## Facts

- Victor Stanley, Inc. sued Creative Pipe, Inc. and its principals in a dispute involving alleged misuse of designs and related materials; the ruling addressed discovery of electronically stored information (ESI).
- During Rule 34 discovery, defendants produced ESI that included 165 documents appearing to contain attorney–client and/or work-product material.
- Plaintiff identified the 165 documents and sought a ruling that multiple categories of the produced ESI were not protected or were otherwise discoverable.
- Defendants conceded production but contended it was inadvertent and should not waive any protection.
- The court reviewed the documents in camera and evaluated defendants’ ESI search and privilege-screening process, including whether defendants supported privilege claims with adequate detail.

## Issues

1. Whether defendants waived attorney–client privilege and work-product protection by producing 165 documents where defendants failed to show reasonable precautions against disclosure.
2. Whether, independent of waiver, particular communications qualified for attorney–client or work-product protection, and whether any were subject to the crime/fraud/tort exception.
3. Whether defendants met their burden under Rule 26(b)(5) and related discovery practice requirements to substantiate privilege and work-product assertions.

## Decision

- The court held defendants waived attorney–client privilege and work-product protection as to all 165 produced electronic documents.
- The court found defendants failed to carry their burden to prove that the disclosure was protected as “inadvertent” under the applicable multi-factor standard.
- The court concluded defendants did not provide a sufficient, evidence-based explanation of their ESI privilege-screening methodology (including search terms, selection process, who designed the protocol, and quality-control testing).
- After in camera review, the court further determined that many documents were not privileged in the first instance, including communications that were business/technical rather than for legal advice or involved non-attorneys, and that some communications implicated the crime/fraud/tort exception.

## Legal Principles

- In assessing inadvertent disclosure, courts may apply an intermediate, multi-factor test considering: (1) reasonableness of precautions, (2) number of disclosures, (3) extent of disclosures, (4) promptness of corrective measures, and (5) whether the interests of justice favor relief from the error.
- The producing party bears the burden to prove it acted reasonably to avoid inadvertent disclosure and to justify non-waiver.
- A producing party risks waiver when privilege screening for ESI relies on an inadequately explained or untested search and retrieval methodology.
- Attorney–client privilege applies only if the communication is between client and lawyer (or subordinate acting as such), for the primary purpose of obtaining legal advice, intended to be confidential, not in furtherance of a crime or tort, and the privilege is properly claimed and not waived.
- Privilege and work-product claims require a particularized, document-specific showing (including adequate logging and supporting information); conclusory assertions are insufficient.

## Conclusion

The court ordered that the 165 produced ESI documents were discoverable because defendants waived attorney–client and work-product protections by failing to demonstrate reasonable, defensible privilege-screening precautions and by inadequately substantiating privilege claims on a document-by-document basis.


Victor Stanley, Inc. v. Creative Pipe, Inc., 250 F.R.D. 251 (D. Md. 2008)