Take Another Look: Is your legal hold notice discoverable?

Friday, March 13, 2015 - 15:46

Recently, a federal district court denied a motion for a protective order to prevent the disclosure of litigation hold notices because it concluded that the defendants did not intend for the notices to be kept confidential as attorney-client communications, and the notices did not constitute attorney work product to otherwise prevent their disclosure.[1] Although this decision appears to be an outlier, it serves as a reminder about how to draft and disseminate legal hold notices[2] so that both the attorney-client privilege and work product doctrine apply, therefore preventing the disclosure of the notices.

Legal Hold Notices Are Typically Not Discoverable

In general, legal hold notices are not discoverable because they constitute attorney-client privileged communications and contain material protected from disclosure under the work product doctrine.[3] For instance, counsel prepares the hold notice, which is distributed to persons with relevant knowledge (who may be required to execute an acknowledgement of receipt). The substance of the hold notice generally discusses the nature of the matter, and may include strategic considerations and/or the party’s legal position. The substance of the hold notice also advises of the obligation to preserve relevant documents and data, identifies the relevant documents and data to be preserved, sets forth the steps to ensure preservation, and cautions against failure to abide by the notice. Therefore, the hold notice prepared by an attorney, which may contain the attorney’s thoughts and impressions about the dispute, and communicates advice and direction to the client regarding preservation obligations, is typically not discoverable.

There are, however, two important points to keep in mind. First, a well-settled exception to the discoverability of legal hold notices is a preliminary showing of spoliation of evidence.[4] Second, facts underlying the legal hold notice are not shielded from disclosure. For example, an attorney may ask a deponent about whether he consulted with an attorney to prepare for the deposition or what documents he reviewed to prepare, because those questions probe facts and not the substance of any attorney-client communications.[5] Similarly, an attorney may inquire about whether a litigation hold notice was issued and explore the actions that were taken to collect and preserve documents and data, because those questions seek facts, not the disclosure of confidential communications.[6] In other words, hold notices are not excluded from the otherwise applicable parameters of the attorney-client privilege and work product doctrine.

One Court’s “Opposite Conclusion”

But one court’s “close decision” confirmed that the counsel should not take for granted the application of the attorney-client privilege and the work product doctrine to prevent disclosure of a hold notice.[7] In U.S. ex rel v. Barko, the federal district court reached what it acknowledged was the “opposite conclusion” of most courts when it ordered the production of the defendants’ hold notices.[8] The court ordered the production after reviewing the hold notices in camera and concluding that the attorney-client privilege and attorney work product protection were inapplicable.

By way of background, the “Privileged & Confidential” litigation hold notices were sent by the defendant’s chief executive officer and vice president of the legal department to “large groups” of recipients, such as “all employees.”[9] The notices instructed all of the defendant’s employees to preserve documents related to a government investigation, and described the defendant’s document retention policies.[10] The defendants sent follow-up emails regarding the litigation hold notices, which “encouraged employees to share some of the litigation hold notices with other employees who may not have received or read the first notice.”[11]

The court concluded that the hold notices were not subject to the attorney-client privilege to protect them from disclosure.[12] The court explained that “[t]he cornerstone requirement” of the privilege is the “intent to keep the [attorney-client] communication confidential,”[13] but the defendants “failed to demonstrate [their] intent to keep these communications confidential.”[14] In reaching this determination, the court found it “crucial” that the litigation hold notices were sent to large groups of recipients, including “all employees.”[15] The court reasoned that “if the sharing [of otherwise confidential information] goes beyond [a] ‘need-to-know’ limitation,” then the privilege is lost.[16] The court likewise observed that the follow-up emails failed to warn against the dissemination of the hold notices “more widely than necessary,” reasoning that these emails “would destroy whatever confidentiality may have existed.”[17] In the same vein, the court noted that the absence of any instruction advising recipients “not to discuss the litigation hold notices outside the company” negated any intention to keep the purported attorney-client communication confidential.[18] Lastly, the court called the “Privileged & Confidential” header on the hold notices mere “boilerplate labeling” that was not “controlling.”[19]

The court then observed that the application of the work product privilege was “an even closer call,” but ultimately concluded that it was inapplicable.[20] In its analysis, the court explained that the purpose of the work product doctrine is to protect “documents and tangible things that are prepared in anticipation of litigation at trial,”[21] so that an attorney can “prepare his legal theories and plan his strategy without undue burden and needless interference”[22] from opposing counsel. The court found that it was “not clear” whether the hold notices and follow-up emails constituted work product because the substance of the notices “merely describe[d] . . . document retention practices, rather than relate to any attorney’s preparations for litigation.”[23]

Moreover, the court reasoned that there was “little concern about prejudice” to defense counsel if the hold notices were disclosed because document preservation is “simply not the type of preparation that is intended to be protected” by the work product doctrine.[24] The court rejected any anticipated complaint by counsel that his trial preparation was “unfairly affected” by his adversary obtaining facts about document preservation that was otherwise discoverable.[25] Lastly, the court distinguished the hold notices from “more generic litigation holds” since their substance, which included relevant information about the underlying government investigation, was therefore likely to lead to the discovery of admissible evidence.[26]

Practice Pointers for Maintaining the Privilege and Work Product Protection

There is no question that the court in Barko reached “the opposite conclusion” from other courts evaluating the discoverability of legal hold notices.[27] But that does not mean that counsel should ignore or otherwise dismiss this opinion. Instead, the court in Barko provided some valuable lessons for counsel to consider when drafting a hold notice so that it is unquestionably a confidential attorney-client communication that constitutes attorney work product.

