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Case Summary: Rhoads Indus.; Attorney Client Privilege, the Waiver of Privilege, and Reasonable Precautions

Posted by rjbiii on December 8, 2008

Case Summary: Rhoads Indus. v. Bldg. Materials Corp. of Am., 2008 U.S. Dist. LEXIS 93333 (E.D. Pa. Nov. 14, 2008 )

In a question of the adequacy of a keyword screening protocol, the court entertains a motion to deem plaintiff had waived privilege as to approximately 800 inadvertently produced documents. Rhoads filed the action against Bldg. Materials Corp. of America (“GAF”) for, inter alia, breach of contract, and against R.W. Cooper & Co. (“Cooper”) for negligent misrepresentation.

Rhoads began preparing for the litigation in February, 2007. In June 2007, upon realizing that e-discovery would be extensive in the case, he hired Salvatore Gramaglia as an IT expert. Mr. Gramaglia, after conducting tests, Mr. Gramaglia purchased a license for “Discovery Attender” to be used in electronic searches. Mr. Gramaglia and Kimberly Buchinsky, an associate at Gowa Lincoln P.C., began identifying mailboxes containing relevant information to Rhoads’ project with GAF. The court stated that “Gramaglia and Buchinsky reasonably believed that the computer program would screen out all privileged materials.” Efforts to settle the dispute were unsuccessful, and on November 13, 2008, Rhoads filed the complaint. Discovery commenced shortly thereafter. Sam Washawer, a was bought in by Rhoads for the litigation. He discussed the scope of e-discovery with Mr. Gramaglia and Ms. Buchinsky, and observed the performance of Discovery Attender. He also conferred with Gramaglia and Buchinsky over the topic of search terms for searches.

During January and February of 2008, Gramaglia performed searches using terms supplied by counsel, initially identifying 210,635 documents as “being responsive.” His priv filter consisted of searching the “address line of all e-mails for these terms: *rhoadsinc* and either *gowa*, *ballard*, or *cpmi*. “Gowa” and “Ballard” represents Rhoads’ law firms, while “CPMI” refers to a non-testifying expert for plaintiff. This search resulted in the designation of 2,000 documents as “privileged,” although they were not placed on a privilege log at that time.

In response to the large volume of documents initially returned, counsel narrowed the responsive search criteria, reducing the total documents returned to 78,000 that plaintiff believed were responsive and non-privileged. Ms. Buchinsky then manually reviewed documents from specific mailboxes for privilege. She removed certain documents from the production, and entered them on a privilege log. Meanwhile, counsel also reviewed twenty-two boxes of hard copy documents for responsiveness and privilege.

On May 13, 2008, Rhoads produced to Δ’s, three hard drives containing responsive electronic documents, including the 78,0000 documents returned by the responsive “screen.”

On June 6, 2008, Rhoads produced two privilege logs to Δ’s, in response to a court order. One log was associated with Ms. Buchinsky’s manual review, while the other contained hard copy documents.

On June 5, 2008, Δ’s GAF notified Π’s counsel that some privileged e-mails may have been produced. Π immediately responded by asserting that no privilege had been waived, and that this was likely a case of inadvertent production. Over the next two and a half weeks, Π then conducted nine depositions and responded to Δ Cooper’s Motion to Dismiss before addressing the privilege issue.

On or about June 23, 2008, Ms. Buchinsky began reviewing the 78,000 e-mails produced as a result of the responsive searches executed in Discovery Attender. She generated a new privilege log identifying 812 emails as privileged, producing it to Δ’s on June 30, 2008 as an attachment to a letter invoking FRCP 26(b)(5)(B) to have Δ’s sequester the inadvertently produced documents.

On August 19, 2008, Δ Cooper filed a Motion to Deem that Plaintiff had waived the Privilege to the approximately 800 documents. Δ GAF filed a motion joining Cooper’s motion on August 25, 2008. Defendants did not dispute that the production was inadvertent and that the software purchased by Rhoads was designed to ferret out privileged documents. Defendants did argue that Rhoads’s technical consultant and counsel were not sufficiently careful to review the software screening and to take steps to prevent disclosure when it appeared obvious that privileged material had filtered through the screening procedure.

