This matter came on for hearing on May 10, 2010. John Edmunds, Esq., appeared, and Tonya Parker, Esq., Jaime Olin, Esq., and Michael Hurst, Esq., appeared by phone on behalf of Plaintiff. Mauren Calvert, Esq., appeared on behalf of Defendants. Teri–Ann Shiroma Nagata, Esq., appeared on behalf of Defendant Aloha Petroleum Ltd. (“Aloha Petroleum”). After careful consideration of the Motions, the supporting and opposing memoranda, and the arguments of counsel, the Court HEREBY DENIES the Motion and GRANTS in part and DENIES in part the Counter–Motion for the reasons set forth below.

As the parties and the Court are familiar with the background of this case, the Court will include only those facts relevant to the instant Motions.

On June 23 and 24, 2009, Plaintiff served HECO with its First Request for Production of Documents. In response, HECO reviewed approximately 875,000 pages (or the equivalent thereof) of documents, and produced approximately 146,000 pages of documents, emails, plans, and meeting notes.

On September 4, 2009, the Court approved the Stipulated Confidentiality Agreement and Protective Order (“Stipulated Protective Order”) entered into by the parties. In pertinent part, the Stipulated Protective Order provides:

Stipulated Protective Order at ¶ 14.

On December 22, 2009, at the deposition of Dave Waller (“Waller”), Plaintiff offered, as exhibits, unredacted copies of 1) an email exchange between Waller, Edward Reinhardt (“Reinhardt”), Stahlkopf, Tayne Sekimura (“Sekimura”), and Joseph Viola (“Viola”), HECO's in-house counsel, (“Viola Email”) and 2) notes taken by Reinhardt in a spiral bound notebook of discussions concerning the BlueEarth biodiesel project (“Reinhardt Notes”). Paul Alston, counsel for Defendants, expressed his belief that said documents were privileged, but indicated that he would further investigate the matter.

*2 On January 25, 2010, counsel for Defendants notified the parties that privilege had been confirmed. Counsel also requested the return of the unredacted documents, as well as copies of the same. Opp'n, Ex. B.

Recently, Defendants additionally recalled two email chains (“miscellaneous emails”) and replaced them with redacted documents, on the basis of attorney-client privilege.

Plaintiff seeks to compel complete and unredacted production of the Viola Email, Reinhardt Notes, and miscellaneous emails, which Plaintiff believes are improperly designated as attorney-client communications.[1]Defendants maintain that the subject documents are protected by the attorney-client privilege and request that the Court issue a protective order 1) declaring that the documents are privileged; 2) declaring that the attorney-client privilege has not been waived; 3) ordering the immediate return of the documents in their unredacted forms; 4) prohibiting all other parties from using, relying on, or referring to the privileged or redacted portions of the documents, their subject matter, or contents; and 5) ordering that the redacted portions of the documents are inadmissible at trial.

*3 Federal Rule of Civil Procedure (“FRCP”) 37(a) authorizes parties to “move for an order compelling disclosure or discovery.” Fed.R.Civ.P. 37(a).

FRCP 26(c)(1) provides:

Fed.R.Civ.P. 26(c)(1).

The parties agree that state law governs the attorney-client privilege in this diversity case. KL Group v. Case, Kay & Lynch, 829 F.2d 909, 918 (9th Cir.1987) (citing Fed.R.Evid. 501). The party asserting the privilege has the burden of establishing its existence and validity. Dicenzo v. Izawa, 68 Haw. 528, 536, 723 P.2d 171, 176 (1986). To be protected by the privilege, “confidential communications [must be] made for the purpose of facilitating the rendition of professional legal services.” Haw. R. Evid. 503(b); Save Sunset Beach Coalition v. City and County of Honolulu, 102 Hawai'i 465, 484–85, 78 P.3d 1, 20–21 (2003). According to the Hawaii Supreme Court, the privilege may be invoked when the following is established:

Id. at 485, 78 P.3d at 21 (quoting Sapp v. Wong, 62 Haw. 34, 38, 609 P.2d 137, 140 (1980)). The privilege applies to communications to and from the attorney. Metzler Contracting Co. LLC v. Stephens, 642 F.Supp.2d 1192, 1202 (D.Haw.2009). There may be no privilege when a third party is present during the attorney-client communications, or when there is an absence of an attorney-client relationship. Id. at 1203.

