Trial Magazine

When defense counsel attempt to hide the ball in discovery by over-designating documents as “Attorneys’ Eyes Only” (AEO) and providing improper categorical privilege logs, it’s crucial to closely review and immediately challenge any improper designations. These issues often take significant time to resolve, so you’ll want to ensure document production moves forward while holding defendants accountable for attempting to withhold crucial evidence.

AEO Designations

When cases involve corporate entities or trade secrets, the parties often agree to a protective order that allows the producing party to designate highly sensitive documents as AEO: The receiving party’s attorneys can review the documents but cannot show or discuss their contents with their client or the client’s representatives or employees.¹ It comes as no surprise that this designation is subject to abuse, as producing parties commonly over-designate documents as AEO. When you cannot share with your clients the nature of the documents produced by the defense, it severely hampers your case. One court observed that when attorneys are unable to share relevant facts, clients are in a difficult position to assess whether the arguments put forward on their behalf are meritorious.²

Producing party has the burden. Courts have established a high standard for demonstrating the propriety of a restrictive AEO designation, finding that the designation should be used only in rare instances.³ One federal district court in Illinois stated that the AEO designation “should only be used on a relatively small and select number of documents whe[n] a genuine threat of competitive or other injury dictates such extreme measures . . . because discovery and trial preparation are made significantly more difficult and expensive when an attorney cannot make a complete disclosure of relevant facts to a client.”⁴

The party advocating for AEO protection must identify with sufficient particularity “the harm it will suffer”—using “specific demonstrations of fact, supported whe[n] possible by affidavits and concrete examples”—and also must show that “the disclosure of the particular AEO-designated materials to even a small number of the other party’s personnel would risk the disclosure of sensitive competitive information.”⁵

When a party has designated a high percentage of its discovery production as attorneys' eyes only, courts will view such 'blanket' designations with skepticism.

When a party has designated a high percentage of its discovery production as AEO, that party has the burden to show the reasonableness and propriety of those designations because courts will view such “blanket” designations with skepticism.⁶ Courts also have found that when produced documents have become “stale”—the passage of time has mooted the documents’ potentially sensitive nature—the AEO designation is inappropriate.⁷

Sanctions. Attempts to hide behind unfounded claims of “extreme sensitiv[ity],” “business” or “competitive” harm, distortions of the record, and mischaracterizations of the protective order may warrant the removal of the AEO designation and possibly sanctions.⁸ Federal Rule of Civil Procedure 37(b)(2)(A) gives courts authority to sanction a party that “fails to obey an order to provide or permit discovery.”⁹ Courts have even awarded litigation costs and attorney fees when confidentiality designations have been overused. One federal district court, for example, awarded the costs that the plaintiffs incurred challenging the defendant’s over-designation of “business proposals” and other documents that were available through public records requests, finding that this improperly shifted the cost of review to plaintiffs.¹⁰

Motions to compel production. You can file a motion to remove the AEO designation on the ground that it’s improper. In your motion, note any blanket designations of documents, and request that the designating party explain with specificity the reasons for each AEO designation, including the precise competitive threat that its disclosure would entail.

Categorical Privilege Logs

Another area often abused is categorical privilege logs, which allow the producing party to identify certain categories of privileged documents withheld in groups. Supposedly in the name of efficiency, these logs provide summary information that the documents being withheld contain the solicitation or provision of legal advice protected under attorney-client privilege or were prepared in anticipation of litigation under the work product doctrine. Some jurisdictions permit, and even may prefer, the use of categorical privilege logs,¹¹ but they are largely problematic for the following reasons.

Improper designations. Categorical privilege logs that contain improper category designations, descriptions, and dates allow the proponent to obscure the nature of the documents being withheld.¹² For example, failing to identify the authors and recipients of any correspondence separately may make it impossible to make a privilege determination, particularly when a category of documents is described as “attorney communications to obtain legal advice,” in which case at least one attorney should be identified as the author or recipient.¹³ At a minimum, a categorical log must “describe the nature of the documents to be protected in a manner that will enable other parties to assess the claim.”¹⁴

