, a fortiori, the holder of the privilege lacks a subjective intent to forgo protection. See Amgen Inc. v. Hoechst Marion Roussel, Inc. 190 F.R.D. 287, 290 (D.Mass. 2000); Mendenhall v. Barber-Greene Co., 531 F. Supp. 951, 954 (N.D.Il. 1982); Helman v. Murry's Steaks, Inc., 728 F.Supp. 1099, 1104 (D. Del. 1990);Kansas-Nebraska Natural Gas Co., Inc. v. Marathon Oil Co., 109 F.R.D.12, 21 (D.Neb. 1983). Thus, only a deliberate and intentional disclosure forfeits the privilege.
Under the "strict accountability" approach the privilege is always waived regardless of the privilege holder's intent or inadvertence. See Ares-Serono, Inc. v. Organon Int'l B.V., 160 F.R.D. 1, 4(D.Mass. 1994); International Digital System Corp. v. Digital Equipment Corp., 120 F.R.D. 445, 449 (D.Mass. 1988). "Finding waiver in situations where in which the forfeiture of the privilege was not subjectively intended by the holder is consistent with the view, expressed by some cases and authorities, that the essential function of the privilege is to protect a confidence which, once revealed by any means, leaves the privilege with no legitimate function to perform." McCormick,McCormick on Evidence § 93 at page 372 (Vth ed. 2003 suppl.) (citing United States v. Kelsey-Hayes Wheel Co., 15 F.R.D. 461, 464 (E.D.Mich 1954); People v. Bloom, 85 N.E. 824, 826. (N.Y. 1908) ("[W]hen the secret is out, it is out for all time, and cannot be caught again like a bird, and put back in its cage.")). Courts which follow this approach see little benefit in recognizing a privilege founded on the principle of confidentiality when that confidentiality has been breached. It best encourages attorneys to safeguard their documents so as to avoid all inadvertent disclosures.
Plaintiffs contend that the First Circuit has previously adhered to the "strict waiver" test. See Texaco Puerto Rico, Inc. v. Department of Consumer Affairs, 60 F.3d 867, 883 (1st Cir. 1995) (affirming this district court's finding that defendant had automatically waived any privilege by inadvertently disclosing some of the documents in question to plaintiff's legal representatives). In said case, the Court held that "it is apodictic that inadvertent disclosures may work a waiver of the attorney client privilege. Thus, it begs credulity to argue that the District Court had erred "in finding an automatic waiver."Id. (emphasis added).
"Unlike the strict accountability rule, which rigidly requires that all inadvertent disclosures constitute a waiver, the word ` may' provides for discretion."Amgen Inc., 190 F.R.D. 287, 291 (D.Mass. 2000) The usage of the word " may" entails a fact-finding analysis to determine when it may or may not constitute a waiver. "The First Circuit describes the negligent conduct of the disclosing party, a description which would be unnecessary had the First Circuit adopted the strict accountability rule since the disclosing party's intent or negligence is irrelevant to the application of said rule." Id. http://web2.westlaw.com/find/default.wl?DB=506SerialNum= 1995149199FindType=YReferencePositionType=SReferencePosition= 883AP=fn=_toprs=WLW6.06mt=Westlawvr;=2.0sv=SplitMoreover, "the costs of attempting to avoid waiver under a strict rule would argue strongly for modification along these lines, and it is believed that the decisions are tending in these direction". McCormick on Evidence § 93 at pages 372-373.
Based on its reading of Texaco Co., supra, this court is compelled to follow what "has been called the `middle test,' the `pragmatic approach,' or the `totality of the circumstances approach'." United States of America ex rel. Richard D. Bagley v. TRW, Inc., et al. 204 F.R.D. 170, 176 (C.D.Cal. 2001). Said test holds that inadvertent disclosure only constitutes a waiver, if, in view of the totality of the circumstances, adequate measures were not taken to avoid the disclosure. "The party claiming the protection of a privilege bears the burden of demonstrating, by a fair preponderance of the evidence, not only that the privilege applies, but also that it has not been waived [by the inadvertent disclosure]." Amgen,190 F.R.D.at 289; see also In re Grand Jury Subopena (Zerendow), 925 F.Supp. 849, 855 (D.Mass. 1995). Thus, it is considered that a client has met the burden of establishing that a privilege exists and no waiver has occurred if adequate steps have been taken to ensure a document's confidentiality.