On November 5, 2008, the first hearing on the waiver of privilege was conducted. All three privileged logs were produced. Mr. Gramaglia and Ms. Buchinsky testified as to the method of creation of the logs, and their relationship to each other. Rhoads admitted that 2,000 e-mails previously designated as privilege had not yet been disclosed in a privilege log. Ms. Buchinsky testified to her belief that a manual review of all 78,000 emails would have resulted in the timely identification of those documents in a privilege log. The court then ordered that any documents not on a privilege log as of the date of that hearing should be produced, absent exceptional circumstances.

After the hearing, Rhoads inspected the 2,000 documents earlier set aside, but not identified in a log, as privilege. The results of this inspection were discussed on a hearing on November 13, 2008. Rhoads concluded that 941 documents were duplicative. Of the 1059 unique documents, 511 were responsive, consisting of 335 privileged documents and 176 non-privileged documents. Of the 335 privileged documents, 215 had been previously identified in other logs. Rhoads agreed to produce the 176 responsive non-privileged documents, and generated a fourth privilege log. The court expressed its opinion that Rhoads might still retain privileged and un-logged documents.

The court then weighed the facts using the five factor test laid out in Fidelity & Deposit Co. of Md. v. McCulloch, 168 F.R.D. 516 (E.D. Pa. 1996). These factors are:

(1) The reasonableness of the precautions taken to prevent inadvertent disclosure in view of the extent of the document production.
(2) The number of inadvertent disclosures.
(3) The extent of the disclosure.
(4) Any delay and measures taken to rectify the disclosure.
(5) Whether the overriding interests of justice would or would not be served by relieving the party of its errors.

On the first factor (reasonableness taken to prevent inadvertent disclosure), the court found that the following factors favored the plaintiff (producing party):

1. Plaintiff purchased a special software program, Discovery Attender, for the purposes of complying with discovery in this litigation.
2. Plaintiff’s technical consultant (Mr. Gramaglia) conducted trial searches prior to purchasing the software and was satisfied with its reliability and accuracy.
3. Mr. Gramaglia was experienced with Rhoads’s computer system.
4. Plaintiff believed that its search terms would pick up all attorney-client communication.
5. Plaintiff did not use “Warshawer” or “Costello” (outside counsel) as search terms because counsel believed Gowa was included on all e-mails going to the client.
6. Plaintiff did not include “privileged” or “confidential” as keyword search terms because all Rhoads e-mails use these words in the signature line at the bottom of every e-mail, and thus use of these words would have identified every Rhoads document as privileged.
7. Ms. Buchinsky spent over 40 hours reviewing documents for privilege before production. Additional attorneys spent significant hours on the privilege review.

The court found the following factors favored defendants (requesting parties):

1. Plaintiff should have used additional search terms to weed out potentially privileged documents, especially the names of all of its attorneys. Here the court cited Bensel v. Air Line Pilot Ass’n, 248 F.R.D. 177, 180 (D.N.J. 2008).
2. Ms. Buchinsky had no prior experience doing a privilege review and her supervising attorneys did not provide any detailed oversight.
3. Plaintiff’s search for privileged documents was limited to e-mail address lines (as opposed to the e-mail body). Therefore any potentially privileged e-mails (as defined by Plaintiff’s search terms) that were subsequently forwarded outside of Rhoads and either Gowa, Ballard, or CPMI would not be captured by its search.
4. Plaintiff produced documents that its limited search should have caught. Therefore Plaintiff not only failed to craft the right searches, but the searches it ran failed. Plaintiff has no explanation for this.
5. As Stanley notes, relying exclusively on a keyword search for the purpose of conducting a privilege review is risky, and proper quality assurance testing is a factor in whether precautions were reasonable. Victor Stanley, 250 F.R.D. at 257, 260. Here there was no testing of the reliability or comprehensiveness of the keyword search.
6. Plaintiff’s only testing of its search was to run the same search again

On the second factor, the number of inadvertent documents produced, the court found this fact favored plaintiffs:

1. The number of documents inadvertently produced represent a small percentage (1-2%) of the total production.

The court found these facts weighed in favor of defendants:

1. 800 inadvertently produced documents plus at least 120 privileged documents that this Court now orders be produced is still a large number of documents regardless of the percentage produced.
2. The court in Stanley found that 165 documents was a sufficiently large number to favor waiver of the privilege.

