Opinion
Civil Action No. 00-11049-PBS
January 21, 2003
MEMORANDUM AND ORDER
During discovery in this massive patent litigation, involving five related cases and 30,000 documents, plaintiffs VLT, Inc. and Vicor Corp. (collectively "Vicor") disclosed eighteen privileged documents to Lucent Technologies, Inc., ("Lucent") an alleged infringer, and now seek their return. Lucent argues that the disclosure was not inadvertent under the terms of the negotiated protective order, and asserts that their disclosure constitutes a subject matter waiver. The magistrate judge ruled in favor of Lucent. Objecting timely, Vicor asks this court to set aside the magistrate's rulings pursuant to Fed.R.Civ.P. 72(a) and Local Magistrate's Rule 2(b). Since the issuance of the magistrate judge's order, the matter has become more complicated, as more privileged documents have come to light.
VLT, Inc. v. Artesyn Technologies, Inc., et al., Civil Action No. 00-10238-PBS; VLT Corporation and Vicor Corporation v. Lambda Electronics, Inc., Civil Action No. 00-10957-PBS; VLT, Inc. v. Power-One, Inc., Civil Action No. 01-10207-PBS.
After hearing on July 31, 2002, Vicor's motion for reconsideration is DENIED in part and ALLOWED in part.
DISCUSSION 1. Standard of Review
A district judge reviewing the order of a magistrate judge regarding a nondispositive matter "may modify or set aside any portion of the . . . order found to be clearly erroneous or contrary to law." Fed.R.Civ.P. 72(a). See also Local Magistrate's Rule 2(b) ("A judge of the court shall reconsider the magistrate's order and set aside any portion thereof found to be clearly erroneous in fact or contrary to law.").
2. Background
The stipulated protective order provides:
Inadvertent production of documents subject to work product immunity or the attorney-client privilege shall not constitute a waiver of the immunity or privilege, provided that the producing party shall notify the receiving party in writing of such inadvertent production promptly after the producing party learns of such inadvertent production. If prompt notification is made and the producing party establishes the circumstances surrounding the document's inadvertent production, such inadvertently produced document and all copies thereof shall be returned to the producing party or destroyed upon request.
¶ 19. The protective order does not define "inadvertent production."
In construing a protective order virtually identical to the one at issue here, in related litigation, Magistrate Judge Neiman concluded: "Plaintiffs have established that their methodology, while leaving much to chance, resulted in the unintentional rather than the purposeful or grossly negligent disclosure of two documents." VLT Corp. v. Unitrode Corp., 194 F.R.D. 8, 11 (D. Mass. May 31, 2000) ("Unitrode"). He also determined that Vicor met the prompt notification requirement by immediately requesting return after discovery. See id. at 19. The dispute involved two documents provided to Unitrode in document production: (1) a May 1, 1995 letter from David Feigenbaum, one of Vicor's attorneys, to a patent agent ("the Feigenbaum letter"); and (2) a letter dated August 20, 1996 from Jay Prager, a senior vice-president at Vicor, to Mr. Feigenbaum and others ("the Prager letter"). The error had been the failure of a paralegal to screen out privileged documents despite correct instructions by an attorney.
The Lucent litigation was filed on May 30, 2000. In her February 26, 2002 ruling on Lucent's motion for finding of waiver and to compel production of documents based on waiver involving 18 documents, including the same Feigenbaum and Prager letters, Magistrate Judge Bowler held: "ALLOWED. The production was not merely inadvertent and therefore lies outside the term of the protective order. The production also amounts to a subject matter waiver. See Texaco Puerto Rico v. Dept. of Consumer, 60 F.3d 867, 883-84 (1st Cir. 1995)." (Docket No. 101). She also rejected Vicor's cross motion for return of inadvertently produced documents. Both orders were dated May 28, 2002.
3. Legal Standard
Determining whether the disclosures were inadvertent demands a two-pronged inquiry. First, this Court must determine the correct legal standard for evaluating the term "inadvertent production" in the protective order. Second, this Court must consider whether the particular document disclosures at issue in this case were "inadvertent" under this standard.
