Federal Evidence Review

Court denies motion to compel return of e-mail message after concluding the disclosure was not inadvertent under FRE 502(b) since defense counsel “had ample opportunity to discover and assert the claimed privileged status of the e-mail” and failed to do so, in Clarke v. J.P. Morgan Chase & Co., No. 08 Civ. 02400, slip op. (SDNY Apr. 10, 2009)

The courts continue to apply FRE 502(b), enacted in September 2009, on the issue of determining whether disclosure of privileged communications was inadvertent. See generally President Signs New Attorney-Client Privilege Rule (FRE 502). A case from the Southern District of New York (SDNY) provides an example where counsel failed to claim the privilege in a reasonable and timely manner and therefore did not obtain the protection of inadvertent disclosure under FRE 502(b).

The class action case involved a dispute over the reclassification of certain employees from “exempt” to “nonexempt” for purposes of overtime eligibility under the Fair Labor Standards Act. At issue was whether a particular e-mail was protected by the attorney-client privilege or work product doctrine and whether the disclosure of the e-mail was inadvertent. The e-mail was drafted by an assistant general counsel to recommend that information department technology managers reclassify some positions from “exempt” to “nonexempt”. Defendant J.P. Morgan Chase & Co. moved to compel the plaintiffs to return or destroy all copies of the e-mail message.

SDNY United States Magistrate Judge Debra Freeman denied the motion after concluding the defendant failed to meet its burden to show the attorney-client privilege applied, the disclosure was inadvertent under FRE 502(b), and the communication was covered by the work product doctrine. The court reviewed the e-mail in camera. Initially, the court questioned whether the defendant had met his burden to show that the e-mail was privileged under the attorney-client privilege, including whether there was an attorney-client relationship between the company counsel and the e-mail recipient, whether the communication was confidential, and whether the purpose of the communication was to provide legal advice. Clarke, No. 08 Civ. 02400, slip op. at _ (citing Mercator Corp. v. United States, 318 F.3d 379, 384 (2d Cir. 2002) (“It is, moreover, well established that the party invoking a privilege bears the burden of establishing its applicability to the case at hand.”) (citing other cases); United States v. Construction Prods. Research, 73 F.3d 464, 473 (2d Cir. 1996) (attorney-client privilege applies to “(1) a communication between client and counsel, which (2) was intended to be and was in fact kept confidential, and (3) [was] made for the purpose of obtaining or providing legal advice.”)).

However, independent of the application of the attorney-client privilege, the court concluded the defendant failed to show the disclosure of the e-mail was inadvertent under FRE 502(b). The court noted that the defendant “does not appear to have taken particular care to prevent the dissemination of the e-mail or the supposedly privileged portions of its contents to the reclassified employees.” Clarke, No. 08 Civ. 02400, slip op. at _. The court applied the following factors under FRE 502(b):

“(1) the reasonableness of the precautions to prevent inadvertent disclosure, (2) the time taken to rectify the error, (3) the extent of the disclosure, [and] (4) an over[arching] issue of fairness and the protection of an appropriate privilege which . . . must be judged against the care or negligence with which the privilege is guarded.”

Clarke, No. 08 Civ. 02400, slip op. at _ (quoting Business Integration Services, Inc. v. AT&T Corp., 251 F.R.D. 121, 129 (S.D.N.Y. 2008) (internal quotations and citation omitted)).

First, the defendant should have been aware of the e-mail when it provided its initial disclosures in the case. In fact, the e-mail was the first document provided with others. The e-mail was noted during an employee deposition. No claim of privilege was asserted. One week after the deposition, and one day before further depositions, defendant’s counsel raised the issue of privilege for the first time. These circumstances did not support inadvertent waiver. As the court explained:

“First, Defendant took no steps to prevent the dissemination of privileged information, apart from including a request in the e-mail that recipients ‘not begin any communication to employees prior to receiving specific details on December 11.’ …

“Second, from the December 2009 date when Defendant learned (or, if they had but looked at Plaintiffs’ document production, should have learned) of the e-mail’s disclosure, Defendant took an inexplicably long time to demand its destruction or return.…

“Third, although the question of the ‘extent of the inadvertent disclosure’ is ‘mainly of concern in the context of inadvertent disclosures during discovery,’ rather than prior to discovery, Business Integration Services, 251 F.R.D. at 129, here, it should be noted that the volume of Plaintiff’s discovery was not so large that the e-mail would have been difficult for Defendant to identify. On the contrary, the document’s existence in that production would have been readily apparent.

“Finally, issues of fairness weigh in favor of waiver in this case, given that Defendant had ample opportunity to discover and assert the claimed privileged status of the e-mail, but waited until the day before the Rule 30(b)(6) deposition to raise its privilege claim. Plaintiffs should not have been forced to alter their deposition preparation at the last minute, so as to take account of Defendant’s belatedly raised claim. Accordingly, even if the e-mail were privileged, privilege has been waived.”

Clarke, No. 08 Civ. 02400, slip op. at _ (citation omitted).

Finally, the court noted that the e-mail was not protected by the work product doctrine since it was not prepared “in anticipation of litigation” under Fed. R. Civ. P. 26(b)(3)(A). Specifically, the defendant failed to show that “but for the prospect of litigation, the e-mail in question would not have been prepared in the ordinary course of business or in substantially the same form.” Clarke, Case No. 08 Civ. 02400 (CM) at _.

In addition to showing another application of new FRE 502(b), the case underscores the importance of acting promptly to rectify any inadvertent disclosure of privileged communications.