July 2012 Vol. 9, No. 2

9.2.7

Attorney-Client Privilege, Waiver of; Common Interest Doctrine

Case:

Kilopass Technology Inc. v. Sidense Corp. (N.D.Cal. 2012) 2012 WL 1534065

Issue:

Did a party preserve the attorney-client privilege over documents it produced to opposing party where:  (1) outside counsel contracted with a vendor to search and sort electronic documents for privilege; (2) the list of the party’s past lawyers and law firms provided to the vendor, which outside counsel had obtained from the party, failed to include lawyers and firms that provided early corporate work for the party; (3) vendor mistakenly did not run the privilege search across all production batches of documents and did not run all search terms provided by outside counsel; (4) after receiving the production batches from the vendor just days before production was due, the party’s attorneys and paralegals conducted spot checks, but the privileged documents escaped manual screening due to the tight timeline for production; and (5) where, as a result, the party claimed that more than 1 in 50 documents the party produced was privileged?

Holding:

No. The Court found that the party’s screening procedures had been unreasonable and that the privilege over the documents therefore had been waived.  “[R]easonable pre-production review of the documents would have flagged their privileged nature.  This is not a case where a few privileged documents in a large batch slipped through otherwise robust screening procedures.  Even where a small number of privileged documents are disclosed in a large batch, privilege may be waived where the screening procedures were particularly unreasonable.”  (2012 WL 1534065, *3, citations omitted.)

The Court pointed out that the party had produced 1,139 assertedly privileged documents in a batch of 55,000, more than 1 in 50.  “The high proportion of privileged documents evidences a failure on [the party’s] part to properly screen the documents.  Moreover, this is not a case where only the third party vendor made a mistake.  It appears that all three parties involved [the party, outside counsel, and the vendor] erred or otherwise did not execute their tasks with reasonable diligence.”  (Ibid.)  The party therefore could not be said to have taken “reasonable steps to prevent disclosure” as required by Federal Rule of Evidence 502(b)(2).

Note:

The producing party claimed that it had properly withheld customer presentations the party had made regarding developments in this lawsuit because they were subject to the common interest doctrine.  Under that doctrine, disclosure to a third party does not waive the attorney-client privilege where the third party shares a common interest with the disclosing party.  “The doctrine generally applies to cases where allied lawyers and clients work together in prosecuting or defending a lawsuit so that they may exchange information among themselves without waiving the privilege.”  (Id. at *1, citation omitted.)

The Court held that the common interest doctrine did not shield production of the party’s customer presentations.  The documents consisted of the party’s interpretation of the Court’s claim construction ruling, which the party viewed as having been very favorable.  The documents further described the strengths of the party’s case going forward.  The Court found nothing in the documents suggesting allied clients and lawyers working to defend the lawsuit.  “Instead, the documents are what one might expect from marketing materials following a Claim Construction Order.”  Therefore, the common interest doctrine did not apply.  (Ibid.) 

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