Proposed Federal Rules Changes Will Not Save Litigants From the Consequences of Their Mistakes: Part 2

October 10, 2007

Last week’s Privilege Point provided an example of a litigant which lost the privilege by making a mistake when complying with a protocol similar to new and proposed federal rules changes. Kingsway Fin. Servs., Inc. v. Pricewaterhouse-Coopers LLP, No. 03 Civ. 5560 (RMB) (HBP), 2007 U.S. Dist. LEXIS 46660 (S.D.N.Y. June 27, 2007).

In a decision issued a few days later, the District of Rhode Island wrestled with a similar issue. In Gail v. New England Gas Co., 243 F.R.D. 28 (D.R.I. 2007), non‑party Rhode Island Department of Environmental Management intended to produce 5,900 pages of documents, and withhold 400 pages of privileged documents. The Department engaged a document processing and management service firm called “WarRoom” to scan and produce the documents on CDs to the litigants. WarRoom sent the litigants CDs that contained all the documents (including the privileged documents) ‑‑ claiming that it was following the Department’s instructions. Defendant NE Gas quickly advised the Department that the CD contained “‘internal communications with counsel,'” and that it had suspended its review of the documents pending the Department’s confirmation that it produced them intentionally. Id. at 32 (citation omitted). The Department responded by acknowledging that it had produced several letters that were arguably privileged, and that “if they were the kinds of documents NE Gas was referring to, NE Gas could assume that they were produced intentionally.” Id. When the Department sent its privilege log to the litigants two weeks later, NE Gas promptly advised the Department that all of its privileged documents had been included on the CD. The court found that the Department’s failure to retrieve the CD after it received NE Gas’s initial communication amounted to a “failure to take prompt corrective action” after learning of its inadvertent production of privileged documents ‑‑ thereby forfeiting privilege protection. Id. at 37.

Even under the more forgiving standards of the new and proposed federal rules, any privilege or work product claims are not likely to survive mistakes like this. There is simply no substitute for carefully handling protected documents during litigation.