Do Courts Routinely Enforce Clawback Agreements?

In a July, 2006 article Andrew Rhys Davies writes:”The difficulty with clawback arrangements is that it is unclear whether they actually preserve privilege. Under the Rules Enabling Act, the new procedural rules cannot modify the substantive law on privilege, so the existing law on inadvertent production will determine whether a clawback agreement preserves privilege in a particular case. (See Proposed Fed. R. Civ. P. 26(b)(5), advisory committee’s note.) Unfortunately, the case law on inadvertent production, and on the effectiveness of clawback agreements, is all over the map. ”

So how have clawback agreements performed since the December 2006 amendments? Here begins a series of posts regarding clawback caselaw. 




In Bro-Tech Corp. v. Thermax, Inc., 2008 WL 5210346 (E.D. Pa. Dec. 11, 2008), the clawback agreement in question provided, among other things, a procedure for challenging a claim that a produced document must be returned. Plaintiff’s motion to compel was denied as untimely for failing to follow the procedure the parties had agreed to in the clawback agreement. So in this case, the court did enforce the clawback agreement. 

In Victor Stanley, Inc. v. Creative Pipe, Inc., 250 F.R.D. 251 (D. Md. 2008) , the court considered a situation where the parties had agreed to a clawback agreement, but then defendants had informed the court that they would do a document by document review and that a clawback agreement was not necessary.  Plaintiffs found in defendants’ production some documents that appeared potentially privileged. The court found a waiver, as described by “K&L Gates” in an article from June 2008:  “Magistrate Judge Paul W. Grimm (author of the Hopson decision) concluded that any privilege/protection that attached to the 165 electronic documents was waived by the voluntary production of the documents to plaintiff by defendants.  The court found that under either the strict approach to privilege waiver, or the intermediate test, the finding of waiver would be the same.  The court observed that the intermediate test requires the court to balance the following factors to determine whether inadvertent production of attorney-client privileged materials waives the privilege:  (1) the reasonableness of the precautions taken to prevent inadvertent disclosure; (2) the number of inadvertent disclosures; (3) the extent of the disclosures; (4) any delay in measures taken to rectify the disclosure; and (5) overriding interests in justice.” 

For more information on motions to compel in most major state and federal litigation districts in the United States, see SmartRules Guides.

In Hopson v. Mayor and City Council of Baltimore, 232 F.R.D. 228 (D. Md. 2005), the magistrate judge discussed in depth issues concerning how parties should conduct discovery of voluminous electronic information. The court addressed how to ensure both that the requesting party receive appropriate discovery and that the producing parties are not subject to unreasonable burden, expense or risk of waiving attorney-client or work-product privileges. The Hopson decision discusses the merits of using negotiated non-waiver, electronic records production agreements between parties as a means of avoiding the waiver of attorney-client privilege and work-product protections in the production of large volumes of ESI.

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