Finally Forgiveness: Magistrate Recognizes that E-Discovery Software Isn’t Perfect

U.S. Magistrate Judge Elizabeth LaPorte

Elizabeth LaPorte, U.S. magistrate judge for the Northern District of California, struck a blow for rationality in electronic discovery last month in Datel Holdings, Ltd. v. Microsoft Corporation, 2011 U.S. Dist. LEXIS 30872 (March, 11, 2011). What did she do? She held that e-discovery software isn’t always perfect. Forgiveness is a virtue. Good for her, I say.

What’s This All About?

Microsoft was sued by Datel Holdings for allegedly monopolizing the aftermarket accessories for its Xbox 360 video game product. (See Microsoft’s Datel Defense Takes Bite out of Apple’s Playbook, from the blog Antitrust Today.)

During the course of discovery, Microsoft realized that it had produced six emails that it considered to be privileged. Five of the six documents were part of a long email chain that started with a request for legal advice. The emails got through because key text was truncated due “to a glitch in the document review software  that caused these documents to be produced in truncated format.” Microsoft counsel alleged that the documents got through their screening process because it wasn’t obvious from the text that remained that the email chain was instigated by a request from in-house counsel.

Specifically, Defendant explains that after potentially responsive documents were collected from custodians, they were loaded into a computerized document processing system known as “Clearwell.” Clearwell extracted metadata from each document and converted the documents into a format that allowed for text searching. Once the documents were processed through Clearwell, they were entered into an online platform where they were reviewed by attorneys. For reasons still unknown to Defendant, Clearwell truncated some “Re-auth” documents during processing.

(Internal citations omitted.)

Naturally plaintiff took a different view. Datel counsel argued that any privilege that existed was waived by the production because defense counsel did not take the steps necessary to avoid waiver under FRE 502(b). That provision requires a showing of the following to prove inadvertent waiver and recover the documents:

  1. The disclosure is inadvertent;
  2. the holder of the privilege or protection took reasonable steps to prevent disclosure; and
  3. the holder promptly took reasonable steps to rectify the error, including (if applicable) following Federal Rule of Civil Procedure 26(b)(5)(B).

Forgive and Forget

This is a good case from which to see how at least some forward-thinking courts will apply Rule 502(b) on claims of inadvertent waiver. Not to spoil the suspense, but this magistrate judge had no difficulty finding that a mistaken production based on a software glitch was inadvertent and forgivable. Contrast this finding with Mt. Hawley Insurance Company v. Felman Production Inc., 2010 WL 1990555 (S.D.W.Va., May 18, 2010), where the mistaken production was also caused in large part because of the failure of a Concordance index. (See also my posts about Mt. Hawley here and here.)

Let’s see what Magistrate Judge LaPorte had to say:

1. Was the disclosure inadvertent?

You bet. Microsoft’s counsel clearly didn’t intend to produce privileged emails. Datel’s counsel tried to muddy the waters here by arguing that because Microsoft produced repeated copies of the privileged emails, the court had to find the production intentional:

Plaintiff contends that Rule 502(b) only protects “unintended production,” not ill-considered production or production made without bothering to acquire a complete understanding of the four corners of a particular document.

Nice try but no cigar. Magistrate Judge LaPorte quickly and correctly tossed out this argument. Inadvertence means inadvertence. If you didn’t mean to produce a privileged document, it was inadvertent.

Here, although Defendant’s team of lawyers carefully reviewed documents to identify privileged communications, a computer glitch truncated the documents, removing the portion conveying the request from counsel to conduct a factual investigation. The technical glitch was a mistake, which occurred accidentally and unintentionally, and prevented Defendant’s team of lawyers from recognizing the privileged nature of the email chain.

As the magistrate judge concluded: “Mistaken production due to an unexpected software glitch that occurred despite the use of standard discovery software falls squarely on the inadvertent side of the divide between intentional disclosure under Rule 502(a) and unintentional disclosure under Rule 502(b).”

Right on.

2. Did Counsel Take Reasonable Steps to Prevent Disclosure?

Here was the heart of the battle. Magistrate Judge LaPorte credited Microsoft counsel for adopting “fairly robust measures to protect against inadvertent production.” Specifically,  this included:

  1. Hiring a group of contract lawyers to review documents for privilege.
  2. Deploying a QC team to review documents marked potentially privileged.
  3. Directing a privilege team to review any documents that made it through QC as privileged (third review).
  4. Entering the privileged documents in a privilege log.
  5. Giving review attorneys specific instructions on how to identify documents that contained privileged materials.
  6. Conducting a tutorial on privilege in addition to the written instructions.
  7. Adding another layer of QC checks by defense counsel to ensure the review work was done appropriately.

Magistrate Judge LaPorte also noted with approval that these measures enabled defense counsel to catch and mark privileged those copies of the emails that had not been truncated during processing.

Datel counsel made some interesting arguments in this respect. First, they criticized Microsoft counsel for not marking all the documents in the email chain privileged when they noticed that certain elements were. Some review software, including Catalyst’s, will allow you to do this with a click of a mouse as a “Tag all” option.

Datel also argued that Microsoft’s counsel clawed back certain other documents earlier but not these. Microsoft responded that cross-checking everything would have required “Herculean efforts” and would have delayed the production. Besides, the email at issue had been truncated during processing, so the privilege claim was not obvious.

