## Facts

- Koch Foods of Alabama, LLC and General Electric Capital Corp. were litigating an equipment-ownership dispute in federal court based on diversity jurisdiction.
- During discovery, Koch Foods produced 3,758 pages of documents.
- A single page of a three-page email exchange between Koch Foods’ CFO and Koch Foods’ counsel was inadvertently produced, embedded within a 37-page lease agreement.
- The email chain had been identified on Koch Foods’ privilege log, and Koch Foods maintained it did not intend to produce the page.
- Koch Foods learned of the production when GE Capital presented the page at the CFO’s deposition and promptly asserted privilege and inadvertence.
- Koch Foods moved for a protective order requiring return of the page and prohibiting its use; a magistrate judge granted the motion.
- GE Capital objected to the magistrate judge’s order, arguing that production waived the attorney-client privilege.

## Issues

1. Whether Koch Foods waived the attorney-client privilege under Alabama law by inadvertently producing a privileged email page during discovery.
2. Whether the magistrate judge’s protective order was clearly erroneous or contrary to law under Rule 72(a) and 28 U.S.C. § 636(b)(1)(A).

## Decision

- The district court overruled GE Capital’s objections and left the protective order in place.
- The court held the inadvertent disclosure did not waive attorney-client privilege under the applicable Alabama-law analysis.
- Applying the deferential standard of review for non-dispositive discovery orders, the court found no clear error or legal error in the magistrate judge’s ruling.

## Legal Principles

- A district court may modify or set aside a magistrate judge’s non-dispositive discovery order only if it is clearly erroneous or contrary to law; factual review is highly deferential.
- Where state law supplies the privilege rule and does not prescribe a definitive test for inadvertent disclosure, a court may apply a totality-of-the-circumstances balancing approach to determine waiver.
- Factors relevant to inadvertent-disclosure waiver include: (1) the producing party’s precautions to prevent disclosure, (2) the volume and scope of production, (3) the extent of the inadvertent disclosure, (4) the promptness of corrective action, and (5) fairness and consistency with the purpose of the privilege.
- Identification of the communication on a privilege log, an isolated disclosure within a large production, and prompt efforts to rectify the mistake support a finding of no waiver and justify a protective order barring use and requiring return.

## Conclusion

The court affirmed a protective order after finding that an isolated, promptly corrected inadvertent production of a logged attorney-client email page did not waive privilege under a totality-of-the-circumstances approach, and it declined to disturb the magistrate judge’s discovery ruling under the clearly erroneous/contrary-to-law standard.


Koch Foods of Alabama, LLC v. General Electric Capital Corp., 531 F. Supp. 2d 1318 (M.D. Ala. 2008)