Withholding metadata. Defendants also use categorical privilege logs to withhold metadata, including the senders, recipients, and authors of withheld documents. This practice obscures whether communications are truly between an attorney and client or whether documents are attorney work product drafted by an attorney in anticipation of litigation. Courts favor the production of metadata when possible because it provides characteristics of withheld documents and often is readily accessible and automated.¹⁵

Email chains. The metadata in any email chain can provide only the date, author, and addressee of the most recent email, so whether defendants should list email chains in categorical privilege logs as multiple entries (with one entry for each email in the chain) or as a single entry also has been the subject of motion practice. For example, a federal district court in Kansas rejected the defendant’s position that a single identification of all email chains on a particular subject was sufficient.¹⁶ Providing in-depth analysis of the application of privilege to email chains and acknowledging a lack of previous decisions regarding their treatment in privilege logs, that court criticized “stealth claims of privilege, which, by their very nature, could never be the subject of a meaningful challenge by opposing counsel or actual scrutiny by a judge.”¹⁷

Likewise, a federal district court in Florida concluded that the government’s privilege log was insufficient because individual emails were not listed, the log did not provide enough information to determine whether authors and recipients were counsel or third parties such that privilege was waived, and it did not identify any non-privileged portions of the email chains.¹⁸ To the extent that such cases raise concerns over privilege logs that list email chains subsuming intermediate communications and thereby concealing the metadata for individual emails, you should be far more wary of the categorical log, which may list multiple email chains per entry.

Sanctions. As with AEO designations, if the court determines that the producing party engaged in wrongdoing, sanctions may apply, including the wholesale waiver of privilege.¹⁹ Even after recognizing that “waiver of privilege is the most extreme sanction a court can impose for failure to follow required [discovery] procedures,” a federal district court in Georgia ruled that the producing party’s second privilege log violated the court’s order because it remained “wholly inadequate,” disclosing little or no information about the documents’ contents and failing to identify who sent or received the documents.²⁰ The court ultimately ordered the defendant to provide “all documents identified in its privilege logs.”²¹ Other courts have reached similar conclusions.²²

Motions to compel production. When a party provides an inadequate log, the court may do one of several things: It may give the party another chance to submit a more detailed log, deem the inadequate log a waiver of the privilege, order an in camera inspection of all the withheld documents, or order an in camera inspection of a sample of the withheld documents.²³ To properly combat an inadequate categorical privilege log, closely analyze the information provided. In your motion to compel, discuss the log’s features that prevent you from properly assessing the claim of privilege, including an inability to determine whether an attorney or third party is indicated as a sender, recipient, or author in any log entry, as well as any sign that the withheld documents are email threads that may conceal that information if it would be contained in the metadata of intermediate-level emails.

These two designation areas typically involve extensive negotiations and subsequent briefing, both of which take valuable discovery time before improper designations are removed.  Therefore, it’s imperative to pursue any challenges to improper designations as soon as possible in the discovery process.

Peggy J. Wedgworth is a partner and John D. Hughes is senior counsel at Milberg Phillips Grossman in New York City. They can be reached at pwedgworth@milberg.com and jhughes@milberg.com.

