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The attorney-client privilege protects confidential communications between the attorney and client from disclosure if the client was seeking legal advice. But even where all the elements of the attorney-client privilege are otherwise present, the privilege will not be recognized if it has been waived. The term “waiver” as used by the courts actually encompasses more than the traditional definition of a knowing and voluntary waiver of a right. Courts often find a “waiver” of the privilege that is really more appropriately considered a “forfeiture,” for example, where the client or lawyer has not intentionally waived a privilege but has acted in such a way as to disentitle the client from invoking the privilege. See International Oil, Chem. & Atomic Workers Local 7-517 v. Uno-Ven Co., 1790 F.3d 779 (7th Cir. 1999) (noting that a “waiver” of the privilege is sometimes found “in order to punish the person claiming the privilege for a mistake”). It is in this broader sense that courts have sometimes found a “waiver” of the privilege where the attorney has released privileged information by mistake. Examples of mistaken or “inadvertent” disclosure abound. The lawyer hits the wrong speed dial on the fax machine, and privileged information is thereby sent to the adversary. Or the lawyer painstakingly complies with a voluminous discovery request, and yet a privileged document is mistakenly included in the materials sent to the adversary. The question in these situations is, what sort of conduct should receive the sanction of the loss of a privilege? What rises to the level of a forfeiture? The courts have adopted various views on mistaken disclosure, ranging from fairly permissive to completely merciless. ‘STRICT LIABILITY’ APPROACH Representative of the “strict liability” approach is In re Sealed Case, 877 F.2d 976 (D.C. Cir. 1989). There, the court held that the inadvertent disclosure of a few privileged documents in the course of a massive discovery response not only constituted a forfeiture of the privilege with respect to the documents, but also worked a “subject matter” waiver. So, the client was forced to make a further production of all previously privileged documents covering the subject matter set forth in the documents inadvertently disclosed. The court reasoned that the privilege was costly to the search for truth, so privileged information must be guarded “like the crown jewels.” See also In re Grand Jury Proceedings, 727 F.2d 1352 (4th Cir. 1984) (inadvertent disclosure of privileged information constitutes a waiver of the privilege regardless of the circumstances). The problem with this draconian rule is that it increases the costs of discovery and hence the costs of legal services; lawyers are likely to spend inordinate amounts of time in document production making sure that privileged material does not slip through. Moreover, parties might fight tooth and nail during discovery over materials. They will be loath to produce a document in discovery, no matter how inconsequential, if a court might find it later on to be privileged, with the consequence being a subject matter waiver. Thus the D.C. Circuit view on mistaken disclosure is likely to lead to an increase in the number of privilege issues that a court will have to hear. TREND IS FOR ‘CULPABILITY’ The clear trend in the courts is to adopt a more nuanced, “culpability” approach to mistaken disclosure. Most courts focus on two points: 1) whether reasonable precautions had been taken to avoid mistaken disclosure of privileged information; and 2) whether the party with the privilege moved quickly to rectify its error. For example, in Alldread v. City of Grenada, 988 F.2d 1425 (5th Cir. 1993), the city inadvertently sent privileged tapes to the plaintiff in the course of complying with a massive discovery demand. The court rejected a strict liability approach and held that the question of whether a waiver occurred must be assessed under a five-factor test. These factors are: (1) the reasonableness of precautions taken to prevent disclosure of privileged material; (2) the amount of time taken to remedy the error; (3) the scope of discovery (the more massive the discovery, the more excusable the disclosure); (4) the extent of the disclosure of privileged information; and (5) the overriding issue of fairness. The Alldread court held that under the circumstances the privilege had not been forfeited. It noted that the city had immediately asserted the privilege upon discovering the disclosure, that the discovery was massive, and that considerations of fairness counseled in favor of the privilege. See also McCafferty’s, Inc. v. Bank of Glen Burnie, 179 F.R.D. 163 (D.Md. 1998) (discovery of privileged materials by person sifting through trash did not constitute a forfeiture of the privilege; the client had taken sufficient precautions to preserve confidentiality by shredding documents and disposing of them in a sealed plastic bag in a private dumpster