Plaintiff argues that the Viola Email is not privileged because it does not contain any confidential communications, nor does it indicate, on its face, that the communications occurred for the purpose of rendering legal services. Defendants counter that the communications with Viola are privileged because they were for the purpose of obtaining legal advice. Defendants explain that Viola's role in the BlueEarth negotiations was to ensure proper documentation, and that the email apprised him of business developments and implicitly requested legal advice.

*4 It is well-established that attorney-client communications must involve legal advice or services. Haw. R. Evid. 503(b); Sunset Beach, 102 Hawai'i at 485, 78 P.3d at 21. However, the request for advice need not be express. Hercules, Inc. v. Exxon Corp., 434 F.Supp. 136, 144 (D.C.Del.1977). The “privilege exists to protect not only the giving of professional advice to those who can act on it but also the giving of information to the lawyer to enable him to give sound and informed advice.” Upjohn Co. v. United States, 449 U.S. 383, 390 (1981); Hercules, 434 F.Supp. at 144 (“Client communications intended to keep the attorney apprised of continuing business developments, with an implied request for legal advice based thereon, or self-initiated attorney communications intended to keep the client posted on legal developments and implications may also be protected.”). Contrastingly, “communications made in the routine course of business, such as transmittal letters or acknowledgement [sic] of receipt letters, which disclose no privileged matters and which are devoid of legal advice or requests for such advice are not protected.” Id. at 145 (citations omitted).

The Viola Email, while it does not contain an express request for legal advice on its face, was intended to keep Viola apprised of the BlueEarth negotiations and implicitly sought legal advice regarding the information therein. Viola represents that his “role on the negotiating team was that of a legal advisor to HECO and MECO ... [and] included making sure business and operational decisions were properly expressed and documented in any contract or agreement.” Decl. of Joseph Viola (“Viola Decl.”) at ¶ 5. He further offers his understanding that the email was for the purpose of seeking his legal advice, and recalls several conversations regarding the subject matter of the email with Stahlkopf, Waller, Reinhardt, and Sekimura. Id. at ¶¶ 7–8. This is substantiated by Michael May, President and CEO of HECO. Decl. of Michael May (“May Decl.”) at ¶¶ 3–4. Reinhardt, an employee of MECO, also clarifies that the Viola Email, which he sent, was for the purpose of obtaining Viola's legal advice and was intended to be confidential. Decl. of Edward Reinhardt (“Reinhardt Decl.”) at ¶ 3. Because Defendants have established that the redacted portions of the Viola Email were made in confidence, for the purpose of securing legal advice (though not explicitly stated) from Viola, the Court finds that those portions are protected by the attorney-client privilege.[2]

Plaintiff additionally challenges Defendants' claim of privilege on the ground that the email contains nothing more than discoverable factual information. The Court disagrees. Neither party disputes that the privilege only extends to communications and not facts. The U.S. Supreme Court has explained that

Upjohn, 449 U.S. at 395–96 (citation and quotations omitted). Here, the email is clearly a communication written to Viola and other HECO and/or MECO employees concerning negotiations for which Viola was enlisted to offer legal advice. The email chain does not, as Plaintiff claims, contain only factual information. Rather, the email chain includes facts, is a communication concerning those facts, and is therefore protected by the attorney-client privilege. If Plaintiff wishes to procure the facts themselves, Plaintiff may utilize the discovery process to do so.[3] Id. at 396 (although less convenient than subpoenaing questionnaires and notes protected by the attorney-client privilege, the government could question employees who communicated with counsel).

*5 2. Reinhardt Notes (H005259–H005261, H005263, H005269, H005280, H005290)

Plaintiff posits that the Reinhardt Notes are not privileged because they do not reflect the presence of an attorney at the meetings to provide legal advice, nor demonstrate that legal advice was sought or given. Defendants submit that portions of the Notes are privileged because they memorialize communications at meetings attended by Viola and/or Craig Nakanishi, HECO's outside regulatory counsel, for the purpose of rendering legal advice.