Notes

1. The protective order also typically includes other designations such as “Highly Confidential.” This article focuses on AEO designations, not general over-designation, although the cases cited in this section may be applicable.
2. Lucas v. Gold Standard Baking, Inc., 2017 WL 1436864, at *3 (N.D. Ill. Apr. 24, 2017). 
3. Ragland v. Blue Cross Blue Shield of N.D., 2013 WL 3776495, at *1 (D.N.D. June 25, 2013) (“[A]ny designation of material as ‘attorneys’ eyes only’ should be reserved for only those rare instances in which it is truly justified, i.e., when there is a real expectation and entitlement to confidentiality under the law that has been preserved and not waived and there is no other effective alternative.”); see also Gillespie v. Charter Commc’ns, 133 F. Supp. 3d 1195, 1202 (E.D. Mo. 2015). 
4. Global Material Techs., Inc. v. Dazheng Metal Fibre, Co., Ltd., 133 F. Supp. 3d 1079, 1084 (N.D. Ill. 2015) (rejecting broad allegations of harm and only sustaining designations supported by an affidavit articulating specific damage from disclosure).
5. McDonald Apiary, LLC v. Starrh Bees, Inc., 2016 WL 868185, at *1–2 (D. Neb. Mar. 4, 2016) (internal citations omitted) (information merely kept secret, or that a party merely takes steps to keep secret, is not presumptively “confidential”); see also Broadspring, Inc. v. Congoo, LLC, 2014 WL 4100615, at *20–23 (S.D.N.Y. Aug. 20, 2014) (defendants failed to sustain the designations when “[over] and over again, [they] merely assert, in conclusory fashion, that the designations and redactions at issue are proper [based on] perfunctory explanations”); Motorola, Inc. v. Lemko Corp., 2010 WL 2179170, at *4 (N.D. Ill. June 1, 2010); Meissner v. Yun, 2017 WL 6596764, at *3 (N.Y. Sup. Ct. Dec. 20, 2017) (denying motion when materials did not contain confidential information as defined by the stipulation).
6. Procaps S.A. v. Patheon Inc., 2015 WL 4430955, at *3 (S.D. Fla. July 20, 2015); see also Team Play, Inc. v. Boyer, 2005 WL 256476, at *1 (N.D. Ill. Jan. 31, 2005) (citing In re Bank One Sec. Litig., 222 F.R.D. 582 (N.D. Ill. 2004)).
7. Raymat Materials, Inc. v. A&C Catalysts, Inc., 2014 WL 939976, at *2 (N.D. Cal. Mar. 6, 2014) (awarding attorney fees for bringing motion to compel de-designation of AEO material consisting of “stale information” and “perfunctory business emails”); Water, Inc. v. Everpure, Inc., 2011 WL 13186051, at *2 (C.D. Cal. June 17, 2011) (de-designating AEO material “[b]ecause most of the requested information is several years old . . . it is unclear how this stale information will cause competitive harm in the future”).
8. See, e.g., Broadspring, 2014 WL 4100615, at *20–23; Team Play, 2005 WL 256476, at *1.
9. Fed. R. Civ. P. 37(b)(2)(A). Sanctions may include removing the confidentiality designation and the recovery of attorney fees as provided under Rule 37(a)(5)(A). If a motion to compel is filed and the opposing party then “voluntarily” provides the disclosure, the court is to award the movant the reasonable attorney fees and costs incurred in bringing the motion. Fed. R. Civ. P. 37(a)(5)(A). The power to issue such awards was added to “encourage judges to be more alert to abuses occurring in the discovery process” and to deter such abuses. Fed. R. Civ. P. 37 Advisory Comm. Note to the 1970 amendment. 
10. Del Campo v. Am. Corrective Counseling Servs., Inc., 2007 WL 3306496, at *4 (N.D. Cal. Nov. 6, 2007); see also Humphreys v. Regents of the Univ. of Cal., 2006 WL 3020902, at *1, 3 (N.D. Cal. Oct. 23, 2006); In re Ullico Inc. Litig., 237 F.R.D. 314, 317, 319 (D.D.C. 2006) (awarding reasonable expenses and fees for bringing motion to comply with protective order when party designated more than 99% of its produced documents as confidential).
11. In July 2014, the Commercial Division of the Supreme Court of New York adopted 22 N.Y.C.R.R. §202.70(g), Rule 11-b(b)(i), which establishes a preference for categorical privilege logs. Other jurisdictions have adopted the use of categorical rather than document-by-document logs. See Vasudevan Software, Inc. v. MicroStrategy Inc., 2012 WL 5637611, at *7 (N.D. Cal. Nov. 15, 2012) (suggesting the use of categorical logs as opposed to a document-by-document log); see also FDIC v. Crowe Horwath LLP, 2018 WL 3105987, at *6 (N.D. Ill. June 25, 2018) (noting that “sometimes deciding a privilege dispute does not require the make-work of a document by document privilege log, so long as asserting categories of document subject to the privilege is clear enough”).
