In U.S. v. Vepuri, CRIMINAL ACTION NO. 21-132 (E.D. Pa. Oct. 19, 2021), Pennsylvania District Judge Harvey Bartle III denied the government’s motion for an order to establish a procedure for privilege protection materials that have been seized and defendant KVK-Tech, Inc.’s Cross-Motion for Return of Records and to Enjoin the Government from Reviewing Privileged Documents, adopting its own procedure that “will take into account the interests of the Government and safeguard the rights of the defendant”.

Case Background

In this case involving criminal charges for conspiracy to defraud the US by introduce unapproved drugs into interstate commerce with intent to defraud and mislead and to make false statements to the FDA and related mail fraud, the Government, pursuant to three search warrants, seized what was described as 30 terabytes of ESI and an estimated 500 boxes of hard copy materials from the several premises of defendant KVK-Tech, which included files from the person who described himself as both KVK-Tech’s CEO and General Counsel.

In the Government’s privilege protection motion, it proposed to create a filter team of attorneys and support staff, walled-off from the prosecution team in this action, to review potentially privileged materials, consulting with defense counsel as to folders that are likely to contain privileged material and using searches and filters to identify potentially privileged materials. The order proposed by the Government provided pursuant to Rule 502(d) of the Federal Rules of Evidence that any disclosure of privileged information shall not be deemed a waiver of any privilege in any other federal or state proceeding. Defendant KVK-Tech opposed the privilege protection motion with its own cross-motion and also opposed any use of a filter team.

Judge’s Ruling

Judge Bartle stated: “The use of a filter or taint team separate from the prosecution team is well established. Such a procedure promotes the expeditious review of documents, helps avoid delay in the investigation of criminal conduct, and ultimately assists in effecting a speedy trial or other resolution of the action. Our Court of Appeals in In re Search of Electronic Communications, 802 F.3d 516, 530 (3d Cir. 2015) has recognized that a taint team to review for privileged documents “is a common tool employed by the Government.” It further observed that a court has the prerogative to adopt an appropriate procedure to fit the case at hand and may always require the use of a special master to review documents or undertake itself the task of in camera review.”

But Judge Bartle nonetheless rejected the Government’s privilege protection proposal, as follows: “The Government’s proposed procedure here is fatally flawed insofar as the filter team is permitted to provide to the prosecution team all materials it deems not to be privileged without any opportunity for the defendant to mount a challenge. In this respect, the filter team, as part of the executive branch of government, would be arrogating to itself the judicial function of deciding what documents are privileged and what documents are not privileged. The authority to determine issues of privilege belongs to the courts and the courts alone. The Government’s proposed order undermines the separation of powers and vitiates significant interests of the defendant…It will not be approved.”

He also rejected the defendant’s proposed approach, stating: “The defendant’s motion to compel the Government to return the seized materials is likewise flawed. The defendant proposes that it will then review the materials and release those it deems not to be privileged. As to those it deems privileged, it will produce a privilege log and the issue will then be litigated before the court. The party seeking the document is always at a disadvantage as it has only an abbreviated description of the documents on the log. The defendant not only seeks the elimination of any filter team but effectively seeks the undoing of the searches which were supported by warrants obtained from and signed by a Magistrate Judge. Defendant’s reliance on Klitzman is misplaced. While our Court of Appeals did order the return of documents in that action, the circumstances were quite different. There was no taint or filter team in place or even suggested as a barrier against the prosecution team.”

As a result, Judge Bartle stated: “The court adopts the following procedure which will take into account the interests of the Government and safeguard the rights of the defendant. The filter team, walled-off from the prosecution team, may retain and review all materials seized. The Government shall provide the defendant with immediate access to the materials in its possession. The defendant shall review the materials as promptly as possible and advise the filter team which materials it considers not to be privileged and which materials it considers to be privileged. To the extent it considers materials not privileged, they will be immediately produced to the prosecution team. As noted above, it has been represented to the court that a significant percentage of the materials are manufacturing, financial and other business records which are highly unlikely to implicate any privilege. The parties should deal with this category of materials first and without delay. The filter team will have a reasonable amount of time to review the materials the defendant has designated as privileged. To the extent the filter team agrees with the defendant, those materials shall be returned to the defendant.

The court will appoint a special master, at the Government’s expense, to review for privilege those remaining materials as to which there still exists a dispute. The parties shall attempt to agree on a special master. If unable to agree, each side shall submit to the court the names of up to three individuals who will agree to serve. The court shall not be advised as to the party recommending any individual. The court will select a special master from the list.”

So, what do you think? Does the Court’s privilege protection approach accomplish what it intends to accomplish?  Please share any comments you might have or if you’d like to know more about a particular topic.

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