Often viewed as a necessary evil, the Rule 26(f) conference can serve as an invaluable opportunity to meaningfully discuss discovery such that the process is streamlined and seeks to avoid unnecessary (and often costly) disputes.   Generally speaking, Rule 26(f), among other things, sets the deadline for the conference as soon as practicable and at least 21 days before the scheduling conference, and lists several required topics for the conference, including preserving discoverable information. Although a litigant should use the Rule 26(f) conference to reduce the risk of spoliation claims through agreements on preservation, as well as reduce costs by limiting the scope of e-discovery, achieving results is almost entirely dependent on the attorney’s preparation.  Indeed, being well informed about your client, its documents ‒ including ESI ‒ and its goals will allow for a productive discussion rather than an empty formality.  But, how exactly do you prepare and what should you think about before the conference?

To prepare for the conference, it helps to think about the end game and to formulate the steps necessary to get there.  The below thoughts on preparation/topics are intended merely as a guidepost and are not exhaustive.

  • Understand your client’s ESI:  What kind of ESI is required to prosecute the client’s claims and defend against those of the adversary?  Where does that ESI reside?  To this end, it is important to become familiar with your client’s network architecture, including what hardware exists, and where.   You should strive to understand the client’s knowledge management (when/how is ESI stored), system knowledge (what is stored and where) and who is responsible for maintaining and storing data.  For example, are there physical email servers on site, or are the servers virtual?  What is necessary to access and collect data from each server?  Relatedly, give thought to addressing admissibility and how authenticity may be established over the documents (See The New Rules of Federal Evidence Have Arrived“).
  • Identify Custodians:  Take time to identify employees/custodians likely to have potentially responsive ESI.  Preservation comes at a cost and if you fail to understand your custodians, you may over-preserve.  Consider, for example, if the client is a national organization with offices throughout the U.S.  If all of the relevant custodians work out of the Omaha office, with all of the potentially responsive data located on a particular server, is there need to preserve the content of all other servers?  Consider interviewing those custodians to identify other relevant custodians.
  • Understand the timing and execution of Hold Notices, and Related Thorny Issues: At the conference the parties should determine the scope of the duty to preserve.  For example, be prepared to disclose (and ask adversary about) the status of the litigation hold.  Has one been issued?  If so, when and who received it.  If not, why not?  You may even seek to inquire about what subjects and sources the Hold covers and if there is any procedure in place for auditing compliance.  Are there any time-sensitive data sources involved and if so, have auto-delete and auto-archive functions been turned off for those data sources?  Is data from third-parties potentially responsive?  And, if so, what steps, if any, have been taken to preserve that data?   Have any key custodians left the company or potentially leaving?  If so, what steps are being taken to preserve his/her data?  Because of the large increase in e-data and the various locations where that data may reside, think about ways to narrow defensibly the scope of what you preserve.
  • Understand Collection:   While you may agree to preserve all of Katy Cole’s emails from 2010 to the present, that doesn’t mean you are agreeing to review for production all of that data.  What will be done to identify the materials that will be reviewed?  Can the parties agree upon search terms, date delimiters and other methodologies to limit the universe of material? Consider entering an agreement as to appropriate date ranges, custodians, systems, file types, and search terms.
  • Understand Privilege Obligations:  You should also discuss privilege during the Rule 26 conference.  Consider seeking a stipulation or Rule 502(d) order stating that disclosure of privileged information does not constitute a waiver of the attorney-client privilege in the instant or another proceeding.  Discuss whether a traditional privilege log is practical or burdensome for large volumes of ESI. Would it be preferable to log privileged emails by thread groups (i.e., a message and its attachments; related messages in a string of replies and forwards)?  Or are categorical logs (i.e., those that describe withheld categories instead of listing withheld records) preferable?
  • Understand Production Format:  Don’t leave format to the whim of your adversary.  Discuss expectations.  Indeed, there is little worse than receiving a thumb drive that contains various unsearchable PDFs (well, maybe a paper production is worse).  Discuss your production specifications and be prepared to produce in the same format you demand production.  Relatedly, is there any paper in the production?  If so, be certain to request that Optical Character Recognition (OCR [i.e., the process by which paper documents are converted into editable, searchable computer files]) be applied for ease text-search ability.  And, are you producing in a fell swoop or will the parties engage in phased discovery?

A meaningful and productive Rule 26(f) conference can streamline discovery, avoid unnecessary costs and avoid spoliation concerns.  It should be embraced as an opportunity to reach agreement and engage in a cooperative discovery process that will promote proportionality.

Have questions?  Please contact me at kcole@farrellfritz.com.

Despite the existence of a stipulated clawback agreement (that was never presented to the Court to be So Ordered) that provided “[i]nadvertent production of privileged documents does not operate as a waiver of that privilege,” the Court found defendants’ claim to privilege was waived by the inadvertent and “completely reckless” production of privileged materials.  In reaching its conclusion, the Court declined to conclude a clawback agreement always protects against waiver, regardless of its terms.  Rather, like the Second Circuit’s approach, the Ohio State Court held that the heightened protection provided to producing parties under a clawback agreement is lost when the party’s disclosure is “completely reckless.”

Background

Plaintiff, Irth Solutions, LLC (“Irth”) filed this lawsuit in state court alleging contract and fraud based claims.  Eventually, Defendant Windstream Communications, LLC (“Windstream”) removed the action to the District Court for the Southern District of Ohio, based upon diversity jurisdiction.  Shortly after removal, Windstream advised the Court there was a discovery dispute involving an inadvertent production of privileged electronic communications.