12. N.Y. Bar Ass’n Comm. on State Courts of Super. Jurisdiction, Guidance and a Model for Categorical Privilege Logs 2 (Sept. 2014), www2.nycbar.org/pdf/report/uploads/20072891-GuidanceandaModelforCategoricalPrivilegeLogs.pdf (citing Auto. Club of N.Y., Inc. v. Port Auth. of N.Y. & N.J., 297 F.R.D. 55, 59 (S.D.N.Y. 2013)). This guidance is hereinafter referred to as N.Y. Bar Ass’n Guidance.
13. See Williams v. Duke Energy Corp., 2014 WL 3895227, at *18 (S.D. Ohio Aug. 8, 2014) (privilege log held insufficient when authors and recipients were not identified); see also First Horizon Nat’l Corp. v. Houston Cas. Co., 2016 WL 5867268, at *4 (W.D. Tenn. Oct. 5, 2016) (categorical log deemed insufficient when the “communications include[d] dozens of authors and recipients and lump[ed] together documents concerning many matters into broad categories”); Gupta v. Walt Disney World Co., 2006 WL 2724899, at *2 (M.D. Fla. Sept. 22, 2006) (an adequate privilege log requires “the authors and their capacities, [and] the recipients and their capacities”).
14. N.Y. Bar Ass’n Guidance at 6 (citing Fed. R. Civ. P. 26(b)(5)). See Orbit One Commc’ns, Inc. v Numerex Corp., 255 F.R.D. 98, 109 (S.D.N.Y. 2008) (Court required that a categorical log include justification of assertion of privilege “with regard to each category, and the description of each category must provide sufficient information [from the proponent of such privilege] to assess any potential objection to the assertions of attorney-client privilege.”).
15. See, e.g., Favors v. Cuomo, 285 F.R.D. 187, 223 (E.D.N.Y. 2012) (ordering defendants to provide revised privilege logs, including metadata and stating that “given today’s litigation technology, there is no good reason why privilege logs should not include . . . other readily accessible metadata for electronic documents, including, but not limited to: addressee(s), copyee(s), blind copyee(s), date, time, subject line, file name, file format, and a description of any attachments”).
16. In re Universal Serv. Fund Tel. Billing Practices Litig., 232 F.R.D. 669, 672–73 (D. Kan. 2005).
17. Id. 
18. St. Andrews Park, Inc. v. U.S. Dep’t of the Army Corps of Eng’rs, 299 F. Supp. 2d 1264, 1271–72 (S.D. Fla. 2003).
19. See, e.g., CSX Transp. Inc. v. Admiral Ins. Co., 1995 WL 855421, at *5 (M.D. Fla. July 20, 1995) (after a party had been given two opportunities to amend, a court could find that “enough is enough” and order production of all documents listed on an inadequate privilege log); Williams v. Taser Int’l, Inc., 274 F.R.D. 694, 696 (N.D. Ga. 2008) (Court ordered production of a new privilege log when the initial log “left Plaintiffs completely unable to determine which documents have been withheld, the basis upon which they have been withheld, and whether [the defendant’s] claim of privilege or protection is legitimate.”).
20. Williams, 274 F.R.D. at 697. 
21. Id. at 698. 
22. See Meade v. Gen. Motors, LLC, 250 F. Supp. 3d 1387, 1396 (N.D. Ga. 2017) (defendant failed to produce a proper privilege log after two orders and court found that “Defendant has waived its attorney-client privilege as to all documents other than those specifically identified”); Novelty, Inc. v. Mountain View Mktg., Inc., 265 F.R.D. 370, 381–82 (S.D. Ind. 2009), clarified on den. of recons., 2010 WL 11561280 (S.D. Ind. Jan. 29, 2010) (a party’s continued refusal to comply with a court order to provide a proper privilege log “reflects its willfulness, bad faith, and ‘fault’”; the court held that a waiver of “any discovery privileges that [the party] might have otherwise properly asserted” was the “necessary and appropriate” sanction for such misconduct); Ritacca v. Abbott Labs., 203 F.R.D. 332, 336 (N.D. Ill. 2001) (“Abbott’s casual disregard for the discovery rules in this litigation can only be characterized as unjustified, inexcusable, and in bad faith. . . . This [] clear case of foot-dragging . . . warrants a finding of waiver.”).
23. Nationwide Mut. Fire Ins. Co. v. Kelt, Inc., 2015 WL 1470971, at *9 (M.D. Fla. Mar. 30, 2015); see also Companion Prop. & Cas. Ins. Co. v. U.S. Bank N.A., 2016 WL 6539344, at *3 (D.S.C. Nov. 3, 2016) (privilege log was found inadequate and the plaintiff was ordered to provide a metadata log for all documents withheld or redacted).