As to the first inquiry, the protective order itself does not specify whether "inadvertent production" encompasses gross negligence. In Unitrode, Magistrate Judge Neiman's construction of "inadvertent" precludes protection for gross negligence. Vicor argues, correctly, that some courts have construed "inadvertence" terms in protective orders in ways that protect against gross negligence. See e.g., Prescient Partners, L.P. v. Fieldcrest Cannon, Inc., 1997 WL 736726, *4 (S.D.N.Y. 1997) (protecting all disclosures that are not "completely reckless"); Cardiac Pacemakers, Inc. v. St. Jude Med., Inc., 2001 WL 699850, *1 (S.D.Ind. 2001) (finding inadvertent production where there was "no deliberate decision to waive the applicable privileges").
The law has long recognized degrees of culpability between the poles of intentional conduct and merely negligent conduct. Vicor argues that the protective order provides for more protection than exists under the common law. However, in light of the caselaw in this district, the use of the word "inadvertent" could be interpreted to mean that the parties intended to protect only negligent disclosures. See Amgen, Inc. v. Haechst Marion Roussel, Inc., 190 F.R.D. 287, 292 (D.Mass. 2000) (adopting the "middle test," which considers various factors for determining when an inadvertent disclosure should result in a waiver of privilege).
In light of the lack of consensus in determining when the privilege is waived, see generally 8 Wright, Miller Marcus, Federal Practice and Procedure: Civil 2d § 2016.2 (canvassing different approaches taken by courts), John T. Hundley, "Inadvertent Waiver" of Evidentiary Privileges: Can Reformulating the Issue Lead to More Sensible Decisions?, 19 S. Ill. U. L.J. 263 (1996) (describing myriad of approaches to waiver in the context of inadvertence), parties to a protective order desiring maximum protection from the legal consequences of the production of privileged documents should specify precisely the kinds of conduct covered by the stipulated protective order. The Unitrode opinion issued on May 31, 2000 — several months before Vicor's production to Lucent — put Vicor on notice that future disclosures deemed "grossly negligent" would be deemed outside the protective order's ambit. The magistrate judge in this case implicitly adopted that standard, which is not contrary to law or the plain meaning of the word "inadvertent." Random House Unabridged Dictionary 964 (2d ed. 1993) (giving synonyms for "inadvertent" such as inattentive, thoughtless, careless, and negligent).
4. The Specific Documents
With respect to the second inquiry, the plaintiffs have not met their burden of proving that the magistrate judge was clearly erroneous in finding that Vicor's disclosure of the Feigenbaum and Prager letters was not inadvertent. The Feigenbaum letter is an easy case: Lucent's subsequent, repeated production of the very same document the return of which it sought in Unitrode, after the Court found that its screening methodology left "much to chance," could be considered recklessness, never mind grossly negligent. Unitrode, 194 F.R.D. at *12. The letter from Feigenbaum dated May 1, 1995 was produced four times — once to Unitrode between September 28 and October 19, 1998, see VLT Corp. v. Unitrode Corp., 194 F.R.D. 8, 10 (D.Mass. 2000); once to Lucent in July 2001; once to Lucent in September 2001, with a different production number; and once to Power-One. Most remarkably, Vicor produced Vinciarelli's privileged deposition testimony about the Feigenbaum letter after winning the Unitrode battle. The Prager letter was produced three times after the Unitrode ruling. Judge Bowler was not clearly erroneous in her ruling on the Feigenbaum and Prager letters.
The other documents present a closer question. Most recently, in a pleading to this court, Vicor has offered the following explanation of the screening snafus in Unitrode: The paralegal in charge of the initial document screening for attorney privilege was, unbeknownst to Vicor's firm Fish Richardson, going through "significant emotional difficulties" during the document review process that severely impaired her job performance and resulted in a mental breakdown (possibly caused by alcoholism) within the next few months after the document review. She was eventually fired for absenteeism. This explanation was not available to Magistrate Judge Bowler because trial counsel at Goodwin Procter discovered the problem after the proceedings before her. However, there were additional errors by other people both at Fish Richardson and at Goodwin Procter. For example, Fish Richardson culled a subset of potentially privileged documents from the complete set and put the eighteen documents in a "Redweld" folder, which was unlabeled, unindexed, and unsegregated. After Fish Richardson completed its screening process, it transmitted all documents to Goodwin Procter between January 2001 and April 2001. Goodwin Procter, unaware of the "Redweld eighteen," re-screened for privilege using only the Fish Richardson index, not the documents themselves. In addition, Goodwin Procter reviewed the actual documents to make sure the privileged ones, as indexed, had been pulled. However, Vicor lawyers never did a fresh screening of the documents for privilege. Therefore, the unindexed, privileged documents fell below the Goodwin Procter radar screen, undetected. No one at Goodwin Procter noticed the Feigenbaum and Prager letters. In July, 2001, these ten boxes of documents, including the privileged documents in the Redweld, were produced to Lucent after having been produced to Power-One.
