Court Condemns Overuse of “Privileged” Stamp

August 1, 2007

Some clients (and even some lawyers) seem to think that they can magically render a document privileged by marking it “privileged.” Of course, this is wrong. Some lawyers who know that such a label stamp does not render a document privileged mark documents anyway ‑‑ presumably concluding that “it might help and it can’t hurt.”

In United States v. CITGO Petroleum Corp., Cr. No. C-06-563, 2007 U.S. Dist. LEXIS 27986, (S.D. Tex. Apr. 16, 2007), CITGO unintentionally produced several privileged documents during litigation with the government. The court adopted the standard multi-factor test in analyzing the waiver impact of CITGO’s mistake. Among other things, the court noted a CITGO lawyer’s testimony before a grand jury that “it was Citgo’s practice to label documents related to internal environmental audits ‘privileged’ ‑‑ whether they were privileged or not ‑‑ because the legal department provided assistance with the audits.” Id. at *12. The court pointed to this testimony in taking an unforgiving attitude toward CITGO’s accidental production ‑‑ explaining that “marking a document ‘privileged’ indicates that the document is worthy of close scrutiny.” Id. The court concluded that “the failure of Citgo to carefully review these documents labeled ‘privilege’ [sic] supports the finding that Citgo did not act reasonably to prevent disclosure.” Id. For this and other reasons, the court found that CITGO had waived the privilege ‑‑ although it refused the United States’ argument that CITGO’s mistake triggered a subject matter waiver.

Unfortunately for lawyers and clients looking for a “silver bullet” to assure privilege protection, there simply is no substitute for using a “privileged” label only on documents that deserve it.