In Sure Fit Home Prods., LLC v. Maytex Mills Inc., No. 21 Civ. 2169 (LGS) (GWG) (S.D.N.Y. May 20, 2022), New York Magistrate Judge Gabriel W. Gorenstein, finding “completely reckless” handling by plaintiffs of exhibits deemed as privileged, found that “plaintiffs waived any claim to privilege over these documents”, despite a protective order by the parties that allowed either side to “claw back” documents produced inadvertently.

Case Discussion

This patent infringement case related to a shower curtain design. “[I]n mid-2021”, the plaintiffs produced Exhibits 88, 89, and 90 to the defendants. On March 11, 2022, the defendants served plaintiffs with their First Set of Requests for Admissions, which included requests to confirm the authenticity of Exhibits 88, 89, and 90. On April 11, 2022, the plaintiffs responded to the requests for admissions, asserting privilege only over Exhibit 89. Subsequently, during an April 25, 2022 meet and confer, the plaintiffs asserted, for the first time, that all three exhibits were protected, and sought to claw back the documents.

However, the plaintiffs had also used the documents in a prior matter (the “Kartri matter”), where the Kartri defendants used the three documents as a combined exhibit to a reply brief in support of their motion for summary judgment. The plaintiffs never objected to the use of the documents. Later, the defendants in the Kartri matter designated the documents comprising Exhibits 88, 89, and 90 as a trial exhibit. Although plaintiffs raised seven separate objections to the admission of the documents, plaintiffs asserted neither attorney-client privilege nor work product protection. While the plaintiffs asserted that the exhibits were “withdrawn” on April 25, 2022, Judge Gorenstein noted “nothing in the Kartri record reflects any such application to the judge in Kartri on that date.”

Judge’s Ruling

Citing the plaintiffs’ “completely reckless” handling of the purportedly privileged exhibits, Judge Gorenstein stated: “The parties agree…that the fact that a protective order governs discovery in this matter alters the waiver analysis” set forth in FRE Rule 502(b). He also noted: “[C]ourts have held that where parties execute such an order, waiver is appropriate only if production of the privileged material was ‘completely reckless’” and “For a production to be ‘completely reckless,’ the producing party must have shown no regard for preserving the confidentiality of the privileged documents.”

Continuing, Judge Gorenstein stated: “The fact that plaintiffs have produced Exhibits 88, 89, and 90 to their adversaries in two separate matters — and did so in circumstances that later drew the specific attention of plaintiffs to the existence of these documents without their taking corrective action — reflects the highest degree of carelessness in handling purportedly privileged material. Courts have held that a party’s failure to object to an adversary’s use of a privileged document, such as during a deposition, is sufficient to constitute waiver, even where a protective order applies… Although here the adversary’s use of the documents was as an exhibit in support of a summary judgment motion and as a proposed trial exhibit rather than at a deposition, the recklessness in failing to timely assert a privilege is comparable.”

Ruling the plaintiffs waived privilege on the three exhibits, Judge Gorenstein stated: “The plaintiffs’ reckless conduct is heightened by the fact that plaintiffs necessarily had to carefully review the documents more than three years ago when they were relied on in support of the summary judgment motion in Kartri, which put them on unmistakable notice that the documents had been disclosed to the other side. Rather than taking any action, however, plaintiffs did nothing to object to the use of the documents in the Kartri matter and then again produced the exhibits to Maytex two years later. Even the designation of the documents as a trial exhibit in the Kartri matter, which once again required plaintiffs to conduct a thorough review of the documents, did not prod plaintiffs to claim privilege. This course of conduct, spanning several years, two disclosures, and multiple clear opportunities to claim the privilege, evidences ‘a total disregard for the confidentiality of any of the documents.’”

So, what do you think? Are you surprised that privilege was waived with a protective order, even with “completely reckless” handling of the documents?  Please share any comments you might have or if you’d like to know more about a particular topic.

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