E-Discovery Landmark Decision For NC: Attorney-Client Privilege Waived In Electronic Discovery Production

E-Discovery Landmark Decision For NC: Attorney-Client Privilege Waived In Electronic Discovery Production

In a classic understatement, Judge Gale said in a North Carolina Business Court opinion last Thursday that "North Carolina case law addressing problems inherent in electronic discovery. . .is not yet well developed."  Op. ¶50.  But in Blythe v. Bell, 2012 NCBC 42, the Judge went ahead and posted some road signs along that undeveloped and difficult path.

The issue in Blythe was waiver of attorney-client privilege.  The Defendants had produced 3.5 million documents on two hard drives of which 1700 turned out afterwards to be potentially privileged.  They made a motion for an order compelling the return of the privileged documents, which Judge Gale denied, ruling that the privilege had been waived.

The first lesson of the case is the test the Court will follow in determining whether an inadvertent disclosure will result in a waiver of attorney-client privilege in an electronic production.  It is that the Court will consider "(1) the reasonableness of the precautions taken to prevent inadvertent disclosure; (2) the number of inadvertent disclosures; (3) the extent of the disclosures; (4) any delay in measures taken to rectify the disclosures; and (5) the overriding interests of justice."  Op. ¶52.  You might remember that test from the infamous case of Victor Stanley, Inc. v. Creative Pipe, Inc. (D. Md. 2008).

Judge Gale didn't get much past the reasonableness of the precautions, which he said was "paramount."  That was especially so given the size of the production by the Bell defendants.  He ruled that the "degree of those efforts should increase as the potential volume of documents to be produced increases."  Op. ¶54.

The "sheer volume" of the production suggested that "more than minimal efforts" have been taken to guard against an inadvertent production.  But the precautions were almost non-existent.

Read this article in its entirety on North Carolina Business Litigation Report, a blog for lawyers focusing on issues of North Carolina business law and the day-to-day practice of business litigation in North Carolina courts.

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Lexis.com subscribers can access Lexis enhanced versions of the Blythe v. Bell, 2012 NCBC 42 (N.C. Super. Ct. 2012) and Victor Stanley, Inc. v. Creative Pipe, Inc., 250 F.R.D. 251 (D. Md. 2008) decisions with summaries, headnotes, and Shepard's.