Document Review Still Requires Attorney Involvement

The District of New Jersey recently refused to compel the return of inadvertently produced privileged documents despite a clawback provision in the protective order where the producing party relied on key word computer searches to screen for privilege without any further attorney review.

In Shire LLC v. Amneal Pharmaceuticals, LLC, 2:11-cv-03781 (D.N.J. January 10, 2014), defendants Johnson Matthey Inc. and Johnson Matthey Pharmaceutical Materials quickly reviewed and produced certain documents to meet the fact discovery deadline in the case.  As part of that review, the defendants relied on analytical software to electronically search the documents.  Some of the documents were then further reviewed by the defendants’ in-house and outside counsel for privilege before undergoing a final review by a third-party vendor.  Other documents were not subject to further review by attorneys, and 47 privileged documents were inadvertently produced.

The plaintiff notified the defendants that their production contained privileged documents.  That same day, the defendants acknowledged the inadvertent production and requested that the plaintiff return or destroy them pursuant to the clawback provision of the protective order.  When the plaintiff refused to do so, on the basis of waiver, the defendants filed a motion to compel.

The court applied a five factor test to determine whether the privilege was waived: (1) the reasonableness of the precautions taken to prevent the inadvertent disclosure in view of the extent of the document production; (2) the number of inadvertent disclosures; (3) the extent of the disclosure; (4) any delay and measures taken to rectify the disclosure; and (5) whether the overriding interests of justice would or would not be served by relieving the party of this error.

The first factor (reasonableness of precautions) was most important to the court’s analysis.  The court held that the defendants did not take reasonable precautions to prevent the disclosure because attorneys were not involved in the review of those documents.   The court found that the second factor weighed against finding waiver because the 47 documents at issue were small in number compared to the 250,000 page production.  The court found that the third factor weighed in favor of waiver because the documents contained the defendants’ internal analysis of the patents-in-suit.  The fourth factor also weighed in favor of waiver because the defendants did not conduct a remedial investigation until after the plaintiffs brought the issue to their attention.  The court also found that the fifth factor weighed in favor of waiver because the inadvertent disclosure was the result of a failure to review.  Thus, the court concluded that the privilege was waived as to those documents.  The court declined to extend the waiver to the full subject matter of the documents, finding no evidence of selective production of documents.

Although document review software has made great strides in recent years and significantly reduced the time and expense associated with reviewing documents for production, clients should ensure that attorneys are still involved in the review process and not rely solely on a clawback provision in the protective order.