The court stated that nothing in the record indicated whether the third factor (the extent of the disclosure) weighed in favor of one party over the other.

On the fourth factor (Any delay and measures taken to rectify the disclosure), the court found these facts favored plaintiffs:

1. Plaintiff immediately responded to Defendant’s e-mail that some potentially privileged documents had been produced by stating that production was inadvertent and inquiring which documents Defendant was referring to;
2. As relied on in Fidelity, Plaintiff was under a tight discovery schedule at the time it was notified of the inadvertent production. Fidelity & Deposit Co., 168 F.R.D. at 522. Ms. Buchinsky was helping prepare for nine depositions taken over the course of twelve days. Plaintiffs also had to respond to Defendant Cooper’s Motion to Dismiss during this time.
3. Plaintiff invoked the remedial measure of FRCP 26(b)(5)(B) to have the inadvertently produced documents sequestered at the same time it produced the June 30th privilege log (Ex. D-1), three weeks after learning of the disclosure.
4. Plaintiff was willing to produce a cleansed hard drive (i.e. without the privileged documents) to Defendants in September, but Defendants refused the hard drive.
5. Defendant did not file their Motion to Deem that the Privilege was Waived until two months after Plaintiff produced the June 30th privilege log.

Those facts favoring defendants:

1. Plaintiff had abundant time to review its own documents and segregate any privileged documents before it started the litigation and also before it began producing documents in May 2008;
2. The crunch and time pressure that Plaintiff claims it suffered in June 2008 were caused by Plaintiff not providing adequate resources (e.g. attorneys or paralegals) to the privileged communication issue;
3. Defendants had to bring Plaintiff’s error to its attention instead of Plaintiff catching its own mistake (cites Victor Stanley).
4. It took Plaintiff over three weeks to produce a privilege log of the inadvertently produced documents once it was aware of its mistake.
5. The June 30th privilege log required Defendants to cross-reference each document produced to them against the log to check whether documents were in fact privileged. Plaintiff did not offer Defendants a cleansed hard drive until September.
6. Plaintiffs did not offer suggestions to rectify the inadvertent production until October, after many depositions had been taken.

On the final factor (Whether the overriding interests of justice would or would not be served by relieving the party of its errors), the court found these facts weighed in favor of the plaintiffs:

1. Plaintiff has shown general compliance with the three conditions of Rule 502, although considering the factors in the prior case law, Plaintiff is responsible for the confusion and delay noted above;
2. The loss of privilege would be highly prejudicial to the Plaintiff;
3. Defendants have not demonstrated substantial unfairness that they have suffered because of their inability to review the privileged documents beyond having to cross-reference documents against the June 30th privilege log.

Favoring defendants:

1. Plaintiff should have conducted a more rigorous privilege review and allowing Plaintiff to retain the privilege in these documents may not deter similar conduct in the future.

The court then concluded its opinion by ruling the following:
Those documents that were never logged after designation (part of the 2000 e-mails initially designated as privileged, but not listed in a privilege log until after the Nov. 5 hearing) were not subject to protection, as a failure to identify privilege documents in a log in a timely manner violates FRCP 26(b)(5).

With respect to the documents that were inadvertently produced, the court stated that neither Victor Stanley or Amersham were controlling. The court stated that although the facts in Victor Stanley were similar to those in the instant matter, Judge Grimm’s analysis reflects, to a more significant degree than [the court] believe[s] appropriate, application of hindsight, which should not carry much weight, if any, because no matter what methods an attorney employed, an after-the-fact critique can always conclude that a better job could have been done. The court found that factors one through four favored defendants, while the fifth strongly supported plaintiffs. As defendants have the burden of proof as the moving party, the court concluded that this burden had not been met, and privilege was not waived for these documents.

