#CaseoftheWeek Episode 23: When Documents Copied to In-House Counsel are Privileged

In episode 23 of #CaseoftheWeek, host Kelly Twigger focuses on whether emails copied to in-house counsel are subject to privilege and whether assigning privilege to otherwise unprivileged documents constitutes a waiver of the privilege. The case we will be analyzing is Epic Games v. Apple Case No. 20-cv-05640-YGR (TSH).

Good morning and welcome to our #CaseoftheWeek for May 4th, 2021. Hard to believe we are already four months into this new year. I am Kelly Twigger, the CEO and Founder of eDiscovery Assistant and the principal at ESI Attorneys. As you know, for those of you who join us weekly, through our partnership with the Association of Certified eDiscovery Specialists (ACEDS) each week we pick a case from eDiscovery Assistant and talk about the practical implications of what that decision means for you, your clients and your practice.

Links to the case we’re going to discuss today can be found in the comments section of each of the platforms that you’re viewing us on, whether you’re on LinkedIn, Facebook, Twitter or YouTube. You’ll also see in there a link to our 2020 Case Law Report that we did in combination with Doug Austin from eDiscovery Today. Each one of those cases identified from 2020 has a discussion of the issues tagged in those cases from eDiscovery Assistant, as well as a link to the actual case and a brief description of each of them and their implications.

We’ve talked about this case previously on our #CaseoftheWeek in other issues. This week we’re addressing privilege issues and in camera review. If you don’t remember the background of this case, in essence, Epic is the maker of Fortnite, which is an extremely popular computer-based video game. It’s sold Fortnite through the Apple App Store as well as through the Google Play store, but did a back end around requiring in app purchases through the Apple store, in essence, to preclude Apple from recovering the 30 percent surcharge on in app purchases made in Fortnite. As a result, Apple disallowed Fortnite from the App Store, claiming that it was a violation of the terms and conditions of the App Store. They’re arguing over whether or not Apple is improperly requiring those payments.

This decision from Judge Hixson, as I mentioned, is from very recent — April 28th of 2021. This is a situation where Apple produced three documents to Epic and then sought to claw them back as privileged. No discussion in the actual opinion as to whether or not there was a physical clawback agreement between the parties, whether this was just subject to the Federal Rules of Civil Procedure, but just that Apple sought to claw these three documents back as privileged.

Essentially the court goes through each of the three documents in camera, which means that the court reviewed them without either party present. In reviewing each one of these, Judge Hixson looks at them and says none of these documents are privileged. This is a pretty common situation we’ve been seeing a lot of in camera review and case law via eDiscovery Assistant over the last two to three years especially, but it raises some important issues that I think need to be highlighted. That’s why I wanted to bring this up on our #CaseoftheWeek. I’m going to talk through each of the individual documents and then we’re going to talk about kind of what the big picture issues are related to privilege.

The first document that Apple wanted to clawback was an email conversation, essentially an email string between two non attorneys at Apple. At one point in the email string, in-house counsel is then copied on the email string. The string itself discusses a proposed idea for the App Store, in which one other nonlawyer is later added to the string, you’ve got two parties to start with, at some point a lawyer is added to the string and then at some point later in the string, you’ve got another nonlawyer that’s also added to the string.

Apple’s argument regarding privilege was that the email was sent to in-house counsel, “so that he could provide legal advice regarding the risks”, involved in the proposal and Apple also filed a declaration in support of its motion stating the same, asking for the document to be clawed back on the basis of privilege.

Apple says that that one of the nine attorneys on the string had discussed the substance of what’s in the email chain with in-house counsel and received legal advice from in-house counsel during other unrelated, contemporaneous meetings and telephone conversations. You’ve got separate meetings of telephone conversations about this similar issue with in-house counsel, and then you’ve got an email string discussing the same issue with non-attorneys in which the in-house counsel is just copied.

The court looks at the email string and says Apple has, “mischaracterized this email thread. It is entirely a business discussion and nothing in it sounds remotely like a request for Vetter’s [the in-house counsel] legal advice or for Vetter to say anything at all. This is a clear example of business people including a lawyer in an email chain in the incorrect belief that doing so makes the email privileged. It does not. It may be true that Schiller (one of the parties at Apple) separately discussed the substance of the email chain with Vetter, the in-house counsel, and if so, those conversations would be privileged, but this email thread is not privileged.”

This is a significant issue because we see this a lot in litigation on both sides of the V, where we’ve got one party claiming privilege because in-house counsel’s copied ostensibly, which is realistic because we’ll run a privileged search for names and mark things potentially privileged, and during review correspondence to lawyers, to and from would be considered privileged, but what comes up is you’ve got to do a more in-depth review of whether, in fact, those potential communications are, in fact, privileged. That they are, in fact, conversations where legal advice is being sought or legal advice is being provided. That’s the first document.