"This approach empowers courts to consider a number of circumstances relating to the inadvertent production, including (1) the reasonableness of the precautions taken to prevent inadvertent disclosure, (2) the amount of time it took the producing party to recognize its error, (3) the scope of the production, (4) the extent of the inadvertent disclosure, and (5) the overriding interest of fairness and justice."Amgen,190 F.R.D.at 291. "[D]epending on the totality of these factors, the court may rule either that the inadvertent disclosure has effected a waiver of the privilege or that the privilege remains intact." Id. A. Reasonableness of the precautions taken to prevent inadvertent disclosure
"Whenever a party seeks a court's assistance in avoiding the consequences of its own inadvertent disclosure, it is asking that limited public resources be used to solve a problem that might not have arisen if the party had initially made a greater effort to preserve the privilege. Courts are and should be available in a variety of contexts to provide relief to parties from the consequences of their own mistakes, e.g., Fed.R.Civ.P.60(b), but, for deterrent purposes, courts may and should hold parties accountable for failing to make a reasonable effort to protect privileges that were created for their own benefit." Fleet National Bank v. Tonneson Co. 150 F.R.D. 10, 16 (D. Mass 1993). "Along the same lines, if the party invoking the privilege failed to take even minimally adequate precautions to guard against inadvertent disclosure, the court could properly withhold protection as a deterrent to such laxness in the future." Id. at 15.
Esso contends that it:
"took reasonable precautions to protect its privileged documents by placing them in an electronic file that was not to be produced. Esso could not have foreseen or reasonably prevented the errant mouse click that resulted in the inadvertent production. A finding of waiver will send the wrong message that parties must undertake extraordinary efforts in responding to document requests, even if such efforts result in the production of fewer documents or a delay in production."Esso's Motion for Protective Order Requiring the Return of Inadvertently Produced Privileged Documents at pages 2-3 (Docket No. 450). The Court is not persuaded by said argument. Privileged information, like the use of modern technology, in a case involving such a vast amount of documents exchanging hands deserves the utmost attention.
Esso points to the separation of electronic files as an example of reasonable precautions. The Court notes that the great majority of Esso's documents consist of handwritten notes of the attorneys which, were scanned and converted to "pdf." format to include them in the folder. A quick inspection of the VEGAC file, or part thereof, after it was burned on the disk, however, should have been sufficient to detect at least one of the handwritten notes and ultimately should have pointed out to the attorneys that an error had occurred.
Esso further contends that: "Before Esso's files of responsive documents were burned to a disc, they were electronically screened for documents containing a ` privileged' code." Esso's Motion for Protective Order Requiring the Return of Inadvertently Produced Privileged Documents at page 6 (Docket No. 450). Even if so, Esso nonetheless failed to screen what was eventually produced to plaintiffs: the disks themselves. A review of the disks, prior to being produced, would have ensured that only the proper documents were copied and, in turn, produced to plaintiffs.
This Court is not compelled to protect privileged information inadvertently disclosed by an "errant mouse click". If parties opt to use technological resources to store privilege information, they should also provide the necessary protection for precisely that information.
The Court further cannot conceive that during a three to four month period no one at Esso checked or worked on the VEGAC folder. "[I]f the inadvertent disclosure occurred so far in the past or otherwise under circumstances where it was clear that recognition of the privilege would be an exercise in futility, the privilege could properly be deemed waived." Fleet, 150 F.R.D.at 15. It would be unfair to deprive plaintiffs of the documents that were produced to them nearly four months beforehand simply because now, someone realized that these were "inadvertently disclosed." The detriment to plaintiffs factor here outweighs Esso's possible benefit in this instance. More so, when Esso found out about the inadvertent disclosure (March 14th) a Tuesday, it was not until the Friday of that week (March17) that Esso submitted its Motion for a Protective Order (Docket No. 356 and 359).
C. The scope of the production and the extent of the inadvertent disclosure
Esso was required to sort and produce approximately four-hundred thousand (400,000) pages of documents of which two-thousand privileged documents were inadvertently produced.See Docket No. 450-1. An occasional inadvertently-produced document or documents would be more comprehensible under the circumstances of such a large production. "Here the total scope of the production was necessarily broad and is but indicative of the extensive discovery required in the context of complex litigation. Yet, such a substantial release of privileged information as occurred here suggests that little can be done to reverse the damage." Amgen,190 F.R.D.at 293. Particularly here, plaintiffs had access to the information during a four month period. "Thus, with respect to both the number of documents produced and the number of individuals who have already seen the documents, the scope of the disclosure in this case is dramatic." Id. It would be a very expensive, time-consuming and unfair task to deprive plaintiffs from using the vast amount of documents produced to them.
D. The overriding interest of fairness and justice
While this court is compelled by the fact that Esso might well be adversely affected by the present ruling, the overriding interest of fairness and justice favors plaintiffs. It would be unjust to reward Esso by simply striping away from plaintiffs documents which, they have now had for several months. Esso's request that this Court do not hold it accountable for its error, which waives a privilege that was in fact created for its own benefit, does not justify the use of judicial resources to solve a problem that might have not have arisen if adequate precautions had been taken in the first place.
III. CONCLUSION
Based on the aforementioned reasons, Esso's Motion for Protective Order (Docket No. 450) is hereby DENIED.
This Court's present ruling would have been exactly the same under the "strict waiver' test.
SO ORDERED.