In the United States Court of Federal Claims
No. 12-286C
(Filed: March 9, 2015)
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NORTHROP GRUMMAN SYSTEMS
CORPORATION,
Motion to compel; Protective
Plaintiff, order; Claw back provision;
Attorney client privilege; Work
v. product doctrine; Waiver of
privilege; Inadvertent waiver;
THE UNITED STATES, FRE 502.
Defendant.
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ORDER
Pending is plaintiff’s motion to compel production of documents in this
contract proceeding. The matter is fully briefed, and we heard argument on
March 3, 2015. For the following reasons, we grant in part and deny in part
plaintiff’s motion.
On September 17, 2013, we entered a stipulated protective order which
facilitated the parties’ exchange of discovery materials. It included a “claw
back” proviso to the effect that, if a “party inadvertently or mistakenly”
produces documents which could have been withheld in whole or in part on the
basis of an applicable privilege or the work-product doctrine, that production
“shall not constitute a waiver of any privilege or other protection,” assuming
the party claiming the privilege requests return of the documents. Nothrop
Grumman Sys. Corp. v. United States, No. 12-286C, ¶ 20 (Fed. Cl. Sept. 17,
2013) (Protective Order).
The parties have engaged in extensive document production. Defendant
alone has turned over millions of documents in electronic form. Included
within that production are apparently at least 1500 documents which the
government now claims are protected by the work product doctrine or attorney
client privilege and which it asserts it never intended to produce. It represents
that it did a privilege review, which, in retrospect, turned out to be inadequate.
Defendant notified plaintiff that the 1500-plus documents had been produced
by mistake and asked for their return. Plaintiff promptly returned them.
Plaintiff now moves the court to compel production of those documents
because, it argues, the earlier production by defendant was a waiver of any
privilege.
Plaintiff does not challenge the assertion that the documents are
otherwise privileged. It contends, however, that the claw back provision is
subject to an implicit requirement that the prior privilege review was
reasonable and that the assertion of privilege must have been prompt. It argues
that the review was so inadequate and the assertion of the privilege so dilatory
in this case that the claw back provision offers no defense to a waiver of the
privilege.
Plaintiff also argues that a second, independent waiver of the privilege
took place when the United States Postal Service gave a third party access to
many, although not all, of the documents in question in the midst of a qui tam
proceeding which related to the contract in suit. That disclosure, to the
plaintiff in the qui tam proceeding, took place approximately a month after
plaintiff in this suit first notified the Department of Justice of the likelihood of
an inadvertent disclosure in this proceeding.
With respect to what we will call the “DOJ documents”–those
documents produced by defendant to plaintiff directly in discovery in this
case–defendant conceded at oral argument that it cannot rely on the protection
of the claw back agreement if its initial privilege review was unreasonable
under the circumstances or if its assertion of the privilege was dilatory. It
argues, however, that it took reasonable steps to avoid waiving the privilege
and that its assertion of the privilege, once it became aware of the possibility
of inadvertent disclosure, was reasonably prompt.
As to the “Postal Service documents” released in the qui tam
proceeding, defendant concedes that the claw back agreement is inapplicable
and that the Postal Service, as the relevant agency, is the “client” for purposes
of asserting privilege. It argues, however, that the release must have been
inadvertent because the agency had reviewed the materials prior to release and
“removed all privileged materials found,” Def.’s Opp’n 24, i.e., there was no
waiver.
DISCUSSION
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Some courts have held that a claw back agreement substitutes for any
discovery or evidentiary rules which might otherwise apply. E.g. Crissen v.
Gupta, No. 12-CV-355, U.S. Dist. LEXIS 51100, at *13-14 (S.D. Ind. Apr. 14,
2014); BNP Paribas Mortg. Corp. v. Bank of Am., No. 09 Civ. 9783, U.S.
Dist. LEXIS 75402, at *30-32 (S.D.N.Y. May 21, 2013); see also Good v. Am.
