How to Lose a Privilege In 10 Steps (Or Fewer): Recent Case Clarifies Scope of FRE 502(d) and Marital Privilege

The latest opinion in the discovery saga of DR Distributors reflects the limits of orders under Federal Rule of Evidence 502(d), application of marital communications privilege, and some cautionary lessons about inconsistent redactions and defending a privilege review process.

The DR Distributors matter (N.D. Ill.) is already famous for providing a few recent illustrations of what not to do in e-discovery. Now the latest opinion in this discovery saga, from Judge Iain Johnston, filed July 22, 2022, reflects the limits of orders under Federal Rule of Evidence 502(d), application of marital communications privilege, and some cautionary lessons about inconsistent redactions and defending a privilege review process generally.

The underlying matter involves a trademark dispute between two sellers of electronic cigarettes, but the main attraction has long been a discovery process that, as Judge Johnston’s opinion succinctly notes, “was—and still is—cursed.” Discovery officially closed in 2015, but complaints of incomplete productions, sanctions motions, and evidentiary hearings dragged on for years, with the parties so far apart on their view of the basic record, the court characterized their submissions as “akin to flipping back and forth between CNN and Fox News.” Ultimately, the back-and-forth resulted in defendants 21 Century Smoking, Inc. and its owner Brent Duke, making additional document productions in 2018, 2019, and 2021.

These belated productions contained communications Defendants would later attempt to claw back on the basis of marital privilege. 21 Century Smoking, it seems, is a family business; Mr. Duke’s wife Laurie Duke works for the company as well. Unfortunately, as the court notes, “some marital discord exists” in that arrangement. Among the documents belatedly produced were hundreds of pages of emails in which Ms. Duke “is highly critical of the way Brent Duke is operating 21 Century Smoking,” often voicing colorful complaints about employee hiring, marketing strategy, finances, and other aspects of her husband’s business judgement.

Defendants’ counsel redacted or withheld some of these emails prior to production but not others, and eventually sought to claw back over 250 communications as protected by marital privilege. These communications were of particular interest to Plaintiff DR Distributors, however, who wanted to use them to defend against counterclaims by arguing that any harm defendants claimed to have suffered was attributable to exactly the kind of business acumen shortcomings Ms. Duke noted in her husband. The plaintiff objected to the clawback attempt and moved for a finding that marital privilege had been waived by production of the documents.

Defendants faced an uphill battle in arguing for clawback, because their production included marital privilege redactions the court characterized more than once as “random,” with the same content often redacted in one iteration of an email thread but produced unredacted in another; the inconsistency in what was identified as a marital communication, and what was not, was so pervasive the court concluded it was “convinced that no human put eyes on these documents.”

Defendants tried to justify their clawback attempts with a bold strategy the court termed a “detrimental reliance” argument—in essence, claiming that “the Court wears the jacket, at least partially, for their ‘inadvertent’ disclosure,” based on the fact the court had previously entered a Rule 502(d) order sua sponte in an attempt to grease the wheels and move discovery along after numerous delays, promising it would apply Rule 26(b)(5)(B) liberally “to ensure that privileges and protections are not breached.”

The court was having none of that, proclaiming that “[t]he chutzpah of Defendants’ argument is almost too much to take,” and pointing out three fatal flaws in the defendant’s argument blaming the court and the Rule 502(d) order for Defendant’s haphazard privilege review. First, the plain language of Rule 502(d) applies only to the attorney-client privilege and work product—not marital privilege. Second, several of the purportedly privileged documents defendants sought to claw back had been produced well before the court issued its order protecting privilege. Third, the court explained that while Rule 502(d) is a “powerful tool,” it nonetheless “still has limits” and counsel should avoid “blindly relying on a Rule 502(d) order to justify the failure to implement a reasonable document review process.”

Because Rule 502(d) does not apply to the marital privilege, the court went on to assess waiver using the pre-Rule 502 balancing test in the Seventh Circuit, under which defendants bore the burden of showing that disclosure was “inadvertent,” and that privilege was not waived. They failed to meet that burden because they provided no details about their privilege review process, leaving it a “complete mystery” and providing the court with “no idea what the privilege review process was or how it worked.” And while defendants provided a variety of excuses in attorney arguments for why they may have missed privileged documents, the only evidence they offered was a declaration making a conclusory statement that production of privileged content was inadvertent. The court therefore held the marital privilege waived as to all the documents the defendants sought to claw back.

So, what can the average e-discovery practitioner—who will probably have to deal with marital privilege issues rarely, if at all—take away from this opinion? The court’s finding of waiver offers three important cautionary points that can apply to other, more common forms of privilege as well:

• A Rule 502(d) order is not necessarily a get-out-of-jail-free card permitting a party to produce and claw back any and all privileged information freely. In some circumstances (here, they were admittedly extreme), some minimally defensible privilege screening process is still necessary, as “[c]ounsel who produce documents without a reasonable privilege review do so at their own risk—even when a Rule 502(d) order exists.”
• In a situation where it is necessary to show “inadvertence” to claw back a privileged document, be prepared to disclose specific details of the privilege review process used. Judge Johnston could not conclude defendants’ privilege review process was reasonable, in large part because he was given no information about how it worked.
• Especially where patience has been worn thin, courts may interpret inconsistent privilege redactions for multiple versions of the same document or email thread as prima facie evidence of an inadequate review; as Judge Johnston noted, “there must be consistency, otherwise the process is not defensible.”

By Tara Emory, Redgrave Data, and Nick Snavely and Martin Tully, Redgrave LLP

Tara Emory is the Senior Vice President of Strategic Operations and Consulting at Redgrave Data, where she helps clients identify and leverage technology to improve their eDiscovery processes and information governance programs. Contact Tara at tara.emory@redgravedata.com.

Nick Snavely and Martin Tully are partners at Redgrave LLP, where they counsel clients on complex matters related to information law, which includes eDiscovery, information governance, and data privacy and cybersecurity issues. Reach out to Nick at nsnavely@redgravellp.com and Martin at mtully@redgravellp.com.

The views expressed in this article are those of the authors and not necessarily those of Redgrave LLP or its clients.