New York Commercial Division Enacts New Rule to Promote More Efficient Privilege Logging

In document-intensive construction cases, a complete privilege log with enough information to allow the opposition to determine whether to challenge the assertion of the particular privilege is time-consuming and burdensome. This post, written by Joseph Imperiale and Kristopher Berr of Pepper Hamilton LLP summarizes a new rule in New York that attempts to rationalize the process of putting together a privilege log:

When responding to document requests or a subpoena duces tecum, litigants in New York traditionally have been faced with the onerous privilege log requirements set forth in Section 3122 of the New York Civil Practice Law and Rules.  Section 3122 requires a litigant who withholds any responsive documents to provide to the requesting party a privilege log containing a separate entry for each withheld document.  Each entry must disclose the legal grounds on which the document is withheld, in addition to certain identifying information including the type of document, the general subject matter of the document, and the date of the document.  N.Y. CPLR § 3122(b).  In complex construction disputes, there is often a large volume of privileged documents, and thus preparing a privilege log that meets the requirements of Section 3122 can be time consuming and expensive.

The “New York State Chief Judge’s Task Force on Commercial Litigation in the 21^st Century” recognized that the privilege log procedure of Section 3122 “has become a substantial expense in complex commercial litigation” with a “demonstrable need” for reform and issued a report in June 2012 recommending that the practice be reexamined.  In response, the Commercial Division Advisory Council drafted Commercial Division Rule 11-b, which represents a significant departure from the requirements of Rule 3122.  Rule 11-b requires that litigants work together to effectuate a newly expressed “preference in the Commercial Division…for the parties to use categorical designations” rather than line-by-line privilege logs.  22 N.Y.C.R.R. §202.70(g), Rule 11-b(b)(1).  Ultimately, Rule 11-b became effective on September 2, 2014.

The new rule requires the parties to “meet and confer at the outset of the case” to discuss the scope of the privilege review, the amount of information required to be set forth in the privilege log, the use of categories in the privilege log, including whether or not certain categories can be excluded from logging altogether, as well as any other pertinent issues.  22 N.Y.C.R.R. §202.70(g), Rule 11-b(a).  The stated goal of Rule 11-b is “to reduce the time and costs associated with preparing privilege logs”, and accordingly, “the parties are expected” under the rule to employ a categorical approach, rather than line-by-line logging.  22 N.Y.C.R.R. §202.70(g), Rule 11-b(b)(1).  Under this rule, the parties may use “any reasoned method of organizing the documents” into categories, which are to be provided to the requesting party in lieu of a document-by-document log.  22 N.Y.C.R.R. §202.70(g), Rule 11-b(b)(1). 

The rule recognizes that the categorical approach to privilege logging may not be appropriate or desirable in all cases and thus provides that the approach should be utilized only “where appropriate” and “where possible[.]”  22 N.Y.C.R.R. §202.70(g), Rule 11-b(b)(1).  But, where a party refuses to allow the categorical approach, the other party may seek an order shifting its costs, including attorney’s fees, to the party rejecting the categorical approach.  22 N.Y.C.R.R. §202.70(g), Rule 11-b(b)(2).  The courts are authorized to shift such costs “upon good cause shown.”  22 N.Y.C.R.R. §202.70(g), Rule 11-b(b)(2).

The parameters of “good cause” are not defined with any particularity in the text of Rule 11-b, and it is therefore unclear under what circumstances the rule’s cost-shifting provision takes effect.  For example, the rule does not indicate whether “good cause” to shift fees and costs is established merely where the court agrees that the categorical approach was preferable, if a showing of bad faith is necessary, or if “good cause” falls somewhere else along this spectrum.  The answer to this question will be borne out by the courts’ application of the new rule.