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Posted in 3d Circuit, Attorney Client Privilege, Case Summary, E.D. Pa., Judge Michael M. Baylson, Privilege, Privilege Log, Search Protocols, Waiver of Privilege | Leave a Comment »

Case Blurb: Search Cactus; Court lays out Protocol for Forensic Collection of Plaintiff’s Hard Drive

Posted by rjbiii on June 19, 2008

Post Process-Plaintiff Attorney objected to a forensics exam of his computer hard drive, a computer which he used both personally and professionally. The court, though noting the validity of issues raised, ruled for Defendants. In doing so, it appointed two forensics experts to act as officers of the court, and issued the following protocol:

[T]his Court ORDERS:
1. Within seven days of the date of this Opinion and Order, Plaintiff’s forensic computer expert shall mirror image both of Plaintiff’s computer systems’ hard drives and Plaintiff shall preserve this mirror image.

2. Plaintiff’s forensic computer expert shall then remove only Plaintiff’s confidential personal information from the mirror image of Plaintiff’s computer systems’ hard drives. Plaintiff’s expert shall provide Defendants with the protocol he utilized to remove the confidential information.

3. Plaintiff shall then provide Defendants’ computer forensic expert access to his computer systems’ hard drives.

4. Defendants’ forensic computer expert shall mirror image Plaintiff’s computer systems’ hard drives in approximately four to eight hours for each system. If the expert finds that this is not enough time, Plaintiff is expected to be reasonable in allowing some additional time. Defendant is expected to be considerate with regard to scheduling times that are less intrusive to Plaintiff and his business.

5. Defendants’ expert shall review his findings in confidence with Plaintiff prior to making any findings available to Defendants.

6. Plaintiff shall identify for deletion any information that is irrelevant and create a specific privilege log of any relevant information for which he claims privilege. The computer forensic expert shall remove the information claimed as privileged and provide all other information to Defendants.

7. Defendants’ expert shall provide Plaintiff with the protocol he utilized to remove the privileged information.

8. Forensic computer experts C. Matthew Curtin and Scott T. Simmons shall act as officers of this Court. Defendants shall be responsible for remunerating Mr. Curtin and Plaintiff shall be responsible for remunerating Mr. Simmons.

Ferron v. Search Cactus, L.L.C., 2008 WL 1902499 at *5 (S.D. Ohio Apr. 28, 2008 )

Posted in 6th Circuit, Computer Forensics, Cost of Discovery, Duty to Preserve, Duty to Produce, Form of Production, Judge Gregory L. Frost, Privacy, Privilege Log, S.D. Ohio | Tagged: , , , , , | Leave a Comment »

Case Blurb: Creative Pipe; Court describes process for maintaining attorney-client privilege

Posted by rjbiii on June 15, 2008

[I]nsuring that a privilege or protection claim is properly asserted in the first instance and maintained thereafter involves a several step process. First, pursuant to Fed.R.Civ.P. 26(b)(5), the party asserting privilege/protection must do so with particularity for each document, or category of documents, for which privilege/protection is claimed. At this first stage, it is sufficient to meet the initial burden by a properly prepared privilege log. If, after this has been done, the requesting party challenges the sufficiency of the assertion of privilege/protection, the asserting party may no longer rest on the privilege log, but bears the burden of establishing an evidentiary basis–by affidavit, deposition transcript, or other evidence– for each element of each privilege/protection claimed for each document or category of document. A failure to do so warrants a ruling that the documents must be produced because of the failure of the asserting party to meet its burden. If it makes this showing, and the requesting party still contests the assertion of privilege/protection, then the dispute is ready to submit to the court, which, after looking at the evidentiary support offered by the asserting party, can either rule on the merits of the claim or order that the disputed documents be produced for in camera inspection.

Victor Stanley, Inc. v. Creative Pipe, Inc., 2008 WL 2221841 at *11 (D.Md. May 29, 2008 ).

Posted in 4th Circuit, Attorney Client Privilege, Case Blurbs, D. Md., FRCP 26(b), Magistrate Judge Paul W. Grimm, Privilege Log | Tagged: , | Leave a Comment »

TX Case Blurb: Honza; Court addresses objection to discovery request based on revealing confidential information, court order

Posted by rjbiii on March 10, 2008

[Producing Party members] seek a writ of mandamus compelling Respondent, the Honorable Greg Wilhelm, Judge of the County Court at Law No. 1 of Ellis County, to set aside a discovery order requiring the Honzas to permit a forensic expert to create a mirror image of each of the computer hard drives in the Honzas’ office in an effort to locate two particular documents or iterations of those documents

The Honzas contend that Respondent abused his discretion because: (2) the order authorizes the disclosure of information protected by the attorney-client privilege; and (3) the order authorizes the disclosure of confidential information pertaining to the Honzas’ other clients who have no connection to the underlying lawsuit.

