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Protecting Privilege: Let’s (not) Be Reasonable

The use of 502(d) orders is catching on, as the burdens and risks of privilege protection grow along with increasing volumes of documents in discovery.  In many courtrooms, judges will ask the parties to agree to a 502(d) order if the parties do not raise it themselves.  At the November Georgetown Law Advanced eDiscovery Institute in November 2013, Judge Waxse went so far as to say that he believes it is malpractice per se for attorneys to engage in discovery without a 502(d) order. Hopefully, you are using clawback agreements or FRE 502(d) orders to protect privileged documents during discovery.   But, you may not be gaining much from these tools if you are still clinging to a standard that involves “inadvertent” production and “reasonable” efforts to protect privilege.

502(d) decreases risk of privilege waivers, while increasing efficiency of discovery For discovery involving a large number of produced documents, it is often expected that at least a few privileged documents will probably be produced.  Reviewers are not perfect, and at times privilege is not immediately obvious from the face of a document.  Even the best-run review teams occasionally have a privileged document slip through. Recognizing that a strict liability standard of waiver would be unfair in today’s world of growing electronic discovery, the 2007 amendments to the Federal Rules of Evidence protected privilege with reasonability standard for inadvertent disclosure:

FRE 502(b)  Inadvertent Disclosure. When made in a federal proceeding or to a federal office or agency, the disclosure does not operate as a waiver in a federal or state proceeding 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). While 502(b) offers a default level of protection, it also creates the potential for sideshow motion practice and discovery about discovery.  A party who attempts to claw back a document under 502(b) will have to prove that the disclosure was “inadvertent” and that “reasonable steps” were taken to prevent disclosure.  For this reason, parties often enter into private clawback agreements, or ask the judge to enter an order that provides additional protection under FRE 502(d), which provides:

FRE 502(d)  Controlling Effect of a Court Order.A federal court may order that the privilege or protection is not waived by disclosure connected with the litigation pending before the court — in which event the disclosure is also not a waiver in any other federal or state proceeding. 502(d) orders can decrease risk while making discovery run more efficiently.  They offer parties the option of less intensive reviews, and avoid costly discovery disputes in which parties challenge the “reasonableness” of each others’ efforts to not produce privileged documents.

In Brookfield Asset Management, Inc., v. AIG Financial Products Corp., No. 09 Civ. 8285 (PGG) (FM), 2013 WL 142503  (S.D.N.Y. Jan. 7, 2013), Judge Maas found that a 502(d) order is a complete defense to production of a privileged document: “Even if AIG or its counsel had dropped the ball (which they did not), the parties at my urging had entered into a rule 502(d) stipulation…Accordingly, AIG has the right to claw back the minutes, no matter what the circumstances giving rise to their production were.” (emphasis added).[1] Note that while bilateral clawback agreements also do this, 502(d) orders have the additional benefit of applying to third parties within a litigation as well as to other proceedings in which the documents may be reproduced. Draft a 502(d) order that achieves your goals Despite the benefits offered by 502(d) and private clawback agreements, parties oftentimes draft a protective order that uses the reasonability language similar to 502(b).

To take full advantage of the protections of 502(d), the key is to rule out application of a reasonability standard. In Rajala v. McGuire Woods, LLP, No. 08-2638-CM-DJW, 2013 WL 50200 (D. Kan. Jan. 3, 2013), the 502(d) order was drafted to apply to “inadvertent production.” [2]  Based on that language, the defendant argued that the plaintiff could not show that it used reasonable efforts to avoid waiving privilege.  Judge Waxse held that privilege was not waived, because the whole purpose of the 502(d) order was to avoid “time-consuming and costly” privilege reviews and avoid waiver.  While plaintiffs were able to protect privilege of their inadvertently produced document, they likely could have avoided dealing with defendant’s challenge altogether if the 502(d) order had been more clear. A 502(d) order, or private clawback agreement, is no better than 502(b) if it incorporates language that permits clawback for a party who “inadvertently” produces a document, or produces a document after taking “reasonable” steps not to disclose it.  An effective 502(d) order should therefore use language making clear that production does not result in waiver “regardless of the circumstances” or “whether production was inadvertent or otherwise.”

[1] The Order provided: Defendants’ production of any documents in this proceeding shall not, for the purposes of this proceeding or any other proceeding in any other court, constitute a waiver by Defendants of any privilege applicable to those documents, including the attorney-client privilege…

[2] The Clawback provision provided: The inadvertent disclosure or production of any information or document that is subject to an objection on the basis of attorney-client privilege or work-product protection, including but not limited to information or documents that may be considered Confidential Information under the [Protective Order], will not be deemed to waive a party’s claim to its privileged or protected nature or estop that party or the privilege holder from designating the information or document as attorney-client privileged or subject to the work product doctrine at a later date. Judge Waxse held that privilege was not waived because “[t]he terms of the Protective Order, and not the default provisions of Federal Rule of Evidence 502, govern the handling of inadvertent productions in this case.” See also Judge Peck’s Model 502(d) Order, available at www.nysd.uscourts.gov/cases/show.php?db=judge_info&id=928 (posted November 26, 2013), providing that “The production of privileged or work-product protected documents, electronically stored information (‘ESI’) or information, whether inadvertent or otherwise, is not a waiver of the privilege or protection from discovery in this case or in any other federal or state proceeding.”

Tara Emory, PMP
Tara Emory, PMP
Tara Emory advises organizations and law firms on e-Discovery and information governance programs. Tara counsels clients on data management and compliance, policies, records management technology, and defensible deletion. In litigation, she is an expert on search methodologies, data preservation and collection approaches, discovery protocols, and strategies for resolving discovery issues with litigation adversaries, government regulators, and the courts. Above all, Tara seeks to solve her clients’ unique data problems in ways that reflect a best fit for each client and matter.
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