Second document is, again, another email conversation between non-attorneys. Apple in-house counsel is included on the thread, but notwithstanding what Apple puts in its declaration, according to the judge, nothing in this email exchange asks for legal advice from the in-house counsel. According to the judge, it’s clear that two non-attorneys expected answers from each other based on the review of the communication. Apple argued that a third non-attorney who is not on the email string received legal advice from the in-house counsel during contemporaneous meetings and phone calls concerning the subject matter of the email threat.

Again, we’ve got an email thread where Apple is claiming that contemporaneous meetings held separate and apart from the email thread, involving the same subject matter, and attempting to attach privilege over an email thread where legal advice is neither sought nor received from in-house counsel.

According to the Judge, the conversations in the contemporaneous meetings and the other phone calls would be privileged, but the email chain was not. Again, it’s an example of adding a lawyer to an email thread in an attempt to create a non-existent privilege. Second document, not privileged.

The third document is a PowerPoint presentation. This is important because we get a lot of times where we seek on both sides of the V and often times in sophisticated commercial cases we see this, where there’s a lot of input from legal into what should go into a PowerPoint presentation, but when you have the final version of the presentation that reflects all of the business and legal information that went into it, that presentation, according to this Court here, based on this set of facts, was not privileged.

Apple’s argument in trying to claw back the PowerPoint was that two attorneys reviewed and revised the draft presentation, which therefore then, “reflects the legal advice that they provided to Apple business people in connection” with the App Store program that’s described in it.

The court looked at the presentation and at Apple’s arguments and said, and this is an important quote, “lots of documents are reviewed and revised by attorneys and therefore reflect legal advice they provided to business people, employee handbooks, contracts companies enter into, sexual harassment policies, workplace safety guidelines, employee benefit plan descriptions and so on”, I would also add to that marketing platforms, marketing presentations. “The attorney client privilege protects the communications between attorney and client involved in drafting those documents, such as emails with red line documents reflecting legal advice or oral conversations giving legal advice. But that’s it. Apple does not contend that this document is itself a communication between attorney and client (it obviously is not) or even that the reader could glean from this document what the legal advice or edits were (you can’t) so it is not privileged.”

Based on that analysis, all three documents were deemed not to be privileged and Apple was not permitted to claw them back. Now, what are our practical considerations here? Because there are a lot of them. I mean, we all know that dealing with privilege issues and privilege logs in litigation is pretty much the bane of our existence and Federal Rule 26 lays out exactly what’s required to be provided in a privileged log, but what I can tell you is that in this particular situation where you’ve got in-house counsel copied on an email, it raises the situation of if Apple had simply provided these documents on a privilege log, would there have been enough information for Epic to have challenged the application of privilege to it versus what actually happened here, which is that Apple accidentally produced these documents and then sought to claw them back as privileged and Epic was able to say to the court, take a look at them and tell us whether or not you think they’re privileged. The court said they’re not.

I think that it raises some pretty significant issues on the construction, the scope and structure of privilege logs. Does it mean that when you’re reviewing a privilege log that’s been produced to you that you need to look at situations where in-house counsel is only copy and is not a direct recipient? Would the analysis have changed here if the privilege log was produced and in-house counsel was a direct recipient? If the TO lines included in-house counsel as well as the non-attorneys; that could have changed the ability of Epic to challenge this.

There are lots of issues here associated with providing information on privilege logs and how the opposing party would be able to challenge them if the producing party was trying to essentially shield documents from production by use of privilege. Now, that can happen intentionally. It can also happen unintentionally, especially when you’re dealing with very large collections of documents and privilege being assigned by a review team. A lot of times we’ll create privilege logs, we’ll have potentially privileged documents identified where attorney names from in-house counsel or outside counsel will come up and then the review of those documents has to be done manually and decisions have to be made on a second pass privilege review. These days, we have a lot of requirements from courts to get those privilege logs out with a production. Each privilege along comes with an individual production as opposed to waiting until the end of all production is being finished in the case and then providing a privilege.

Well, those are hard, very hard deadlines to meet. When you’re getting a production ready, you’re often just finishing your second pass review of the actual information and it means that you’ve got to have a second set of privilege review happening for that individual production at the exact same time you’re getting that production ready to go. That, just practically speaking, is a very difficult burden to meet. I think that this case from Judge Hixson really raises some interesting questions about dealing with privileged information, what the scope is of privilege being applied and whether that is often what’s playing out in litigation.