The present discovery dispute originated with [Requesting Party’s] motion to gain access to the Honzas’ computers, which was filed about one month before trial. By this motion, [Requesting Party] sought “[i]nformation (the ‘Metadata’) contained on the actual computers of the Defendants, such as any time stamps on the Relevant Documents, versions of the Relevant Documents, if any, as well as the deletion of various versions, if any.” [Requesting Party] explained that, although the Honzas responded to a prior request for production of relevant documents in their electronic version, “the Metadata was neither produced nor made available.”

[Ed. Testimony indicated the existence of relevant documents with respect to a another transaction apparently not addressed by earlier discovery requests]

[] [Requesting Party] sought discovery of relevant documents pertaining to the [newly revealed] transaction, and the [Producing Party] complied by providing pertinent written discovery.

[Requesting Party] seeks the metadata from the [Producing Party’s] hard drives because it wants to identify the points in time when the partial assignment draft was modified in relation to the diary entry. This goes to the issue of whether [the Producing Party] altered the partial assignment after the parties concluded their agreement but before the document was presented for execution.

[Ed. The opinion then went on to list various Federal and State sources for persuasive authority in discovery law, especially with respect to ESI]

Privileged or Confidential Information

The [Producing Party] also contend[s] that the discovery order improperly authorizes the disclosure of (1) information protected by the attorney-client privilege and (2) confidential information pertaining to the Honzas’ other clients who have no connection to the underlying lawsuit.

Notwithstanding the “unlimited” access necessarily granted the forensic expert, Respondent’s order preserves any privileged or confidential information in several ways. First, the expert is limited in his search to two specific documents or iterations of those documents. [Members of the Producing Party] are then accorded the right to review the documents and information which the expert believes responsive and produce to [Requesting Party] only those documents and information which [members of the Producing Party] themselves believe are responsive. These provisions effectively preclude [Requesting Party] from having any access to documents or information pertaining to other clients of the Honzas not involved in this litigation.

Second, the order allows the [Producing Party executives] to withhold from discovery any documents or information which they claim to be privileged or confidential and provide instead a privilege log, subject to in camera review by Respondent.

Finally, the order provides that: (1) the observation of information by [Requesting Party] representatives during the imaging process shall not constitute a waiver of privilege or confidentiality; (2) all participants in the imaging process are subject to a protective order prohibiting the unauthorized disclosure of information; and (3) [Requesting Party’s] expert must provide proof of being bonded and of having commercial liability insurance by which the [Producing Party] may be “fully indemnified against any monetary loss.”

For these reasons, we hold that Respondent appropriately tailored the discovery order to prohibit the unauthorized disclosure of privileged or confidential information and no abuse of discretion is shown.

[Ed. Note that a dissenting opinion is also entered by one of the Judges hearing the case. See the order itself for the full text of that dissent, or of the opinion itself.]

In re Honza, 2007 WL 4591917 (Tex. App. Dec. 28, 2007)

Posted in Case Blurbs, Computer Forensics, Data Collection, Data Custodians, Data Sources, Discovery Requests, Duty to Produce, Objections to Discovery Requests, Privacy, Privilege, Privilege Log, Scope of Discovery, Texas, TX Judge Felipe Reyna | Leave a Comment »

TX Case Blurb: Honza; Court outlines process for Forensic Expert’s access to Party’s hard drive and subsequent production

Posted by rjbiii on March 10, 2008

[Producing Party members] seek a writ of mandamus compelling Respondent, the Honorable Greg Wilhelm, Judge of the County Court at Law No. 1 of Ellis County, to set aside a discovery order requiring the Honzas to permit a forensic expert to create a mirror image of each of the computer hard drives in the Honzas’ office in an effort to locate two particular documents or iterations of those documents

The Honzas contend that Respondent abused his discretion because: (1) the discovery order is overbroad and authorizes an improper “fishing expedition”; (2) the order authorizes the disclosure of information protected by the attorney-client privilege; and (3) the order authorizes the disclosure of confidential information pertaining to the Honzas’ other clients who have no connection to the underlying lawsuit.

