In Episode 153, Kelly Twigger discusses the applicability of a 502(d) order to documents produced pre-litigation, the complexity of the analysis under FRE 502(b) following the alleged inadvertent production of documents and how a party can waive privilege in FTC v. Amazon.com, Inc. (August 1, 2024).
Introduction
Welcome to this week’s episode of our Case of the Week series brought to you by eDiscovery Assistant in partnership with ACEDS. My name is Kelly Twigger. I am the CEO and founder at eDiscovery Assistant, your GPS for ediscovery knowledge and education, and the Principal at ESI Attorneys. Thanks so much for joining me today.
Each week on the Case of the Week, I choose a recent decision in ediscovery and talk to you about the practical implications of it. This week’s decision highlights how easy it is to lose track of multiple copies of documents and not treat all duplicates the same way in production, and how that can lead to waiver of the attorney-client privilege, even where the parties have a 502(d) order in place.
A couple of announcements before we dive in. Just an hour after this morning’s broadcast, I’ll be joining my colleagues, Brett Burney at Nextpoint Law Group and Doug Austin of eDiscovery Today on a webinar about the latest in hyperlinked files. The link to register is here. I think we have about 450 people attending, so that will be fantastic.
Second, our whole team from eDiscovery Assistant will be at Relativity Fest the week of September 24-26, where I’ll be speaking on the case law panel again with David Horrigan and a number of esteemed colleagues, as well as talking to the Relativity scholars and mentors that week. If you’re interested in signing up for a meeting to chat with us while we’re at Relativity Fest, please check your email for a link, or you can reach out here to schedule time to meet.
All right, let’s dive into this week’s decision.
Background
This week’s case comes to us from the FTC v. Amazon.com, Inc. matter. This is the second decision that we’ve covered from this case. This one brings about some very important points for us. This is a decision from August 1, 2024, so just three weeks ago, from United States District Judge John Chun. District Judge Chun has 27 cases in our eDiscovery Assistant database. As always, we tag each of our decisions with our proprietary issue structure. This week’s issues include FRE 502(d), FRE 502(b), redaction, in-camera review, instant messaging, waiver, attorney-client privilege, and clawback.
As I mentioned, this is the second decision we’ve covered for this case. The first one was Episode 149. To refresh your memory, this is a matter brought by the FTC alleging that Amazon is a monopolist that uses a set of interlocking anticompetitive and unfair strategies to illegally maintain its monopoly power. The FTC and its state partners say that Amazon’s actions allow it to stop rivals and sellers from lowering prices, degrade quality for shoppers, overcharge sellers, stifle innovation, and prevent rivals from fairly competing against Amazon.
Facts
We are before the Court on this decision on a motion to compel from the FTC seeking to require Amazon to produce 17 documents. Amazon originally produced all 17 of these documents as part of the FTC’s underlying investigation or in other investigations, and then clawed them all back, asserting privilege. The FTC argues here that Amazon waived its privilege by producing some of the documents intentionally with redactions and by failing to promptly claw back some of the unintentionally produced documents.
In terms of context, Amazon has produced more than 1.7 million documents across three separate FTC investigations into Amazon. The three investigations are called the Dark Patterns Investigation, which led to this case, and the FTC also investigated Amazon in two other unrelated matters referred to here as Investigations 1 and 2. The 17 documents at issue fall into four categories, as there were multiple copies of the same documents. There are numerous facts about each category of documents that you’ll want to dig into, and it’s too much for us to cover here today.
The first document at issue was what’s called the May 4th memo. Amazon produced two redacted copies of the memo during Investigations 1 and 2. The FTC used the memo at a hearing during the Dark Patterns Investigation with no objection from Amazon, and again a year later, during which time Amazon’s counsel did object and sought to claw it back.
The second set of documents was the July 14th memo and presentation. Amazon produced six copies of the memo, both with and without redactions in Investigations 1 and 2. It then withheld the memo as privileged in the Dark Patterns Investigation, and then produced a redacted version in the Dark Patterns Investigation. All five versions of the presentation were produced without redactions, again, in the Dark Patterns Investigation.
The third document was IC-37, a document which was prepared for a meeting among members of the Amazon Prime team on May 10, 2021. Amazon produced IC-37 without redactions in Investigation 1, clawed it back in the Dark Patterns Investigation, and then produced a redacted version. Then in the litigation before us, Amazon clawed it back again and reproduced it with additional redactions.