Reinhardt offers the following explanations for the Notes: 1) the May 7, 2008 Notes (Ex. 3 to Plaintiff's Motion—H005259–61) are from a meeting he attended with Nakanishi and reflect a conversation between the two, wherein Reinhardt sought legal advice regarding the regulatory implications of developing the BlueEarth project; Reinhardt Decl. at ¶ 4; 2) the May 9, 22, and July 22, 2008 Notes (Exs. 4, 6, 10 to Plaintiff's Motion—H005263, H005269, H005290) are from internal meetings attended by himself, Stahlkopf, Waller, Sekimura, and Viola, and the redacted portions include internal, confidential communications with Viola regarding legal issues and seeking legal advice; Id. at ¶ 5; 3) the June 27, 2008 Notes (Ex. 8 to Plaintiff's Motion—H005290) are from a meeting with representatives of Energy Capital Partners and Plaintiff and the privileged portion reflects confidential communications discussed at an internal meeting between Stahlkopf, Waller, Sekimura, Viola, and himself, regarding legal issues and seeking legal advice from Viola. Id. at ¶¶ 6–7. Viola corroborates this information. Viola Decl. at ¶¶ 9–11.

Through Reinhardt and Viola's declarations, Defendants have satisfied their burden of establishing that the redacted portions of the Reinhardt Notes are protected by the attorney-client privilege. The communications were intended to be confidential and they were made for the purpose of obtaining legal services and/or advice. As discussed in the foregoing section, it is of no consequence that the request for advice or service was not expressly made on the face of the Reinhardt Notes. Nor is the privilege defeated by the existence of factual information where, as here, disclosure of the unredacted Notes would force Defendants to convey what they wrote or stated to counsel. For these reasons, the Court concludes that the redacted portions of the Reinhardt Notes are privileged.

Finally, Plaintiff contests Defendants' assertion of privilege with respect to two email chains, both of which included Viola. Plaintiff believes that Defendants' assertion is not well-founded, and thus seeks a ruling from the Court regarding the applicability of the attorney-client privilege.

May indicates that the May 13, 2008 email (Ex. 14 to Plaintiff's Motion—H042780–H042781) he sent to Eric Yeaman, HECO's COO, and Viola, was meant to be confidential and was sent for the purpose of seeking Viola's legal advice. May Decl. at ¶ 5; Viola Decl. at ¶ 13 (confirming his understanding that the email was intended to be confidential and was sent for the purpose of seeking his legal advice).

*6 Viola explains that his email dated May 13, 2008 (Ex. 12 to Plaintiff's Motion—H146864) is in part a communication describing confidential conversations he had with May and Yeaman, which involved requests for legal advice concerning rights and obligations under NDAs. Viola Decl. at ¶ 12. Viola confirms that he intended the email to be confidential. Id.

For the reasons set forth in section A.1., the Court finds that the redacted portions of the emails are protected by the attorney-client privilege.

Plaintiff also seeks to compel the production of the Viola Email and Reinhardt Notes on the basis that Defendants waived any claims of privilege by failing to deliver written notice within the 10–day period set forth in the Stipulated Protective Order after discovering the inadvertent production of the subject documents. The Stipulated Protective Order requires the party who inadvertently produces privileged information to advise the receiving party, in writing, within 10 days upon discovery of such inadvertent disclosure. Stipulated Protective Order at ¶ 14. No provision exists with respect to the consequences of failing to comply with the time periods in the Stipulated Protective Order.