At the heart of the decision (Irth Sols. LLC v. Windstream Commc’ns LLC, No. 2:16-CV-219, 2017 WL 3276021 [S.D. Ohio Aug. 2, 2017]) is the parties’ agreement concerning the production of electronically stored information (“ESI”) and an email memorializing that agreement.  As is relevant here, the parties agreed that a formal court order under Federal Rule of Evidence 502 was not necessary given the size of the dispute but nonetheless agreed among themselves:

  • If a producing party discovers that it has inadvertently produced a privileged document, the producing party will promptly notify the receiving party of the inadvertent production;
  • The receiving party will promptly destroy or return all copies of the inadvertently produced document; and
  • The inadvertent production of privileged documents does not operate as a waiver of the asserted privilege.

(Docket 45-1).

Discovery began and eventually (twenty-seven days after Irth alleges production was due) Windstream made a partial production of documents.  According to Windstream, that production contained 43 inadvertently produced privileged documents.  Approximately 12 days later, Windstream’s counsel realized the production issue and contacted Irth’s counsel demanding return of the privileged materials.    Irth’s counsel refused to return the documents, but sequestered them pending decision by the Court.  Irth’s position was that any claim of inadvertence was far-fetched given the small total production size (2200 pages), the inordinate time Defendant took to make any production of documents (3 months) and the firm’s reputation for excellence.

At the hearing on the issue, the Court noted that many of the documents contained clear indicia of potential privilege (e.g., 14 of the 43 documents contained the word “legal” and several identified the author with a signature block making plain her role as counsel: “Counsel to Director of Government Contract Compliance”).  Notwithstanding these privilege flags, defense counsel reaffirmed at the hearing that the documents had been subject to a dual step review process intended to capture privilege concerns.

While the matter was pending before the Court, Windstream produced the at-issue privileged documents again. That’s right – counsel produced the very documents in dispute a second time!  In that instance, defense counsel claimed the production was the result of an attempt to re-produce the prior production set, excluding the privileged materials, in a searchable format and accidentally the Firm’s litigation support team included the privileged materials, despite counsel’s efforts to ensure they were withheld.

Discussion

Taking up the issue, the Court discussed the question of what constitutes inadvertence and ultimately indicated that it would assume arguendo that Defendant had established inadvertence.

The Court then turned to the “impact” of the parties’ clawback agreement on the question of waiver, citing three frameworks applied by other courts: “(1) if a clawback is in place, it always trumps Rule 502(b); (2) a clawback agreement trumps Rule 502(b) unless the document production itself was completely reckless [as embraced by the Second Circuit]; and (3) a clawback agreement trumps Rule 502(b) only if the agreement provides concrete directives regarding each prong of Rule 502(b).”

The Court rejected the first approach, reasoning in part that it “undermine[s] the lawyer’s responsibility to protect the sanctity of the attorney-client privilege” and “runs the risk of undermining contract principles.”

The Court, however, expressed approval of both the second and third frameworks and reasoned it need not choose between them because “taking into account the careless privilege review [conducted by defense counsel], coupled with the brief and perfunctory clawback agreement [the parties drafted], following either [the second or third] approach leads to the same result: Defendant has waived the privilege.”  Applying the framework in this Circuit, the Court noted that “[i]nadvertent disclosure provisions in stipulated protective orders are generally construed to provide heightened protection to producing parties.” (citations omitted).  However, this heightened protection is lost where a disclosure is completely reckless.

In analyzing what constitutes “complete recklessness” the Court stated that various considerations come into the calculus including: the number of privileged documents inadvertently produced, the number of documents ultimately reviewed, and the type of review process engaged in by the producing party.  Applying those factors to the facts before it, the Court ultimately concluded each demonstrated a level of recklessness that supported waiver.  Indeed, the number of privileged documents produced (>10% of the production), the time taken for the review (“Defendant had months to produce the first production”), and the fact that the mistake was not “the result of a technical error or mistake born from hours and hours of review” but instead was the result of critical and reckless mistakes of counsel (i.e., counsel reviewed a limited number of documents and more than 1/3 of the documents prominently featured “Counsel” and a legal signature block) each supported a determination of recklessness.*

Although the Court was sympathetic that privileged documents will inevitably fall through the cracks and be produced inadvertently in today’s world that is replete with emails, the Court in its Opinion reminded the Bar of our responsibility to safeguard the attorney-client privilege.  Indeed, the Court wrote, “as the “guardian” of the attorney-client privilege, it is a lawyer’s responsibility to minimize the cracks through which privileged material might slip. The Court believes the second approach adequately recognizes an attorney’s responsibility to guard that privilege, and holds an attorney accountable when normal cracks become chasms—as was the case here.” (Citation omitted.)

Conclusion

There are many critical lessons to be internalized from this decision not the least of which is the importance of entering a robust and unambiguous claw back agreement that is So Ordered by the Court.  However, it is equally important that any privilege review be undertaken in a deliberate and comprehensive fashion and performed by an attorney capable of assessing privilege – not necessarily the lowest billing attorney assigned to the specific matter.   As the Court made clear, it is the attorney’s responsibility to hold sacred their client’s privilege.  To this end, when devising a review protocol for ESI, it is imperative that a well thought out privilege protocol is designed and implemented.  And, once privilege review is complete that key words and other quality control mechanisms are put in place to avoid the inadvertent production of privileged materials.

Full decision can be located here: https://www.ediscoverylaw.com/wp-content/uploads/2017/08/Irth-Opinion.pdf

* And to make matters worse, Windstream then produced the exact same documents again while asking the Court to protect its privilege.