on private property.) Under the fault-based view of mistaken disclosure, there will be cases where the lawyer’s work is so sloppy and inattentive that a mistake will result in a forfeiture. Illustrative is S.E.C. v. Cassano, 189 F.R.D. 83 (S.D.N.Y.1999). The SEC was proceeding against investors for insider trading. The case was brought in New York but was handled by the Boston office of the SEC. A discovery protocol was set up under which all of the unprivileged SEC documents would be sent to New York, defense counsel would be allowed to investigate the documents and, then, an SEC paralegal on the premises would copy whatever documents defense counsel selected and send those documents to counsel within a month. Defense counsel, combing through the sea of boxes, found a smoking gun document — an SEC staff memorandum, clearly privileged. Defense counsel asked the paralegal if she could photocopy the document immediately so that he could take it with him that day. The paralegal telephoned SEC counsel in Boston for approval. Counsel in Boston immediately agreed to the unusual request, without checking the document number against the privilege log. A few weeks later, the SEC discovered its gaffe and sought an order requiring defense counsel to return the document. The Cassano court held that the SEC’s actions in response to defense counsel’s request to photocopy the memorandum were so careless as to disentitle the SEC from claiming the privilege. The court noted that mistaken production will constitute a forfeiture of the privilege only if the producing party’s conduct was “so careless as to suggest that it was not concerned with the protection of the asserted privilege.” The court declared that the “circumstances of the request clearly should have suggested to the SEC attorney that defense counsel had found what they regarded as gold at the end of the proverbial rainbow. Any attorney faced with such a request in comparable circumstances should have reviewed the document immediately, if only to find out what the other side thought so compelling. After all, these events should have suggested to SEC counsel that perhaps he had erred in assessing the case or previously failed to appreciate the significance of the document, even putting aside any question of inadvertent production of a privileged document. Yet, the SEC attorney authorized production of this document, sight unseen.” SEC counsel was also found delinquent in discovering the disclosure of the privileged memorandum and in moving to rectify the error. MISTAKEN DISCLOSURE Another example of mistaken disclosure constituting a forfeiture arose in United States v. Gangi, 1 F. Supp.2d 256 (S.D.N.Y.1998). The government moved for the return of a prosecution memorandum that requested Department of Justice approval of an indictment. The memorandum to the DOJ was mistakenly attached to the indictment when it was served on two of the defendants. The trial court held that under the circumstances, the disclosure of the report amounted to a forfeiture of the attorney-client privilege. The government had failed to label the memo as confidential, acted without due care in its dissemination especially since the memo revealed witnesses and victims, and inadequately trained the FBI agent who released the indictment with the memorandum attached. Nor did the government have the excuse of producing thousands of documents, so that it might be understandable that a few privileged documents might slip through. The court also reasoned that fairness considerations supported disclosure, because (1) some defendants had not seen the memo (thus, putting those who had not seen it at a comparative disadvantage); (2) redaction was possible to protect victims and witnesses; and (3) the defendants would eventually discover much of the information in the memo at any rate. The court concluded that the government “did not treat the document with the care required to protect its privilege. As a result, two defendants and their lawyers have seen it and dozens of copies are circulating in the public domain.” The risks of mistaken disclosure are obviously profound, and these risks increase in complex cases with voluminous discovery. This has led the parties in some cases to agree in advance that inadvertent disclosure of privileged documents by either side will not constitute a waiver of the privilege. Courts have enforced these agreements. For example, in See, e.g., Prescient Partners LP v. Fieldcrest Cannon Inc., 1997 WL 736726 (S.D.N.Y. 1997), the parties entered into a confidentiality agreement providing as follows: If information subject to a claim of privilege is inadvertently produced, such production shall not constitute a waiver of any claim of privilege. If a claim of inadvertent production is made, the party in receipt of the documents shall promptly return to the claiming party or person the material (and all copies thereof) as to which the claim of inadvertent production has been made. All notes or other work product reflecting