From Doca Co. v. Westinghouse Elec. Co., LLC, 2011 U.S. Dist. LEXIS 59352 (W.D. Pa. June 2, 2011):

Plaintiff DOCA Company ... [i]s successor to Caldon Company (hereinafter referred to as "Caldon")***

A Caldon employee created a timeline designed to help counsel understand the background facts of the current lawsuit. This timeline referred to notes for meetings held in November 1998 in which Caldon discussed alleged predatory acts against Caldon by Asea Brown Boveri ("ABB"). ABB is the predecessor to Westinghouse. The timeline is designated as a privileged document and in the normal course of discovery Caldon would not have produced the timeline. However, the timeline was inadvertently produced during discovery. Eventually Westinghouse relied on the inadvertently produced privileged document as its source for the fact that the 1998 meetings occurred as a basis to inquire of Caldon what was discussed at the 1998 meetings. Caldon refused to answer any questions based on the privileged document containing the timeline, eventually resulting in Westinghouse filing a motion to compel.

II. Magistrate Judge's Orders

The Magistrate Judge was asked to decide whether Caldon could be compelled to produce non-privileged notes of meetings, or allow Westinghouse to ask questions about the facts underlying the meetings, whose existence was revealed to Westinghouse in a privileged document. After considering the case law cited by Caldon, the Confidentiality Protective Order entered in this case (ECF No. 66), and Federal Rule of Evidence Rule 502, the Magistrate Judge concluded that Westinghouse was "free to develop the existence of the meeting and what occurred through independent means, without inquiring into privileged information." Mem. Order, Feb. 10. 2011, at 6. Accordingly, she granted Westinghouse's motion to compel but only to the extent that Westinghouse "may inquire into the facts relating to Caldon's beliefs concerning ABB's alleged predatory practices on or about the time the meeting notes were created." ***

IV. Discussion

The parties have invested a surprising amount of time and energy in arguing a very narrowly defined issue. The issue is whether a party who inadvertently receives a privileged document is permitted to inquire into underlying non-privileged facts based on a non-privileged fact learned only from the inadvertently produced document. Specifically, for the instant case the issue is: Whether Westinghouse is permitted to inquire into the underlying non-privileged facts about what occurred at the November 1998 meetings in light of the fact that Westinghouse only knew of the meetings from the inadvertently produced privileged document.***

In a footnote the Magistrate Judge explained that "Westinghouse asked that its review be limited to this issue and the Court will therefore not address any possible issues as to Rule 502 waiver due to the inadvertent disclosure, reasonable precautions taken regarding the production, timeliness of the clawback, etc." Id. n.2. Thus, because the Magistrate Judge did not address issues concerning Caldon's conduct we ignore the parties' arguments as to these issues.

***It is undisputed that the fact that the 1998 meetings occurred is not privileged, although when Caldon communicated that fact to its counsel the communication was privileged. In addition, the Magistrate Judge has determined for the purposes of the instant dispute there is no fault on the part of either party; that is, Caldon has not waived the privilege, and Westinghouse did not act improperly in discovering the fact that the meetings took place. As such, our decision is limited to the present factual circumstances.

We begin with Caldon's request that we resolve this matter by treating the situation as if the privileged document had never been inadvertently produced. The difficulty with doing this is that it means that a relevant nonprivileged fact would be off-limits in this litigation. Having non-privileged facts remain hidden during litigation should be disfavored, and because we exercise "broad discretion to manage discovery" we have no hesitation in permitting the inquiry to proceed under the circumstances of this case. Rhoades, 2009 U.S. Dist. LEXIS 95486, 2009 WL 3319820, *4, citing Sempier v. Johnson, 45 F.3d 724, 734 (3d Cir. 1995). By permitting Westinghouse to inquire into a relevant non-privileged fact even though it learned of the fact only through an inadvertent disclosure it would unreasonably thwart the ascertainment of the truth.

While the circumstances of this case do not fit squarely within the Upjohn scenario, we conclude that applying the same principles here makes sense. In Upjohn, the Supreme Court explained that a party cannot use a privileged communication to conceal a fact***.

We see no unfairness to Caldon. It is true that Caldon will now have to respond to discovery requests, but it is hardly unfair that Caldon respond to discovery requests regarding non-privileged facts. ***

In addition, our review of Caldon's briefs shows that Caldon would have complied with a direct question about the 1998 meetings had Westinghouse asked about the meetings prior to the inadvertent disclosure. *** The problem, Caldon argues, is not that Westinghouse could have learned of the fact during discovery, the problem is that Westinghouse did not ask at all***.

Likewise, it is not apparent that Westinghouse has acted negligently in failing to inquire into when Caldon first thought Westinghouse might have been engaged improper or predatory business practices independently. This is a complex case, and discovery has involved millions of documents and depositions have been taken globally. (We also recognize that Westinghouse believes it has submitted a properly crafted interrogatory.) Nonetheless, the non-privileged fact is now known and permitting further inquiry into it is appropriate.

We understand Caldon's concern that our ruling will now motivate the parties to review privileged documents for non-privileged information and thereafter seek discovery based upon the newly-learned facts. This may occur, but it is unlikely that it will be a common event. First, we think that the Confidentially Protective Order is sufficiently clear that if an attorney (who is also an officer of the Court) receives an inadvertently produced document, he or she will return the document as soon as the privileged nature of the document is known. Again, the present dispute is the only instance of its kind that has arisen in the course of this lengthy and complex discovery. In addition, relevant facts have a tendency to be brought out during the course of discovery and we suspect that the so-called "hidden" relevant non-privileged fact is rare.