The fourth set of documents included chat messages in IC-9 that the FTC identified as potentially privileged to Amazon in the Dark Patterns Investigation. So, a situation where the FTC received the document, told Amazon they thought there was potentially privileged material, and allowed it to take action. Amazon clawed it back, and then produced it with 13 messages redacted from the chat. The FTC argued that 10 of those redactions are improper and seeks an in-camera review from the Court to make a privilege determination.
Also in that set was IC-40, which Amazon produced in Investigation 1. The FTC used that document as an exhibit during a hearing in the Dark Patterns Investigation, after which Amazon clawed it back. A similar fact pattern occurred with IC-37.
The FTC argues that by producing documents with redactions and failing to take steps to promptly claw back documents, Amazon has waived any privilege in all of these categories of documents.
Also of note is that the parties did enter into an order under Federal Rule of Evidence 502(d) for the litigation, which provided that,
[P]ursuant to Fed. Rule Evid. 502(d), the production of any document, electronically stored information (ESI) or information, whether inadvertent or otherwise, in this proceeding shall not, for the purposes of this proceeding or any other federal or state proceeding, constitute a waiver by the producing party of any privilege applicable to those documents, including the attorney-client privilege, attorney work-product protection, or any other privilege or protection recognized by law.
So that’s the order that was entered into the litigation, and that’s going to be important.
Analysis
Let’s move to the Court’s analysis on this particular set of facts. The Court’s analysis begins with the principle that waiver is the issue when determining whether a clawed back document is privileged, and that generally a party waives privilege by producing a document. It also notes that Amazon has the burden of demonstrating privilege as the party asserting it.
The Court looks first at the applicability of the FRE 502(d) order. The FTC argued that it only applied in the current litigation proceeding and not to the earlier investigations. The Court agreed with the FTC, stating that the 502(d) order applies only to “documents produced during this lawsuit, and not documents produced during the pre-suit investigation.” That’s pretty much a big blow to Amazon here, but it’s important to note that language, and we’ll talk about it in the takeaways. Neither party cited to case law as to whether or not 502(d) applied to pre-suit investigations, and the Court looked to the definition of a proceeding in Black’s Law Dictionary, noting that it does not apply to documents produced in the underlying investigation or to other proceedings.
With that issue out of the way, the Court then looked at whether Amazon made reasonable efforts to rectify its production error under FRE 502(b), which is now the applicable standard. That rule requires three steps to find no waiver:
- Amazon’s disclosures must be inadvertent;
- Amazon must have taken reasonable steps to prevent the disclosure; and
- Amazon promptly took reasonable steps to rectify the error.
The Court started first with whether the disclosures were inadvertent, and the Court found that a party’s having produced the documents with redaction is evidence of an intentional production. According to the Court, “When a party makes a strategic decision that it later regrets, such as redacting a document rather than withholding it completely as privileged, it cannot later claim inadvertence to shield itself from the consequences of its own judgment call.”
Looking at the facts demonstrating that Amazon produced documents multiple times with redactions, the Court could not find that “these disclosures were merely an accident” and that Amazon had waived privilege in the May 4th memo. As to the July 14th memo, the Court found that even though the document was produced more than once, because it was produced without redactions — meaning there was no intentional decision to produce it in a redacted manner — it was not purposeful. And while the Court does not say it, it was not inadvertent.
So we’ve got the May 4th memo being waived because it was not an inadvertent production under Rule 502(b). As for the July 14th memo and other documents, we now have to look at whether Amazon took reasonable steps to prevent the disclosure. The Court looked at the process Amazon outlined and found that the process that Amazon used to review documents for responsiveness and privilege was sufficient to demonstrate that it took reasonable steps to prevent disclosure. So, the first two elements of 502(b) are met.
But the Court then turned to the final element of 502(b) — whether Amazon took prompt action to claw back IC-31, IC-40, and IC-27. Based on the number of days that it took Amazon to claw those documents back, it found that Amazon had not met its burden to show that delays of 18 days, 49 days, and 21 days to claw back those documents were reasonable. Those were not reasonable time frames under Rule 502(b). As such, because all three elements of 502(b) must be met, the Court found that Amazon had waived privilege in those documents.
