Opinion
02 Civ. 0711 (LAK)
July 27, 2002
ORDER
Plaintiff seeks an order requiring defendants and their attorneys to return certain allegedly privileged documents, which plaintiff claims were produced to them inadvertently or, in some cases, which plaintiff implicitly suggests were obtained improperly.
Facts The Allegedly Privileged Documents
The documents as to which plaintiff seeks relief appear to fall into two categories: documents provided to plaintiff's counsel by their client, Enterprise Capital Management, that were turned over to defense counsel on July 16, 2002 (the "ECC Documents"), and documents between and among the firm of O'Sullivan Graev Karabell, LLP ("OGK"), and its client, Lehman Brothers, Inc. (the "Lehman Documents"), which somehow came into the hands of counsel for defendant Alfred Gnat. It should be noted, however, that it now appears from defendants' submissions that plaintiff produced other perhaps privileged documents as to which it appears not to press any claim for relief. The production of apparently privileged documents occurred on three separate occasions.
The OGK partner involved in the representation, Mr. Bodian, subsequently left OGK and joined the firm that now represents plaintiff, apparently taking the representation with him.
On May 8-10 and June 13, 2002, plaintiff's counsel made available for inspection what appears to have been a substantial quantity of documents. These included documents prepared by the Canadian firm of Stikeman, Elliott ("SE"), counsel to Semi-Tech Noteholders, as well as documents prepared by Robert Bodian, a partner of the firm now representing plaintiff, while he was a partner at OGK. No claim of privilege was asserted as to any of these documents until plaintiff's counsel, at a deposition held on July 18, 2002, claimed privilege as to two or more of these documents, apparently documents prepared by Mr. Bodian.
The second incident occurred during the week of June 24, 2002, when plaintiff made documents available to counsel for certain of the individual defendants, documents that included material prepared by OGK and sent to Semi-Tech Noteholders in mid-1999. Defense counsel flagged certain documents for subsequent copying and production. However, they requested, and plaintiff's counsel granted, permission to make copies immediately of certain documents of interest and even gave defendants' counsel access to a copying machine for that purpose. They did not inquire what defendants' counsel found so interesting as to warrant immediate copying. Finally, on July 16, 2002, plaintiff's counsel produced another box of material that included the ECC Documents.
Plaintiff's Precautions
Plaintiff's counsel asserts that they have taken reasonable precautions to prevent the production of privileged documents, that such production as has occurred was purely inadvertent, and that there has been no waiver of the privilege. Specifically, they contend that they have produced 46 boxes of documents containing over 100,000 pages of material, that all were reviewed by lawyers prior to production in order to guard against the inclusion of privileged materials, that the attorneys removed more than 90 privileged documents, and that the fact that a few slipped through was merely an accident as distinguished from the product of serious carelessness. Further, they argue that they raised the issue immediately upon finding out what had occurred.
Discussion
The determination whether the inadvertent production of allegedly privileged documents in circumstances such as these waives the privilege is fact specific. In making the determination, the Court applies the standard previously articulated by it in SEC v. Cassano, 189 F.R.D. 83 (S.D.N.Y. 1999).
Certainly no one could quarrel seriously with the proposition that the interposition of attorneys to review materials intended for production to catch and remove any privileged documents is a reasonable precaution. Nor could anyone doubt that the production involved here, considered in its entirety, was substantial. And counsel's raising of the problem regarding the five ECC Documents was extremely prompt, occurring as it did within 24 hours of their production. But that is not the whole story.
To begin with, the actions of plaintiff's counsel with respect to the production that occurred during the week of June 24 were almost indistinguishable from those of the SEC in Cassano. The parties had agreed that defense counsel would review the documents and flag those of which they wanted copies; plaintiff's counsel then would make and provide the copies to the defendants. Although plaintiff has not said so in so many words, it is well known that such a procedure serves two purposes for the producing party beyond economizing on copying costs: it affords an opportunity for a second privilege review, and it allows the producing party to know just what its adversaries have found to be of interest, thus giving a window on the adversaries' strategy. Once the documents were made available, however, defendants' counsel indicated that they wanted to copy materials immediately, a red flag if ever there was one. Rather than looking to see what was so interesting, however, plaintiff's counsel simply made a copying machine available. This was sufficiently careless as to negate the care that plaintiff's counsel allegedly used in reviewing the materials prior to production. The privilege has been waived as to documents produced on this occasion. See Cassano, 189 F.R.D. 83.
The Court reaches a similar conclusion as to the documents produced on May 8-10 and June 13, albeit by a different route. Even assuming, as plaintiff's counsel asserts, that these materials were reviewed in advance of production, their actions were inconsistent with a reasonable effort to maintain privilege. The documents included materials prepared by S.E. and OGK, and their privileged or potentially privileged nature should have been obvious to any reviewers. While it is not entirely clear that plaintiff now asserts privilege as to these materials, the fact remains that any such assertion first was made months after the production. Nor is there any suggestion that plaintiff prepared a privilege list as required by the rules of this Court or that these documents were on it.
The situation with respect to the ECC Documents is different. In that instance, counsel inadvertently allowed five documents to slip into a much larger production. The error was discovered and called to defendants' attention within 24 hours. There was no waiver.
Conclusion
For the foregoing reasons, the Court concludes that any attorney-client and/or work product privilege that otherwise might have attached to the documents produced by plaintiff on May 8-10, June 13 and during the week of June 24, 2002 has been waived. Defendants are entitled to retain copies of those documents and, subject to the rules of evidence, to use them in this case. Any privilege that may attach to the ECC Documents was not waived by their production on July 16, 2002. Defendants' counsel shall return all copies thereof to plaintiff's counsel forthwith and may make no use of those documents or information derived therefrom.
SO ORDERED.