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January 07, 2019 Top Story

Failure to List Document on Privilege Log Results in Waiver of Privilege

Protective order inapplicable to responsive discovery intentionally withheld

By Amy Mattson

Defendants who unwittingly disclosed an email chain to opposing counsel must produce the draft agreement the chain referenced, ruled the U.S. District Court for the Northern District of Illinois. Any privilege that might have attached to the agreement had been effectively waived by a failure to timely claim privilege or provide a privilege log.

The defendants unwittingly disclosed an email chain referencing a draft agreement for a patent transfer

The defendants unwittingly disclosed an email chain referencing a draft agreement for a patent transfer

iStockphoto by Getty Images

Defendants’ Credibility Called into Question in Action to Recover Legal Fees

The dispute in Monco v. Zoltek Corporation stemmed from the plaintiffs’ termination as counsel in a more than 20-year patent infringement lawsuit just months before the case settled. Former counsel brought action against their former clients, alleging tortious interference with their prospective economic advantage in recovering the legal fees they claimed were owed under their retainer agreement.

During the course of discovery, the defendants were ordered to produce all agreements between themselves about the underlying patent case, including any agreements concerning the allocation of settlement proceeds. The defendants produced an email chain referencing a draft agreement for a patent transfer. When the plaintiffs requested that agreement, the defendants initially did not respond. Following a second request by the plaintiffs, the defendants claimed the email chain was privileged material and demanded its destruction under the parties’ protective order, which addressed inadvertent disclosures of material protected by the attorney-client privilege or the work product doctrine.

The defendants, however, had made no claim of privilege, had provided no privilege log at the time of production describing the nature of the withheld agreement, and had given no indication they were withholding documents they had been ordered to produce. Citing these failures, the court concluded that the unproduced document was “withheld surreptitiously.”

The court found that failure to provide a privilege log went beyond good faith oversight, emphasizing that, despite multiple opportunities to indicate they were withholding production, the defendants had remained silent. Although there was “no doubt” the email chain was produced “unwittingly” and “from plaintiff’s perspective was definitely a blunder,” the court concluded such disclosure had not been “inadvertent” as used within Federal Rule of Evidence 502 addressing work product and attorney client privilege protections.

Negotiations Alone Do Not Implicate the Common Interest Exception or Work Product Doctrine

Even if the draft agreement had been attorney-client privileged, the court found that any such privilege had been waived by defendants. The defendants claimed the common interest exception, which allows parties to share privileged communications with a third party without waiver when the parties have a common legal interest, applied because the email chain referenced a patent assignment negotiation between the two defendants.

In analyzing the defendants’ relationship, the court noted that given available information, one defendant was in fact abandoning its legal interest in the patent at issue and transferring it to another defendant, who stated his intent to pursue litigation in his “individualcapacity.” Relying on this, the court determined there could be no shared legal interest, and thus any attorney-client privilege that might have attached to the e-mail chain and the referenced agreement itself were deemed waived.

Similarly, the court rejected defendants’ claims that the agreement was work product. The court held that nothing about the defendants’ submissions suggested the draft agreement and associated email was in any way prepared in anticipation of litigation and thus had “fallen far short” of demonstrating the work product doctrine applied.

When in Doubt, List It Out

“Although at first blush, this case appears to be about inadvertent disclosure of privilege documents, it really isn’t—it’s much more rooted in counsel’s failure to provide an adequate privilege log identifying documents which are being withheld—or in this particular instance, failure to provide any privilege log whatsoever,” says Nicole M. Reid, Miami, FL, cochair of the Attorneys' Liability subcommittee of the ABA Section of Litigation’s Professional Liability Litigation Committee.

“If in doubt, list the document on a privilege log. Let the court decide if it needs to be produced. Failure to do so, even if done with the proper intentions, can result in negative inferences which will not be well-tolerated by the court,” Reid advises.

“Fear that opposing counsel is hiding the ball behind questionable privilege claims is surely in the back of every litigator's mind. And here, it was a fear well founded,” says Tiffany A. Rowe, Washington D.C., cochair of the Accountant’s Liability subcommittee of the Section’s Professional Liability Litigation Committee.

“When there is reason to believe that opposing counsel is playing fast and loose, don't make accusations that cannot be substantiated or are not in good faith. Call the court's attention to the issue for what it really is: an offense against the court,” Rowe suggests.

Care Is Key in Discovery Responses

Rowe and her Section colleagues encourage litigators not to discount the importance of proper discovery responses. “This case presented an interesting confluence of strategic decisions and mistakes that created a perfect storm which had detrimental outcomes for the defendant,” says Bradford S. Babbitt, Hartford, CT, cochair of the Section’s Commercial & Business Litigation Committee.

“It is an object lesson in the importance of carefully reviewing production that everyone in practice of trial work needs to keep in mind. We are still human, and humans make mistakes,” he says. “But if you are in a position of having to ask for an equitable dispensation, demonstrating that you have attempted to comply with all the rules and work with your opponent, while it may not win the day, will put you in a better position.”

“When responding to discovery, counsel should choose their battles carefully to avoid the appearance of gamesmanship,” advises Michael S. LeBoff, Newport Beach, CA, cochair of the Section’s Commercial & Business Litigation Committee. This includes the assertion of privileges, where boilerplate privilege objections are no longer acceptable,” LeBoff adds.


Amy Mattson is a contributing editor for Litigation News.

Hashtags: #AttorneyEthics #AttorneyClientPrivilege #PrivilegeWaiver #InadvertentDisclosure

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