Court Grants Defendant's Motion for Entry of Clawback Provision

Rajala v. McGuire Woods LLP, 2010 WL 2649582 (D. Kan. July 22, 2010)

Plaintiff, as Bankruptcy Trustee, brought suit against defendant, alleging several claims. The parties could not agree on the entry of a clawback provision. Accordingly, defendant moved the court to enter such a provision. Upon establishing its authority to enter such an order pursuant to Fed. R. Civ. P. 26(c)(1) and analysis of the relevant facts, the court granted the motion, with modification, and indicated that a separate order setting forth a clawback provision would be entered.

Simply stated, the parties to this action could not agree on the entry of a clawback provision. Defendant, a large law firm, wanted one and plaintiff did not. Following the court’s entry of a protective order which did not include a clawback provision, defendant moved the court to enter one.

Defendant argued that such a provision would prevent “contentious, costly, and time consuming discovery disputes” and relied on Fed. R. Evid. 502(d) “which provides that a court may order that a privilege or protection ‘is not waived by disclosure connected with the litigation pending before the Court’” and the rule’s attendant Advisory Committee Notes. Defendant further argued that the nature of discovery in the case, which would require review and production of a large volume of ESI, and its duty to protect the attorney-client privilege of its many clients, necessitated such a provision. Plaintiff opposed such a provision arguing that its ability to carry out its pretrial activities would be hampered by the “ever present concern that any documents could suddenly be taken back” and that, in the event of defendant’s inadvertent production, such a provision would prevent plaintiff from arguing that defendant failed to take reasonable care in preventing the disclosure.

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Source: ediscoverylaw.com