Defendants argue, on one hand, that Alston's verbal notification at Waller's deposition sufficed to inform the parties that the subject documents were inadvertently produced and protected by attorney-client privilege. Defendants note that Plaintiff has failed to identify any harm or prejudice that resulted from the purported delay in receiving written notice on January 25, 2010. Defendants alternatively posit that Plaintiff received “written notice” as contemplated by the Stipulated Protective Order when it received a copy of the deposition transcript on January 5, 2010. On the other hand, and contrary to their foregoing position, Defendants contend that at the time of Waller's deposition, the subject documents were merely “potentially privileged documents.” Defendants point out that the Stipulated Protective Order does not specify how to handle such documents. Defendants accordingly believe that their obligation to notify the parties arose only after they had confirmed that the documents were in fact privileged, which resulted in a timely written notification on January 25, 2010.

Defendants cannot have it both ways. They essentially argue that they satisfied the written notification requirement by orally raising the issue at the Waller deposition, by submitting written notification on January 25, 2010, and/or because Plaintiff received a deposition transcript on January 5, 2010.[4] Yet, they also argue that the 10–day clock only ran from the time they confirmed the privilege, not at the deposition. The Court acknowledges that at Waller's deposition, Alston asserted privilege with respect to portions of the Viola Email and Reinhardt Notes, but indicated that he would need to further investigate. Opp'n, Ex. A at 70, 72–74. However, the fact that Defendants could not confirm with certainty the applicability of the privilege at Waller's deposition did not excuse them of their obligation to comply with the Stipulated Protective Order. It was at that point that they were on notice of their inadvertent production of privileged (or potentially privileged) documents. Nevertheless, without reaching the issue of whether the January 25, 2010 written notice was timely, the Court declines to find that Defendants waived attorney-client privilege.

*7 The January 25, 2010 written notice, whether timely or not, provided adequate notice to Plaintiff of the inadvertent disclosure. What is more, the parties did not establish sanctions and/or penalties for failure to adhere to the deadlines contained in the Stipulated Protective Order. Thus, the overriding interest of preserving the attorney-client privilege, when coupled with Plaintiff's failure to demonstrate that it suffered prejudice, leads the Court to conclude that Defendants' failure to serve Plaintiff with written notice within 10 days of Waller's deposition did not operate as a waiver of the attorney-client privilege. Indeed, the parties agreed, in the Stipulated Protective Order, “that the producing party shall not be deemed to have waived any privilege or protection either for the inadvertently disclosed or produced materials.” Stipulated Protective Order at ¶ 14. The purpose of the recall/clawback process is to give the parties an opportunity to rectify inadvertent errors without waiving privilege. Although Defendants inadvertently produced the Viola Email three times in unredacted form, their production of the same in redacted form four times substantiates their assertion that the communications are privileged, and evidences their intent to protect the communications.

This determination is further supported by Federal Rule of Evidence (“FRE”) 502(b), which governs the inadvertent disclosure of privileged documents. FRE 502(b) provides that a disclosure does not operate as a waiver if: “(1) the disclosure is inadvertent; (2) the holder of the privilege or protection took reasonable steps to prevent disclosure; and (3) the holder promptly took reasonable steps to rectify the error, including (if applicable) following Federal Rule of Civil Procedure 26(b)(5)(B).”[5] Fed.R.Evid. 502(b). To determine whether waiver has occurred, the Court is guided by the following factors: “(1) the reasonableness of the precautions to prevent inadvertent disclosure; (2) the time taken to rectify the error; (3) the scope of the discovery; (4) the extent of the disclosure; and (5) the 'overriding issue of fairness.' ” Hartford Fire Ins. Co. v. Garvey, 109 F.R.D. 323, 332 (N.D.Cal.1985) (quoting Lois Sportswear, U.S.A., Inc. v. Levi Strauss & Co., 104 F.R.D. 103, 105 (S.D.N.Y.1985)).