Water Works Co., No. 14-1374, 2014 U.S. Dist. LEXIS 154788, at *6-8 (S.D.
W. Va. Oct. 29, 2014) (order granting motion for entry of protective order with
a claw back provision). In this case, that could mean ignoring the requirement
of Federal Rule of Evidence 502(b)(2) and (3) that “the holder of the privilege
. . . took reasonable steps to prevent disclosure,” and “promptly took
reasonable steps to rectify the error,” on the theory that the time saved by not
doing what the rule contemplates, at least in paragraph (b)(2), is lost if a
careful review is still required.
While recognizing that introducing the requirements of 502(b)(2) and
(3) into enforcement of the protective order runs the risk of making it look
superfluous to an extent, we believe that such a gloss does no violence to this
particular protective agreement. Paragraph 18 requires each party to “review
its documents for privileged information prior to production.” A normal
reading suggests that a reasonable effort is implied. In addition, the rule
requirement of promptly moving to rectify the mistake is arguably fully
consistent with the claw back agreement. The claw back provision simply
does not speak to the question.
In any event, defendant’s concession that the protective order’s claw
back provision is subject to the implicit requirements that the initial privilege
review must have been reasonable and its assertion of the privilege timely
saves our having to resolve a dispute in the case law. As to the DOJ
documents, the question then becomes whether defendant’s initial privilege
review was reasonable and whether defendant acted reasonably promptly in
asserting privilege once plaintiff called its attention to the possible mistake.
Because it asserts the privilege, defendant bears the burden of proof. Den Isle
Marina, Inc. v. United States, 89 Fed. Cl. 480, 503 (2009). We deal with
Postal Service’s subsequent disclosure separately.
We are prepared, in the case of the DOJ documents, to assume that the
release of privileged documents was inadvertent. Government counsel
explained the steps he took to cope with examining over three million
documents for privilege. Plaintiff’s initial document request was served in
March 2013. It took approximately seven months to respond, which, under the
circumstances we find unsurprising.
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The agency’s documents relating to the contract at issue were kept in
two repositories: a hard drive referred to as the “FSS Server” and a different
hard drive containing emails called the “FSS Emails Collection.” An outside
document review company was engaged to do a digital word search in both for
privileged materials using terms such as “privilege” or “work product” or for
documents that contained the name of any one of a number of agency attorneys
involved with the contract anywhere in the document. That search was
scrapped when it produced approximately 560,000 documents. A narrower
search was then initiated only for documents that were sent to or received by
attorneys.
This second search identified approximately 83,000 documents, which
were withheld from production. The balance of the documents was released
without any further testing or sampling on October 31, 2013. On November
26, 2013, counsel for plaintiff contacted government counsel, pointing out that
apparently some privileged materials had been produced, and seeking
clarification with respect to two particular documents. On December 19, 2013,
government counsel invoked the claw back provision as to those documents.
Within the following three months, plaintiff notified government counsel of
additional concerns about more documents. It was not until June 12, 2014,
that counsel for the government plainly invoked the privilege with respect to
all of the documents currently at issue and sought their return pursuant to the
protective order.
As counsel for the government explained, two mistakes were made
during the second effort to identify privileged documents. First, counsel was
under the impression that the third party vendor was searching, not just for
attorney names, but for terms such as “privileged” or “work product.” In fact,
the vendor did not do so. Second, counsel was under the impression that the
“to and from” attorney search among emails included such addresses anywhere
in the chain of emails included in the document, not just the last email. Again,
that turns out to have been an erroneous assumption.