At some point, the paralegal's termination under troubling circumstances, coupled with Judge Neiman's admonition on May 31, 2000, should have created a flag that the documents needed to be re-screened for privilege, one-by-one, by an attorney. The only question is whether the omission is merely negligent or grossly negligent. The magistrate judge's ruling did not make fact-findings regarding different categories of documents. Based on the full record before me, I cannot conclude that this failure to re-screen arises to the level of gross negligence. With respect to the Redweld documents (other than the Feigenbaum letter) the problem appears to be coordination between co-counsel: there were too many cooks in the kitchen. While the communication between Goodwin Procter and Fish Richardson was inadequate, I hold that the magistrate's conclusion of gross negligence with respect to the Redweld documents was clearly erroneous. Further, the request for return of the "Redweld eighteen" was promptly made after discovery of the flawed document production. Accordingly, I find no waiver with respect to these eighteen documents unless they fall into another category (like the Feigenbaum letter).
Finally, I come to a third category of documents. Remarkably, after this very dispute arose before Judge Bowler in the Lucent litigation, additional documents were produced to another alleged infringer, Artesyn Technologies, Inc. Any privileged documents produced after the Lucent snafu came to light on October 12, 2001 can only be characterized as gross negligence or recklessness. At that point, an attorney should have promptly scrutinized all the documents in the production to all parties. Therefore, copies of any privileged documents produced after October 2001 to any party need not be returned, and the privilege has been waived. Further, any documents produced before October 2001 to any party, the return of which was not requested until after October 2001, need not be returned because the request was not prompt.
To recap, the Court (1) denies the request to return the Feigenbaum and Prager letters; (2) allows the request to return the other privileged documents in the Redweld produced to Lucent; (3) denies the request to return any privileged documents produced to any party after Vicor discovered the Lucent problem on October 12, 2001; and (4) denies the request to return any privileged documents made after October 2001.
D. Subject Matter Waiver
Given my finding that Vicor's disclosures of certain documents were not "inadvertent" and therefore not shielded by the protective order, the remaining question is whether the magistrate's finding of a subject matter waiver with respect to the Feigenbaum, Prager and Unitrode documents, was contrary to law. Lucent points to the First Circuit's holding in Texaco Puerto Rico, Inc. v. Dept. of Consumer Affairs, that "[i]t is apodictic that inadvertent disclosures may work a waiver of the attorney-client privilege." 60 F.3d 867, 883 (1st Cir. 1995). See also In re Grand Jury Subpoena, 925 F. Supp. 849, 855 (D. Mass. 1995) (holding that "waiver of the privilege in an attorney-client communication extends to all other communications relating to the same subject matter"). Since the Texaco court opined that "[i]n general, a waiver premised on inadvertent disclosure will be deemed to encompass `all other such communications on the same subject,'" Lucent reasons, and I agree, that such a result should apply to disclosures deemed grossly negligent or reckless. Id. at 883-84, quoting Weil v. Investment/Indicators, Research Mgmt., Inc., 647 F.2d 18, 24 (9th Cir. 1981). Cf. Amgen, 190 F.R.D. at 293 (discussing Texaco but declining to address issue of subject matter waiver since parties did not directly raise the issue).
II. CONCLUSION AND ORDER
Plaintiffs' motion to set aside the Magistrate's Orders on the Motion for Finding of Waiver and to Compel Production of Documents Based on Waiver is ALLOWED in part and DENIED in part.