Case Summary
Rhoads Industries, Inc. v. Building Materials Corp. of America, 2008 U.S. Dist. LEXIS 93333 (E.D. Pa. Nov. 14, 2008).
Inadvertently disclosed privileged documents not promptly listed on a log pursuant to Fed. R. Civ. P. 26(b)(5) did not have to be returned to plaintiff. However, under recently-enacted Fed. R. Evid. 502, plaintiff was entitled to return of inadvertently produced but promptly logged privileged documents. While plaintiff should have been better prepared for privilege review, return of the privileged documents to plaintiff was in the interest of justice and defendant had not met its burden of proof in showing any prejudice from having to return the documents.
Plaintiff claimed to have inadvertently disclosed over 800 electronic documents that were privileged. Defendant sought an order that privilege had been waived due to plaintiff’s careless production and delay in claiming privilege. The court held that documents not listed on a mandatory privilege log required by Fed. R. Civ. P. 26(b)(5) until over four months after plaintiff’s counsel learned of the inadvertent disclosure did not have to be returned to plaintiff. The delay in logging those documents was “too long and inexcusable.”
Judge Baylson, who served as Liaison from the Advisory Committee on Civil Rules and as a non-voting member of the Advisory Committee on Rules of Evidence of the Judicial Conference, applied recently-enacted Fed. R. Evid. 502 to documents that had been timely listed on privilege logs but inadvertently produced. The court first determined that plaintiff had at least minimally complied with the three factors in Rule 502 for determining that disclosure did not amount to waiver. The court then applied the five-factor analysis of Fidelity & Deposit Co. of Md. v. McCulloch, 168 F.R.D. 516 (E.D. Pa. 1996), and concluded that although four of the five factors favored a finding of waiver, the fifth factor – overriding interests of justice – favored non-waiver. Thus, plaintiff had “abundant time” before starting the litigation and before producing documents to review its own documents and segregate privileged documents, and “an understandable desire to minimize costs of litigation and to be frugal in spending a client's money cannot be an after-the-fact excuse for a failed screening of privileged documents.” However, plaintiff presumably would be prejudiced by a finding of waiver, and defendants were not prejudiced because they had no right or expectation to privileged information absent waiver and they would in any event be receiving a number of privileged documents under the court’s Rule 26(b)(5) ruling.
Plaintiff claimed to have inadvertently disclosed over 800 electronic documents that were privileged. Defendant sought an order that privilege had been waived due to plaintiff’s careless production and delay in claiming privilege. The court held that documents not listed on a mandatory privilege log required by Fed. R. Civ. P. 26(b)(5) until over four months after plaintiff’s counsel learned of the inadvertent disclosure did not have to be returned to plaintiff. The delay in logging those documents was “too long and inexcusable.”
Judge Baylson, who served as Liaison from the Advisory Committee on Civil Rules and as a non-voting member of the Advisory Committee on Rules of Evidence of the Judicial Conference, applied recently-enacted Fed. R. Evid. 502 to documents that had been timely listed on privilege logs but inadvertently produced. The court first determined that plaintiff had at least minimally complied with the three factors in Rule 502 for determining that disclosure did not amount to waiver. The court then applied the five-factor analysis of Fidelity & Deposit Co. of Md. v. McCulloch, 168 F.R.D. 516 (E.D. Pa. 1996), and concluded that although four of the five factors favored a finding of waiver, the fifth factor – overriding interests of justice – favored non-waiver. Thus, plaintiff had “abundant time” before starting the litigation and before producing documents to review its own documents and segregate privileged documents, and “an understandable desire to minimize costs of litigation and to be frugal in spending a client's money cannot be an after-the-fact excuse for a failed screening of privileged documents.” However, plaintiff presumably would be prejudiced by a finding of waiver, and defendants were not prejudiced because they had no right or expectation to privileged information absent waiver and they would in any event be receiving a number of privileged documents under the court’s Rule 26(b)(5) ruling.
