Case Law

Privilege Waived as a Result of Reckless Production and Inadequate Clawback Agreement

Ohio

Irth Sols. v. Windstream Commc’ns, 2017 WL 3276021 (S.D. Ohio Aug. 2, 2017) In this breach of contract and fraud case, the defendant’s counsel attempted to recover privileged documents that were produced in reliance on a clawback agreement between the parties. The clawback agreement stated that the producing party would promptly notify the opposing party when it discovered a privileged document had been inadvertently produced, such documents must be immediately destroyed or returned when discovered, and inadvertent production will not operate as a waiver of the privilege. Aside from the clawback, the plaintiff and defendant had “agreed that a formal court order under Fed. R. Evid. 502(d) was not necessary based on the scale of the case.” During discovery, the defendant turned over a partial production twenty-seven days after it was due. The partial production consisted of 2,200 pages of documents, which included 146 pages (43 documents) of privileged documents inadvertently disclosed. When preparing a privilege log after production, the defendant became aware of its mistake and attempted to claw the documents back. Plaintiff’s counsel challenged, disputing that the production was not inadvertent. The court examined the documents and noted although the defendant claimed to have conducted multiple reviews for privilege, the documents contained clear indications of privilege, including the word “legal” on many of them. After the initial issues, the defendant produced the privileged documents yet again, while reproducing the documents in a searchable form. In analyzing the issue, the court noted that mistakes happen, stating, “Make no mistake, the Court is sympathetic that in this day and age privileged documents will inevitably fall through the cracks and be produced inadvertently.” However, the court found that this situation was not the result of a mistake. The court stated that it, “recognizes an attorney’s responsibility to guard that privilege, and holds an attorney accountable when normal cracks become chasms—as was the case here.” The court determined that the clawback agreement was ambiguous and deficient and that the defendant did not take reasonable steps to prevent disclosure in line with its “reckless” review. Finding that the defendant waived its privilege, the court denied the defendant’s request for sanctions against the plaintiff and did not order the plaintiff to return the 43 privileged documents at issue.

Keywords: Privilege, Inadvertent Disclosure, Clawback Agreement, Waiver, FRE 502(b), FRE 502(d)