Another practical consideration here, we’re seeing a lot of decisions in eDiscovery Assistant about in camera review where the court is being asked to review anywhere from two to ten thousand documents in camera.

Is that really the best use of the court’s time? Should there be a subsequent procedure provided by the Federal Rules in which if parties require an in camera review, that some sort of third party neutral is available to do that? We’re asking judges to get familiar with eDiscovery review software and be able to make those determinations and considerations. How are those judges going to make those notes? If a judge is reviewing several hundred to a thousand different documents a ruling has to be made on each individual document, how were those documents going to be noted? Is the judge going to make those notes directly in a review platform? Do they need to make them separately on a spreadsheet? And again, is that the best use of the court’s time given the backlog dockets we have, especially following a pandemic?

I think there needs to be an approach. There needs to be a consideration of how this process needs to be handled and we’re starting to see eDiscovery the need for a third party neutral and a lot of different situations to review what I think is in camera review, maybe one of them.

In terms of actual privilege, what the court says here, and this is very consistent in rulings across the country that simply copying in-house counsel on an email message does not create privilege. The document has to be asking for or receiving legal advice in order to be privileged. Other communications, discussing what would be contemporaneous privileged communications, do not create privilege within an email string discussing unless they are discussing or seeking legal advice and that’s what we see here in this case.

In terms of applying privilege, you need to look at each separate communication and determine whether the rules of privilege apply to it. Even when you’re looking at an email string, each individual email within that string needs to be considered. That’s another important point. If you participated in the University of Florida eDiscovery Conference or watched the Case Law panel with Judge Gary Jones from Florida, we talked about rulings in the In Re 3M case and dealing with email threading and privilege logs in that case. The Judge’s thought was that email threads should be able to be included as one entry on the privilege log.

Well, that can be hugely problematic, especially in a situation like this where not all of the emails on the email thread might be privileged. How can a party challenge the individual rulings of emails on an email thread if they’re all included as one entry on a privilege block? Again, this is an important issue to be considered from a practical perspective, and it’s something that you need to be considering at the outset of your case. If you’re including how you’re dealing with a privilege log in your ESI protocols, as many do, you need to think through how all of these issues related to the privilege log are going to play out.

I raised this a little bit before, but what if Apple had not disclosed these documents and merely listed them, including in-house counsel. Would Epic really have had enough information to successfully challenge the review of these documents from a privilege log? That’s what we need to work through in the Federal Rules. There needs to be more guidance on how privilege logs are handled and dealt with. This really needs to be an issue that’s removed from consideration. It’s more of a procedural issue than it is a substantive issue, unless you’re getting into the substantive consideration of whether or not a document is privileged, and we need to provide some more guidance on that for parties.

As we’ve talked about, many of the logs are created using metadata from review platforms, and that if that’s how we’re going to continue to create logs, which makes sense because it’s an economical way to go about it, that you can leverage the review process to be able to create information for the privilege log, is that going to provide all of the information that a party needs to be able to assess whether the producing party has in fact only included documents that are legitimately privileged? These are considerations that have to be taken into account, and I think there’s going to have to be some adjustments both from the courts and potentially from a rule change perspective to be able to address these issues.

Is this something that technology can assist with as we start to use AI and sentiment analysis? Is there anything that we could use technologically to determine whether or not legal advice is being sought? I don’t see that yet. Based on all the review of the different software that are out there, I don’t see anything that would allow us to do that except for potentially coding search terms and potential phrases into documents that would give a consideration as to whether legal advice is actually sought.

Those are some options to be able to look at to address the situation, but in general, this decision from Judge Hixson really raises the consideration that one, we’ve got courts spending time looking at individual documents to determine privilege. Is that the best use of their time? Two, do we really have appropriate protocols for privilege logs in litigation under the Federal Rules of Civil Procedure that are allowing both sides to know and understand the documents that are being withheld? And three, how do we address that problem? How do we deal with it?

That’s our #CaseoftheWeek for this week. Thanks for joining me. I will be back next week with another edition of our #CaseoftheWeek from eDiscovery Assistant. If you’re an ACEDS member and interested in using eDiscovery Assistant, there’s a discount available to current ACEDS members and trial for folks taking the ACEDS exam. If you’re interested in either one of those, please drop us a line at ACEDS@eDiscoveryAssistant.com and one of our team will be in touch to get you set up. If you’re interested in doing a free trial of our case law and resource database, please jump to eDiscoveryAssistant.com and sign up in the upper right-hand corner on the free trial to get started.

Have a great week. Stay safe and healthy and I look forward to seeing you next week. Thanks.

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