It is axiomatic that counsel should prepare and disseminate the hold notice. But Barko makes clear that the recipients of the list must be carefully selected, even referring to the distribution list as those on a “need to know” basis. Although counsel may want to be over-inclusive in disseminating the hold notice to ensure that all relevant documents and data are preserved, counsel should resist the temptation to disseminate the notice to “all employees.” Instead, counsel should narrow the recipient list so that the intention to keep the communication confidential and pointed only to the necessary persons is clear.

Likewise, counsel should refrain from advising a recipient to forward the hold notice to a colleague or third party who the recipient believes may have relevant knowledge. Following the court’s reasoning in Barko, such an instruction may be interpreted as inconsistent with the intention to maintain confidentiality. Instead, counsel may choose to incorporate language in the hold notice that advises recipients to notify counsel if they believe that a person with relevant knowledge is not included in the recipient list, instead of advising that recipients share the notice as they see fit.[28]

Similarly, counsel should take care when drafting the substance of the hold notice that describes the nature of the matter and instructs the recipients to preserve relevant documents and data. On one hand, counsel may not want to divulge thoughts or impressions, such as an intended or evolving litigation strategy, which could prove problematic if the hold notice is ever required to be produced. But on the other hand, counsel may intend to implicate the work product doctrine by including some thoughts or impressions in the hold notice. There is no question that this is a difficult balance to strike. Notably, the court in Barko specifically identified the “mere description” of document retention policies insufficient to apply the doctrine, so it would be wise to include more than this information to avoid a “close call” in the application of the work product doctrine.

Lastly, despite the Barko court’s dismissal of the “Privileged & Confidential” header as essentially “form over substance,” the designation of the hold notice in this manner still remains prudent – just make sure the form and substance are indeed consistent.



[1] U.S. ex rel. v. Barko, No. 1:05-cv-1276, 2014 U.S. Dist. LEXIS 162680 (D.D.C. Nov. 20, 2014). The court denied the defendants’ motion for reconsideration of the order compelling disclosure of the litigation hold notices. Barko, No. 1:05-cv-1276 (D.D.C. Dec. 17, 2014), ECF No. 227.

[2] “Legal hold notice” and “litigation hold notice” are used interchangeably throughout this article, although oftentimes counsel may refer to a “legal hold notice” when litigation has been threatened or imminent, but an action has not yet been filed.

[3] See Major Tours, Inc., et al. v. Colorel, No. 05-3091, 2009 U.S. Dist. LEXIS 68128, at *6 (D.N.J. Aug. 4, 2009) (collecting cases).

[4] Id. at *7 (collecting cases).

[5] See, e.g., Miller UK, Ltd. v. Caterpillar, Inc., No. 10 C 3770, 2015 U.S. Dist. LEXIS 16418, *11 (N.D. Ill. Feb. 11, 2015) (“The mere fact that a person is or has seeked legal advice is not privileged.”) (citing Barko, 2014 U.S. Dist. LEXIS 162680).

[6] In re Ebay Seller Antitrust Litig., No. C 07-01882, 2007 U.S. Dist. LEXIS 75498, at *2, *7-8 (N.D. Cal. Oct. 2, 2007) (“Although plaintiffs may not be entitled to probe into what exactly eBay’s employees were told by its attorneys, they are certainly entitled to know what [e]Bay’s employees were doing with respect to collecting and preserving ESI.”) (emphasis in original).

[7] Barko, 2014 U.S. Dist. LEXIS 162680, at *19.

[8] Id.; see id. at *3 (denying the defendants’ motion for the entry of a protective order to prevent the disclosure of various litigation hold notices).

[9] Id. at *14, *16 n.25.

[10] Id. at *14, *17.

[11] Id. at *16.

[12] Id.

[13] Id. at *14.

[14] Id. at *16.

[15] Id.

[16] Id. at *15.

[17] Id. at *14, *16 n.25.

[18] Id. at *16.

[19] Id. at *16 n. 25.

[20] Id. at *17.

[21] Id. at *17 (citing Fed. R. Civ. P. 26(b)(3)(A) (internal quotations omitted)).

[22] Id. at *17 (citing Hickman v. Taylor, 329 U.S. 495, 511 (1947) (internal quotations omitted)).

[23] Id. at *17.

[24] Id. at *18.

[25] Id.

[26] Id. at *18-19.

[27] Id. at *19.

[28] Additionally, encouraging employees to share the legal hold notice as they deem appropriate would interfere with the collection and receipt of acknowledgement forms, which is a prudent practice when implementing, refreshing, and overseeing a legal hold.

 

Jennifer Marino Thibodaux is a director in the Gibbons P.C. Business & Commercial Litigation Department. 

Please email the author at JThibodaux@gibbonslaw.com with questions about this article.