As an initial matter, the Court notes that there is no dispute that the disclosure was inadvertent. The first element of FRE 502(b) is therefore satisfied. The Court will evaluate the remaining two elements in connection with the Lois Sportswear factors. Here, an assessment of these factors militates in favor of Defendants. It appears that Defendants took some reasonable precautions and measures to prevent inadvertent disclosure, including but not limited to reviewing 42 boxes of hard-copy documents and 29 gigabytes of data (approximately 733,000 pages), and having associate attorneys review the documents following electronic sorting. When considering the limited extent of the disclosure in light of the rather extensive scope of discovery, the Court cannot say that Defendants acted unreasonably. Overriding issues of fairness and the importance of preserving privilege cut in favor of Defendants. Accordingly, the Court finds that Defendants took reasonable steps to prevent disclosure. Finally, the Court considers whether Defendants acted promptly to rectify their error. Defendants put Plaintiff on tentative notice that the Viola Email and Reinhardt Notes were privileged at Waller's deposition, the moment they realized that the documents were inadvertently produced. By providing formal written notification approximately one month later, Defendants can be said to have acted expeditiously to rectify the error.

*8 Insofar as the Court has found that the subject documents contain privileged communications, and that Defendants have not waived said privilege through inadvertent disclosure, the Court HEREBY DENIES the Motion to Compel, GRANTS in part the Counter–Motion for Protective Order, and issues the following protective order:

The Court denies the Counter–Motion to the extent it seeks an order barring the use of these materials at trial. While it is axiomatic that privileged documents shall not be introduced or relied upon as evidence at trial, and it appears that an order stating the same need not issue, any such ruling is best left for adjudication by the trial judge.

Based on the foregoing, the Court HEREBY DENIES Plaintiff's Motion to Compel Production of Documents from Defendants Hawaiian Electric Company, Inc., Maui Electric Company, Ltd., and Karl E. Stahlkopf, filed March 19, 2010, and GRANTS IN PART AND DENIES IN PART Defendants' Counter–Motion for Protective Order, filed April 19, 2010.

IT IS SO ORDERED.

At the hearing, Mr. Edmunds raised the crime-fraud exception as a basis for compelling the production of the unredacted versions of the documents. Plaintiff did not raise this argument in its Motion, and it is not properly before this Court at present. Even if it were, Plaintiff has not complied with United States v. Zolin, 491 U.S. 554 (1989). In Zolin, the Supreme Court concluded that courts may, when warranted, conduct in camera review of privileged material to determine whether the crime-fraud exception applies. Id. at 572. The Court instructed that prior to conducting in camera review, “ 'the judge should require a showing of a factual basis adequate to support a good faith belief by a reasonable person,' that in camera review of the materials may reveal evidence to establish the claim that the crime-fraud exception applies.” Id. (internal citation omitted). This standard is less stringent than that ultimately required to overcome the privilege. Id.

Plaintiff erroneously argues that Defendants claim privilege merely because Viola's name is on the communication. Defendants do not invoke privilege on that basis, but rather, submit that the Email is privileged because it was for the purpose of securing legal advice. Defendants point out, and Plaintiff concedes, that a number of emails that included Viola were produced in unredacted form. This would appear to suggest that Defendants are not making a blanket assertion of privilege for all emails bearing Viola's name, but are instead engaging in a deliberative process to distinguish and separate communications made for the purpose of obtaining legal advice from those in which Viola was merely included.

According to Defendants, Paul Alston did not object to Plaintiff's factual questions at Waller's deposition that did not reference the privileged document. Opp'n at 18 n.8.

The Court rejects Defendants' argument that Plaintiff's receipt of the deposition transcript satisfied the written notice requirement. This is particularly disingenuous given Defendants' position that they did not know for certain at the Waller deposition whether the documents were privileged. If, as Defendants claim, the lack of certainty as to privilege excepted their discovery of the inadvertent production from the strictures of the Stipulated Protective Order, the deposition transcript memorializing Alston's verbal objections could not serve as written notice. Regardless, it is difficult to conceive that the parties intended that the written notification requirement could be satisfied with a deposition transcript.

If information produced in discovery is subject to a claim of privilege or of protection as trial-preparation material, the party making the claim may notify any party that received the information of the claim and the basis for it. After being notified, a party must promptly return, sequester, or destroy the specified information and any copies it has; must not use or disclose the information until the claim is resolved; must take reasonable steps to retrieve the information if the party disclosed it before being notified; and may promptly present the information to the court under seal for a determination of the claim. The producing party must preserve the information until the claim is resolved.