NY Federal Judge Rules Employer Not Entitled To Return of Inadvertently Produced E-mail

Originally published on the Employer's Law Blog

A New York federal judge recently ruled that employees in an overtime collective action against Duane Reade, Inc. did not have to return an inadvertently disclosed, privileged e-mail. The e-mail at issue summarized advice given by an in-house lawyer concerning the Fair Labor Standards Act ("FLSA") Attorneys representing Duane Reade asked for a protective order declaring the inadvertently-produced e-mail privileged and requiring its return. Plaintiffs opposed the motion arguing that the e-mail was not privileged because it contained merely "business advice" and, alternatively, the privilege had been waived by its production. Magistrate Judge Katz found that the e-mail did contain privileged information, but ruled that the privilege had been waived because Duane Reade did not act diligently in rectifying the accidental disclosure.

The e-mail at issue was inadvertently given to opposing counsel as part of an ongoing production of electronically-stored information. Defense counsel reviewed over 2 million documents in less than one month with a team of approximately 15 attorneys and the help of outside vendors.

The document fell through the cracks, despite a multitude of precautions taken by defense counsel to protect the disclosure of privileged information. The e-mail was neither sent nor received by counsel but rather was transmitted among high level Human Resources personnel. The only mention of counsel in the e-mail was the first name of a former in-house counsel buried in the text. The e-mail summarized the legal advice given by the former in-house counsel concerning what additional duties assistant store managers needed to perform in order to be exempt from the FLSA's overtime pay requirements.

The federal judge ruled that certain parts of the e-mail were privileged because "how to comply with regulatory or statutory requirements is precisely the type of legal advice one would expect in-house counsel to provide . . . ." However, the Court concluded that the privilege had been waived because defense counsel took too long to remedy its unintended disclosure. Defense counsel produced the e-mail in November 2011 but realized months later, on January 17, 2012, that it qualified for protection and demanded its return that same day. Judge Katz, however, determined that counsel should have realized this much sooner due to certain deposition testimony and other "red flags." For example, the Judge opined that the subject line of the e-mail referring to the FLSA coupled with the advice attributable to an individual with the first name of a former in house counsel should have alerted counsel earlier.

This decision provides lawyers with another cautionary tale concerning the dire consequences of inadvertently disclosing privileged and confidential documents. It further underscores the need for heightened awareness about inadvertently disclosed documents during all stages of litigation regardless of what other efforts were initially taken to prevent its production and swift remedial action. Finally, as producing massive amounts of electronically-stored data becomes the new norm, employers should ensure that managers and human resources professionals in addition to lawyers mark e-mails containing legal advice (or a summaries thereof) as "Privileged and Confidential" or "Contains Advice of Counsel." In a litigation, those flags provide invaluable information to counsel reviewing electronic information.

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