The present discovery dispute originated with [Requesting Party’s] motion to gain access to the Honzas’ computers, which was filed about one month before trial. By this motion, [Requesting Party] sought “[i]nformation (the ‘Metadata’) contained on the actual computers of the Defendants, such as any time stamps on the Relevant Documents, versions of the Relevant Documents, if any, as well as the deletion of various versions, if any.” [Requesting Party] explained that, although the Honzas responded to a prior request for production of relevant documents in their electronic version, “the Metadata was neither produced nor made available.”

[Ed. Testimony indicated the existence of relevant documents with respect to a another transaction apparently not addressed by earlier discovery requests]

[] [Requesting Party] sought discovery of relevant documents pertaining to the [newly revealed] transaction, and the [Producing Party] complied by providing pertinent written discovery.

[Requesting Party] seeks the metadata from the [Producing Party’s] hard drives because it wants to identify the points in time when the partial assignment draft was modified in relation to the diary entry. This goes to the issue of whether [the Producing Party] altered the partial assignment after the parties concluded their agreement but before the document was presented for execution.

[Ed. The opinion then went on to list various Federal and State sources for persuasive authority in discovery law, especially with respect to ESI]

Under these decisions, the following protocol is generally followed. First, the party seeking discovery selects a forensic expert to make a mirror image of the computer hard drives at issue. This expert is required to perform the analysis subject to the terms of a protective order, generally prohibiting the expert from disclosing confidential or otherwise privileged information other than under the terms of the discovery order.

After creating the mirror images and analyzing them for relevant documents or partial documents, courts typically require the expert to compile the documents or partial documents obtained and provide copies to the party opposing discovery. That party is then to review the documents, produce those responsive to the discovery request, and create a privilege log for those withheld. Finally, the trial court will conduct an in-camera review should any disputes arise regarding the entries in the privilege log.

Because our research has disclosed no Texas decisions regarding this type of electronic discovery, we will apply these fairly uniform procedures to the issues presented in this proceeding.

[Ed. Note that a dissenting opinion is also entered by one of the Judges hearing the case. See the order itself for the full text of that dissent, or of the opinion itself.]

In re Honza, 2007 WL 4591917 (Tex. App. Dec. 28, 2007)

Posted in Case Blurbs, Computer Forensics, Data Collection, Data Custodians, Duty to Produce, Objections to Discovery Requests, Privacy, Privilege, Privilege Log, Scope of Discovery, State Courts, Texas, TX Judge Felipe Reyna | Leave a Comment »

Case Blurb: Ryan; Handling Privilege Claims

Posted by rjbiii on December 26, 2007

Maxim’s assertion that it has already produced all non-privileged documents responsive to this particular request leaves unanswered and unclear precisely which documents have not been produced based on privilege. Thus, Maxim shall provide an updated and complete privilege log (in substitution for the May 15, 2007 privilege log) identifying each document for which it claims privilege (and that has not been produced under this subject request), as well as the document’s date, author, recipients, and a brief description of the precise privilege relied upon as a basis for withholding the document. The privilege log shall be submitted to plaintiffs and to the Court. Maxim shall further provide the Court with each of the withheld documents identified in the privilege log for the Court’s in camera inspection. In order to be explicitly clear, these documents shall include any minutes or notes of meetings (whether in person or telephonically) of discussions or negotiations regarding the Jasper/Gifford terminations. The individual defendants are under the same burden to produce the requested documents concerning the termination. If documents are withheld on the grounds of privilege, the individual defendants must provide plaintiffs and the Court with a privilege log, as above described, identifying each and every document being withheld, together with copies for the Court’s in camera review.

Ryan v. Gifford, 2007 WL 4259557 (Del. Ch. Nov. 30, 2007)

Posted in Case Blurbs, Chancellor William B. Chandler, Del. Ch., Privilege, Privilege Log, State Courts | Leave a Comment »