Clawback Provision Honored to Avoid Waiver of Inadvertently Produced Privileged Email
In Hexion Specialty Chemicals, Inc. v. Huntsman Corp., 2008 WL 3522445 (Del. Ch., Aug. 12, 2008), the Chancery Court denied a motion to compel an inadvertently produced communication that was an attorney/client communication. Importantly, the parties had signed a stipulated Confidentiality Order that had a "standard non-waiver and clawback" provision that allowed one party to demand the return of a mistakenly produced document. ( A separate letter decision in this case dated August 5, ruling on a separate issue, is available here.)
This ruling can prove especially useful in the context of electronic discovery during which massive volumes of emails and related e-data need to be exchanged over short periods of time, when it is not always possible to check for every privileged document. Thus, it is comforting to know that one can at least refer to this case where a "non-waiver, clawback provision" was upheld.
Nonetheless, the court also cited prior Chancery Court decisions to support its reasoning that simply because the privileged communication was shared at its inception with other members on the team involved with the disputed corporate transaction, such as investment bankers, that fact did not disqualify it from enjoying the protected privileged status. See , e.g., Cede Co. v. Joule' Inc., 2005 WL 736689 (Del. Ch. 2005).
Solace to those who have an omnibus, confidentiality agreement, with a clawback provision. Take away any one part of that, and the result varies. If the agreement only dealt with items designated confidential, and the inadvertently produced document was not in the confidential production, then that inadvertence might not be remediable. In the basic case, though, with no stipulation in place, courts still may deem the production inadvertent, and not a waiver of privilege. It an area that mostly fuzzy and more about exceptions than rules.