United States ex rel Bagley v. TRW Inc. - 204 F.R.D. 170 (C.D. Cal. 2001)

Rule:

As experience with the issue of whether the inadvertent disclosure of privileged documents waives the attorney-client privilege has grown, three general approaches have emerged. The first might be termed the strict liability approach, so that any non-privileged disclosure, no matter how slight and no matter to whom, forfeits the privilege. The second is the subjective intent approach, so that only a deliberate disclosure forfeits the privilege. The third might be called the skeptical balancing approach, in which the court considers all the relevant circumstances. The third approach has been called the "middle test", the "pragmatic approach", the "totality of the circumstances approach," and the like. The totality of the circumstances approach leaves the trial court broad discretion as to whether waiver occurred and, if so, the scope of that waiver. It requires a detailed court inquiry into the document practices of the party who inadvertently released the document.

Facts:

Relator's counsel notified defendant's counsel that they had found what appeared to be privileged documents when reviewing the documents produced by defendant. Although some documents were labeled as privileged, and relator's counsel assumed the production was inadvertent, relator's counsel studied them and shared a written analysis with plaintiff's counsel before notifying defendant.

Issue:

Was the attorney-client privilege waived by defendant's inadvertent production of the documents?

Answer:

No.

Conclusion:

The court applied three factors of the five factor Lois Sportswear test which favored defendant, including fairness. Considering both the five factors and all relevant circumstances, the court found that the inadvertent production of privileged documents did not waive attorney-client privilege. Moreover, the crime-fraud exception did not apply because there was no evidence that defendant's counsel knew of an alleged fraud or provided legal advice for the purpose of furthering the alleged fraud, and there was no evidence that defendant obtained or used counsel's advice to further any alleged fraud. Plaintiff and relator were directed to return all copies, destroy documents and computer files containing summaries of or quotations from the documents, and not to use the documents in any way.