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Litigation Hold Missteps: Pre-waiver of Privileges

Posted on October 26th, 2009

By Diane E. Barry, Esq.

In Major Tours v. Colorel, the federal district court for the District of New Jersey held that the client (defendant Colorel) had waived attorney client privilege regarding eDiscovery response process well before counsel began their actual discovery work. In other words, the privilege was gone before the attorneys even got there. For a closer look at this distressing case, see 2009 U.S. Dist. LEXIS 68128 (DNJ 2009). I found this case interesting because although the articulated reasons for the court’s result were unusual (pre-waiver of privileges) the fact pattern is not unusual and neither were the legal theories applied by the court. This result could spread to other jurisdictions without difficulty.

Major Tours is a discrimination action filed against the New Jersey Department of Transportation and named individuals. The essential: Plaintiffs (all owners of bus companies) claim that there have been discriminatory safety inspections of African American owned buses en route to Atlantic City.

A few important dates:

  • In a letter dated May 14, 2002, Sen. Arlen Spector asked the Commissioner of the New Jersey Department of Transportation to look into constituent complaints regarding discriminatory conduct. The Commissioner wrote back that the complaints were unfounded.
  • On Sept 11, 2004, Robert Sugarman, Esquire sent a letter to New Jersey Attorney and to the Commissioner of the New Jersey Department of Transportation alleging racial profiling of African American owned bus charter companies who charter trips to casinos in Atlantic City. Sugarman’s letter required a response within 2 weeks “to avoid recourse to litigation.”
  • On June 15, 2005, the plaintiffs filed their Complaint.
  • November 4, 2005, about 5 months later, the Deputy Attorney General sent the various defendants a letter letting them know that that he might need their assistance for, among other tasks, identification of documents.
  • March 22, 2007, about 17 months later he sent out a formal letter requiring preservation of records. 2009 U.S. Dist. LEXIS 68128 (DNJ 2009) *4.

For the first year and a half, the case proceeded without unusual upset. However, when the subject of eDiscovery arose, the defendants drew a line in the sand. They offered up a native production of their active data emails, but refused to produce any archived items. They eventually moved for a protective order as to the archived items due to burden and cost.

This is where the case started sliding south for the defendants. As part of the oral argument on the motion for a protective order, the court enquired about the adequacy of the defendants’ litigation hold efforts. The court wanted to know if the defendants had deleted any emails they were under a duty to preserve. The response to this question would affect the court’s decision on whether or not the defendants should be required to retrieve the archived items. 2009 U.S. Dist. LEXIS 68128 (DNJ 2009) *5.

Plaintiffs moved for production of the two litigation hold letters from the Deputy Attorney General to the defendants. The Defendants argued that the letters were privileged, and that without a preliminary showing of spoliation, which had not been made, the letters could not be ordered produced.

The court disagreed.

The court started out with the defendants. Generally, litigation hold documents are both attorney-client and attorney work product privileged. 2009 U.S. Dist. LEXIS 68128 (DNJ 2009) *6-*7. However, the court switched sides over the litigation hold.

The court noted that the “prevailing view” among courts considering the matter was that litigation hold letters are discoverable when spoliation has occurred. The court analyzed the opening litigation threat letters, and decided that the Sept 11, 2004 letter from Attorney Sugarman was sufficiently specific regarding the immediate threat of litigation to trigger the litigation hold duty. 2009 U.S. Dist. LEXIS 68128 (DNJ 2009) *11-*13. Since the earliest attempts at litigation hold did not occur until more almost two years later, the court thought it probable that that relevant documents had been deleted. (The court also had its doubts as to whether the first letter from the Deputy Attorney General actually qualified as a litigation hold letter, but left those aside for the moment.) This was sufficient to show probably spoliation, and to require production of the requested discovery letters.

Fast forward to the present.

The facts set out in Major Tours are not unusual. They illustrate every attorney’s worst litigation hold nightmares: the client had been put on notice but did not understand that it had been put on notice; important steps were not taken; relevant documents were destroyed; important privileges were waived. By the time the Complaint was filed it was already too late. The privileges had been waived years before counsel even began their litigation work.

Major Tours is unusual on two counts. First, counsel were blindsided when the court brought up these issues, sua sponte, during oral argument on their motion for a protective order. These issues are expected during motions for cost shifting, for spoliation sanctions, for motions in limine. Counsel were caught flat-footed because they didn’t expect them to accompany their motion for a protective order. Next, although litigation hold documents are often produced during litigation, often voluntarily in defense of spoliation claims. Major Tours was distressing due to the legal reasoning used. Pre-waiver of important privileges is a new nightmare for counsel to add to their litigation hold woes.

Lessons to be learned:

  • Look at litigation hold issues carefully before undertaking a new litigation matter. What are you walking in to? Is there a colorable argument to be made that privileges have already been waived? If yes, document these items with your client and proceed with the understanding that your litigation response process may well be discoverable.
  • Even without pre-existing litigation hold issues, litigation hold and eDiscovery process documents should be treated from the outset as if they are not privileged and the opponents and court may well see them. These documents are often necessary as defensive items, to prove good faith or lack of bad motives in the discovery process. Be careful what you say in them, and have draft them with the understanding that the unfriendlies of this world will be looking them over with 20/20 hindsight.
  • Litigation hold and spoliation claim issues can arise at any time during the discovery process and not just as part of motions to shift costs or specifically addressing spoliation. Be ready to address and defend at any point.

Discovery Strategy & Management
International Litigation Services, Inc.
dbarry@ils-ipp.com

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