Taking a benevolent approach, Magistrate Judge LaPorte dismissed Datel’s arguments, holding that Microsoft’s counsel took reasonable steps to prevent inadvertent disclosure. First, she noted what should be a safe harbor standard in these discussions:

Inadvertent production of a relatively low proportion of documents in a large production under a short timetable due to a mistake should be and usually is excused.

She noted that Microsoft had produced more than one million pages under tight deadlines.

She also affirmed a key statement from the Advisory Committee Notes to amended Rule 502(b):

Depending on the circumstances, a party that uses advanced analytical software applications and linguistic tools in screening for privilege and work product may be found to have taken “reasonable steps” to prevent inadvertent disclosure.

As Magistrate Judge LaPorte pointed out: “Here, Defendant used a computerized document processing system to organize its documents which unbeknownst to Defendant, suffered a software failure.” As she noted, the information on the emails was truncated. It wasn’t obvious on the face of the emails that the truncated information lost during processing would have been subject to privilege.

The most important statement for our purposes followed:

In relatively large productions of electronic information under a relatively short time table, perfection or anything close based on the clairvoyance of hindsight cannot be the standard, otherwise, the time and expense required to avoid mistakes to safeguard against waiver would be exorbitant, and complex cases could take years to ready for trial.

That has to be right. If the purpose of the recent amendments to the Federal Rules of Civil Procedure and Evidence were to help reduce the costs of e-discovery, we have to start making room for mistakes—whether made by counsel during review or by software during processing or search. I prefer Magistrate Judge LaPorte’s views over Magistrate Judge Stanley’s any day (except for the fact that the latter was dealing with a party that seemed to deserve what it got).

3. Did Microsoft’s Counsel Take Reasonable Steps to Rectify the Error?

This was the no-brainer part of the argument. Microsoft’s counsel first learned the nature of the truncated emails during a key deposition. At first, counsel saw no basis for a privilege claim. After reviewing the entire discussion chain and learning that there was basis for privilege, counsel immediately asked that the emails be returned.

What Does This Mean for the Law of Search?

This is a good case for those of us who believe that discovery should help support the just, speedy and inexpensive determination of every action, as Rule 1 of the FRCP states. Privilege review is the most expensive part of the process, often requiring teams of lawyers to comb through documents for fear of inadvertently producing a privileged document.

The worry, of course, isn’t just that a specific document will be produced. Rather, the law of privilege suggests that the waiver may go beyond the document produced; it may be held to waive privilege claims relating to the subject matter of the document. Depending on how that is interpreted, the waiver can be extremely broad. At the least, it invites an expensive and potentially serious discovery battle along with a call to the malpractice carrier.

That shouldn’t be what happens. Software can fail, just as any complex operation can. The failure might be through programming code, documents that don’t follow normal specifications or a host of other causes. (Indeed, the Clearwell people later explained that the real problem here was that encrypted emails were decrypted improperly by Microsoft and thus the text was cut off before it even got to Clearwell. See Clearwell’s Use in the Matter of Datel v. Microsoft.)

More important, mistakes happen and will happen. Reviewing millions of pages of documents is a long and tedious task. Search and analytics could help the process but even those measures miss the mark from time to time. Even worse, if text or metadata is mangled during processing (this case) or indexing (Mt. Hawley), the lawyers are at a real disadvantage. How would they know that there are time bombs lurking in the mass of electronic paper before them? How would they know that the software or some other technical process had failed?

In my view, decisions that don’t take this into account are just wrong. The issue is not just the case at hand, as we used to say in law school. Rather, it is the impact of these teachings on other cases and, in particular, on counsel.

If 25 steps in Mt. Hawley weren’t good enough, how many are? Counsel facing discovery need an answer to that question. How about 50 steps? How about five levels of review?What about teams reading the documents to each other? Would that be enough?

Fortunately, the courts are starting to help this process by providing guidelines for search and review. Sampling search terms and review output is one key safe harbor. Using reliable software is another. Counsel just need rules and clear guidelines.

And, by the way, counsel also deserve forgiveness for their inevitable mistakes. Thank you Magistrate Judge LaPorte for your understanding of that need. It could happen to any of us.

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About John Tredennick

A nationally known trial lawyer and longtime litigation partner at Holland & Hart, John founded Catalyst in 2000. Over the past four decades he has written or edited eight books and countless articles on legal technology topics, including two American Bar Association best sellers on using computers in litigation technology, a book (supplemented annually) on deposition techniques and several other widely-read books on legal analytics and technology. He served as Chair of the ABA’s Law Practice Section and edited its flagship magazine for six years. John’s legal and technology acumen has earned him numerous awards including being named by the American Lawyer as one of the top six “E-Discovery Trailblazers,” named to the FastCase 50 as a legal visionary and named him one of the “Top 100 Global Technology Leaders” by London Citytech magazine. He has also been named the Ernst & Young Entrepreneur of the Year for Technology in the Rocky Mountain Region, and Top Technology Entrepreneur by the Colorado Software and Internet Association. John regularly speaks on legal technology to audiences across the globe. In his spare time, you will find him competing on the national equestrian show jumping circuit or playing drums and singing in a classic rock jam band.