the contents of such material shall be destroyed and any information in any computer database shall be deleted. THE ‘PRESCIENT’ CASE The plaintiffs in Prescient mistakenly produced privileged information during the course of discovery. The defendants argued that the privilege was forfeited because the plaintiffs were negligent in the disclosure. They contended that the confidentiality agreement simply tracked the case law providing that inadvertent disclosure is not a forfeiture — unless it is negligent. The court rejected this argument and held that because of the agreement between the parties, disclosure could not constitute a forfeiture of the privilege. The agreement would be meaningless if all it did was track the case law. The court held that the agreement “was designed to protect the parties, who face massive discovery obligations, from having to litigate the issue of inadvertence.” The court declared that “[p]erhaps a completely reckless production of privileged documents would result in waiver.” But the plaintiff had not been reckless in this case. For a production to be “completely reckless,” the producing party must have shown no regard for preserving the confidentiality of the privileged documents. In this case, the error occurred when a paralegal experienced an emotional breakdown and failed to follow instructions. In a similar vein, the Manual for Complex Litigation encourages courts in complex cases with massive discovery to enter a pretrial order providing that mistaken disclosure will not constitute a waiver of the privilege unless the disclosure is completely reckless. See Leslie, “The Costs of Confidentiality and the Purpose of Privilege,” 2000 Wisc. L.Rev. 31, 73 (noting an “increasingly popular protective order” that allows parties protection from mistaken disclosures). ADVISORY COMMITTEE Burdens on the Receiving Party and the Advisory Committee Proposal. As discussed above, the consequences of mistaken disclosure of privileged information can be so profound that they should not be visited on a party who made an innocent mistake. On the other hand, it makes sense to find a forfeiture if the party was not taking proper precautions. This is especially so because the party who received the privileged information is put in a difficult position when the mistake is discovered. If the court orders a return of the information, the receiving party will probably have to demonstrate at a later point that none of the information it is using or arguments it is making were derived from the mistakenly disclosed privileged material. It might be difficult for the receiving party to persuade the court that its evidence and arguments are not tainted. The receiving party can thus be placed at a disadvantage by a mistaken disclosure even though it did nothing more than receive the privileged material. Therefore, if the mistaken disclosure was the result of negligent conduct, the risks and burdens are much more fairly placed on the producing party. Even if the disclosure was an innocent mistake, it would seem fair to put the burden on the producing party to show that the receiving party’s evidence or arguments are tainted by the privileged information. After all, the receiving party was simply minding its own business, and the mistake, though innocent, was nonetheless made by the producing party. Therefore, the burden should shift to the party who made the mistaken disclosure to show that the receiving party is using information derived from the privileged material. CODIFYING PROPOSAL A proposal to codify the privileges under the Federal Rules of Evidence, currently being drafted by the Advisory Committee, covers mistaken disclosures as follows: (b) Inadvertent disclosure. An inadvertent disclosure of privileged information is not a waiver if the person responsible for the disclosure: (1) exercised due care under the circumstances; (2) discovered the disclosure with due diligence; and (3) took all reasonable efforts to protect and retrieve the information once the disclosure was discovered. If the court finds that an inadvertent disclosure is not a waiver, the party who received the privileged information is prohibited from proffering that information at trial. The receiving party is also prohibited from proffering any evidence that is derived directly or indirectly from the privileged information. The party who disclosed the privileged information has the burden of showing, by a preponderance of the evidence, that information proffered by the receiving party is derived from the privileged information. This proposal would codify the negligence-based rule for mistaken disclosures, but would also shift the burden to the producing party to show that the receiving party is improperly using the privileged information. As such it provides a fair balance of interests when privilege information is mistakenly disclosed. Daniel J. Capra is Philip Reed Professor of Law at Fordham University School of Law.

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