Opinion
No. 2013-CV-00540
12-12-2016
Hooksett Sewer Commission v. Penta Corporation, et al
ORDER
Plaintiff Hooksett Sewer Commission ("Hooksett") has filed a Motion for a Protective Order seeking an Order that the Court find that a document produced by Defendant I. Kruger, Inc. ("Kruger") is not privileged, because any privilege applicable to it has been waived. For the reasons stated in this Order, the Motion is GRANTED.
I
This litigation arises out of construction of a waste water treatment plant in Hooksett, New Hampshire. Suit was brought in September, 2013. In December, 2013 the parties to this litigation, including Kruger, agreed to exchange documents in their possession regarding the Hooksett plant. Pursuant to this agreement, Kruger produced approximately 6500 files on December 17, 2013 to all of the parties to this litigation. All of the files were produced electronically by providing flash drives to counsel. On March 20, 2014, then counsel for Kruger sent a memorandum to all counsel seeking to claw back its entire production on the grounds that Kruger had neglected to exclude purportedly privileged documents. Mot. for Prot. Order, Ex. A. A memorandum from Kruger's counsel stated in relevant part:
As you know, due to a programming difficulty with our document management system, our initial production of documents in the Hooksett matter contained privileged communications, two of which we have already clawed back pursuant to our agreement. It now appears that the programming error was more severe than we had originally understood. Therefore I am going to need to claw back additional documents from the production.
Kruger's counsel requested that all electronic files be returned, and stated it would "have those drives reformatted to produce the documents without the privileged communications and, of course, provide an updated privilege log". Mot. for Prot. Order, Ex. A. In March, 2015 Kruger obtained new counsel. According to Kruger, it completed a review of the documents clawed back and produced 4,512 documents, containing 25,041 pages on June 4, 2015. Kruger's Obj. to Mot. For Prot. Order, p. 3. These documents were produced as part of Kruger's Rule 22 Automatic Disclosure. A little more than a year later, on June 9, 2016 Hooksett notified Kruger that it had identified a document in the production, marked KRUGER 22252 PDF which it believed "may have been prepared by an attorney or with attorney involvement". Hooksett advised Kruger that although it did not believe the document was subject to a valid claim of privilege because any privilege with respect to the document had been waived, it had temporarily segregated the document from the production. Kruger responded that the document was privileged, because it was created for Kruger by its counsel, and it identifies a number of potential legal issues concerning the Hooksett wastewater treatment plant. According to Kruger, its inclusion in its document production of June 5, 2015 was inadvertent and unintentional. Upon learning from Kruger that it did in fact assert a claim of privilege, Hooksett filed the instant Motion.
II
The New Hampshire Supreme Court has recognized that work product privilege may be waived by conduct, State v. Dedrick, 135 N.H. 502, 506 (1992) or by use of a document, New Hampshire Right to Life v. Dir. of New Hampshire Charitable Trust, 169 N.H. 95, 108 (2016). However, the law regarding when inadvertent disclosure of a document will result in a waiver of privilege with respect to that document has not been addressed by the New Hampshire Supreme Court. The parties apparently agree that the test used in federal courts to determine whether or not inadvertent disclosure has resulted in waiver should be applicable here, Mot. for Prot. Order, ¶ 15; Obj. to Mot. for Prot. Order, p. 4. The Court believes that this rule is consistent with principles of New Hampshire law, and will therefore apply it.
Under the 2007 amendments to Federal Rule of Evidence 502 (b) the inadvertent disclosure of privileged information "does not operate as a waiver" if:
(1) The disclosure is inadvertent;
(2) The holder of the privilege or protection took reasonable steps to protect disclosure; and
(3) The holder promptly took reasonable steps to rectify the error, including, if applicable, following Federal Rule of Civil Procedure 26(b)(5)(B).
The Advisory Committee Notes to the Rule make it clear that the Advisory Committee rejected the review that any inadvertent disclosure constitutes waiver without regard to the protections taken to avoid such a disclosure and adopted the majority view that an inadvertent disclosure is not a waiver if the holder of the privilege took reasonable steps to prevent disclosure and also promptly took reasonable steps to rectify the error.
To determine whether reasonable precautions were taken to avoid inadvertent disclosure of privileged information, federal courts consider:
(1) The reasonableness of precautions taken to prevent disclosure of privileged material;
(2) Time taken to rectify the error;
(3) The scope of discovery if the situation involves massive production of
documents which would render disclosure more excusable;Riverio-Calder v. Cooperativa de Ahorro y Credito de Aguiladilla, 2013 U.S.Dist.LEXIS 17697 (D.P.R. Feb. 8, 2013) * 9. ; see also Industrial Communications & Wireless, Inc. v. Town of Alton, 2008 U.S. Dist. LEXIS 61383 (D.N.H. August 7, 2008) *6-10.
(4) The extent of the disclosure of privileged information; and
(5) Considerations of fairness.
Application of these factors leads inexorably to the conclusion that privilege has been waived. In the first place, Kruger did not take reasonable actions to prevent the disclosure of privilege. Kruger's explanation for its first inadvertent production was that it misspelled the name of its own in house counsel while conducting a privilege search electronically. It is true that the Advisory Committee Notes to Federal Rule of Evidence 502(b) provides that "a party that uses advanced analytical software applications and linguistic tools in screening for privilege and work product may be found to have taken "reasonable steps" to prevent inadvertent disclosure". But at oral argument, counsel for Kruger represented that the first search was partly done by the client rather than completely by counsel.
Nonetheless, Hooksett does not claim waiver as a result of that first disclosure Rather, Hooksett produced KRUGER22252PDF almost a year later when, presumably aware that its electronic search program had not adequately detected privileged documents, its current lawyers did not do a sufficient search to ensure it was protecting its privilege when it reproduced its initial production. As in United States v. Citgo Petroleum Corporation, 2007 U.S. Dist. LEXIS 27986 (S.D.Tex. April 16, 2007)*13 "the multiple disclosures, by different law firms, at different times" belies any claim that Kruger acted reasonably in protecting its privilege. See also Industrial Communications & Wireless, Inc. v. Town of Alton (supra) at * 7 (" The precaution of assigning an associate to review and pull privileged material from the four boxes may very well have been reasonable, but without double checking by the more senior attorney directly responsible for the case, under the facts and circumstances present here, it was insufficient"). Kruger describes the document as a spreadsheet prepared by its coverage counsel in or around January 2012 which addressed the possible issues of liability, potential damages to be claimed by the Plaintiff and allocation percentage of liability of various entities. Even a cursory review of such a document would have established that it was privileged and should not be produced.
Moreover, the delay before Kruger asserted its rights weighs against it. The document was likely produced in the first production in December 2013. It was certainly produced on June 4, 2015, and Kruger did not attempt to recall the document until June 2016, a year later, and only after Hooksett advised it that it had produced the document. The production is not particularly voluminous. According to Kruger, the electronic files when printed consist of approximately 25,000 documents. In the case of this magnitude that is not an unreasonably large number of documents.
Finally, Hooksett does not assert a subject matter waiver; it alleges that the privilege is waived only with respect to this single document. This position militates against any suggestion of unfairness. Kruger's waiver is limited to the reasonably the foreseeable consequences of its waiver.
It follows that Hooksett's Motion for a Protective Order must be granted. Kruger has waived any privilege in KRUGER22252.PDF. 12/12/16
DATE
s/Richard B . McNamara
Richard B. McNamara,
Presiding Justice RBM/