The Court then agreed to conduct an in-camera review of the two documents that Amazon did not waive privilege on, the message chat in IC-9 and the July 14th presentation. As to the chat, remember that the FTC identified this to Amazon as being potentially privileged. The Court found that FTC had shown a good faith belief that some of the redacted messages were not privileged and granted in-camera review. As to the July 14th presentation, Amazon argued that it was created to seek legal advice, but the Court noted that it was sent to 28 non-attorneys and two attorneys, and that 20 non-attorneys and two attorneys attended the meeting where the presentation was given. It also noted that the chat leading up to the meeting stated that the primary purpose of the meeting was not to solicit legal advice, but to get a plan in place for moving forward. The Court agreed to exercise its discretion and conduct an in-camera review of the presentation to determine privilege despite those findings.
Takeaways
Okay, what are our takeaways from this decision?
Well, there are several. While Amazon is the party that’s caught in the crosshairs here, this decision really highlights the complexity of trying to provide documents on a short time frame and to manage production in competing investigations. The amount of management required to ensure that all documents are treated the same is incredibly difficult. It is a very, very tall mountain to climb.
This decision demonstrates, though, that even though it’s incredibly complex, and a tall mountain, it is absolutely paramount for counsel to have their ducks in a row on how they are asserting privilege across multiple investigations. Please remember that I am Monday morning quarterbacking here on the Case of the Week, and I’m only working from the Court’s decision, not all of the filings that the parties have made in this case. That’s how it works when we rely on case law for making arguments, and that’s why we do it here like this on Case of the Week.
This is an incredibly complicated situation for Amazon. Parties have very little leeway and a huge time crunch to produce documents in an investigation. And this case involved three separate investigations over a 2-3 year time period. The Court’s decision here basically requires that Amazon coordinate the documents from all three investigations — more than 1.7 million documents — and make consistent privilege calls across what are likely separate review teams and maybe even separate counsel. That’s very, very difficult.
But, there are two important takeaways here.
First, the Court doesn’t care how complicated it is. You still have to abide by the rules, and specifically here, Rule 502(b). Amazon lost on 502(b) for two reasons. It intentionally produced documents with redactions and then tried to claw them back, meaning there was no inadvertence. And two, it failed to claw back documents quickly enough. Here, you need to focus on the number of days that the Court said was too much — 18 days, 49 days and 21 days with respect to each of those documents. In the scope of litigation, that number of days seems like nothing, but it was not timely enough in the Ninth Circuit.
The redaction piece here is also really important. According to this decision and the underlying cases cited by the Court, when a party takes action to redact information to produce a redacted version of a document, that is an intentional decision that cannot be considered inadvertent. Rule 502(d) would cover that if applied, but Rule 502(b) does not. That means that your process and the management of privileged information is critical, and even more so in an investigation where Rule 502(d) will not apply.
And that takes us to our second takeaway. This Court found that 502(d) does not apply to investigations, it only applies to the litigation in which it is entered. That makes sense given the language of the rule, but it also means that parties only have 502(b) to govern inadvertent production issues in an investigation. That’s a critical holding and one to note if your firm is handling investigations.
All of this means that when your client knows an investigation is coming, you need to prepare. Hold a special meeting about potentially privileged documents to ensure you have a process to identify all copies and mark them consistently. Tools these days will allow you to run near-text deduplication, full-text deduplication, lots of tools, lots of AI now that you can leverage to be able to find similar documents. It really should be a no-brainer with most of the tools that you have, and likely the sophisticated tools they were using here for this investigation.
You have to leverage those tools, but you have to know to take that step, and this decision tells you you’ve got to make sure you’re taking that step. Keep a log about all of these documents that you identify and run it against any future productions. If you have multiple counsel, make sure they are coordinating. You need one person in charge of all of these details or they will fall through the cracks as they did here. Apart from outright losing a case, there is nothing worse than the dread that settles into your gut when you realize you have produced attorney-client privileged information. The only way to prevent that is effective, efficient process planned in advance. The timeline of investigations is too compressed to allow for creating that process and implementing it effectively. You need to do it beforehand.
Conclusion
That’s our Case of the Week for this week. Thanks for joining me. We’ll be back again next week with another decision from our eDiscovery Assistant database. As always, if you have suggestions for a case to be covered on the Case of the Week, drop me a line. If you’d like to receive the Case of the Week delivered directly to your inbox via our weekly newsletter, you can sign up on our blog. If you’re interested in doing a free trial of our case law and resource database, you can sign up to get started.
Have a great week!