Plainly there was too much reliance on the third party vendor. Greater
care and oversight should have been exercised by counsel. This conduct was
not so careless, however, as to warrant a conclusion that it was tantamount to
a waiver, particularly in light of the parties’ reliance on the protections of the
claw back proviso. While such an agreement does not vitiate a duty of care,
we are less inclined to treat what happened as unreasonable reliance on the
safeguard of the claw back protections, particularly given the large volume of
material. Nor do we believe that the delay in fully invoking the claw back
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provision from November 26, 2013, to June 12, 2014, warrants forfeiture of
the privilege. If nothing had been done by the government until June 12, we
would be inclined to agree. In fact, government counsel sent six letters or
emails regarding inadvertent production, beginning on December 19, 2013,
and concluding with the comprehensive request in June 2014. During that
period of time, the government undertook a more comprehensive document
review of the failed efforts of 2013. While plaintiff should have been kept
better informed of the reasons for delay, we cannot hold that this amount of
time vitiates the government’s right to assert privilege. In short, defendant can
assert privilege with respect to the documents supplied by DOJ on October 31,
2013.
We reach a different result with respect to the documents released by
the Postal Service. Federal Rule of Evidence 502(b), Inadvertent Disclosures,
provides that a disclosure does not waive the work product or attorney client
privilege if it was inadvertent, if the holder of the privilege took reasonable
steps to prevent disclosure, and if it promptly took steps to rectify the error
once discovered. The Postal Service’s release to the relator in the qui tam
proceeding cannot get past either or both of the first two requirements.
For aught that appears, the disclosure to the relator of the entire FSS
hard drive was anything but inadvertent. In its briefing, counsel for the
government tells us that “USPS counsel had reviewed the FSS Server material
for privilege as it was being compiled, together with electronic privilege
searches, and removed all privileged material found.” Def.’s Opp’n 24. At
oral argument, the court was told that counsel for the Postal Service examined
the contents of the server document by document as they were added to the
database to delete privileged material. Far from indicating that the release was
“thus inadvertent,” id., what it strongly suggests is that the Postal Service had
every intention to give the relator in that suit the documents as to which the
government now wants to assert privilege. Unlike the documents inadvertently
released by the DOJ, as to which counsel has given us a detailed explanation
of the steps it took to prevent inadvertent disclosure, and, most importantly, an
explanation of the precise errors that lead to the inadvertent disclosure, there
is nothing comparable to explain what the Postal Service did. It appears that
the Postal Service merely changed its mind about what should be protected.
Morever, a copy of the FSS Server was given to the relator in the qui
tam suit in January 2014, although the briefing does not reflect the precise
date. This was at least one month after the government was initially notified
by plaintiff of the possibility of an inadvertent release of privileged
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information. It is unclear whether that production was before or after an email
written by counsel for plaintiff on January 21, 2014, once again raising a
question about possible production of privileged material. That email
specifically referred to one particular document which became the focus of the
parties briefing: a 2013 Office of Inspector General Report (“OIG Report”)
concerning this contract. This is one of the documents which the government
contends is protected by the attorney client privilege or work product doctrine.
The OIG Report was added to the FSS Server ten times. Thus,
assuming counsel for the Postal Service screened for privilege every time
material was added to the server, the decision not to treat it as privileged had
to occur on ten occasions. It is no answer, as counsel for the government
suggests, that, having seen the document once and not directing it to be
removed, we can assume subsequent treatment was controlled by the first
review. The FSS Server’s collection of documents was accumulated over
many months. Thus, the decision to leave the OIG Report on the server did
not occur only in one review. The document had to be seen repeatedly. The
only logical inference is that this document, which might strike some as
sensitive, like the others, was of no concern to the Postal Service.
A party can waive a privilege, and the logical assumption is that a
knowing production, after careful review, waives the privilege. The
government bears the burden of proving it has not done so here with respect
to the FSS Server documents released by the Postal Service. Defendant did
not meet that burden. The only fair inference is that the agency made the
considered judgment that it would not claim privilege as to these documents
or that it was so careless that production was tantamount to a knowing waiver.
CONCLUSION
Plaintiff’s motion to compel is granted with respect to the FSS Server
documents produced by the Postal Service to a third party. It is denied in all
other respects. To the extent there are documents on both servers, the privilege
was waived.
s/Eric G. Bruggink
Eric G. Bruggink
Judge
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