Lessons Learned for 2019: Spotlighting the Top eDiscovery Cases from 2018
Lessons Learned for 2019: Spotlighting the Top eDiscovery Cases from 2018
January 31, 2019
Reducing ESI Preservation Obligations with Proportionality and Metrics
Reducing ESI Preservation Obligations with Proportionality and Metrics
April 22, 2019

Addressing Possible Pitfalls from Rule 502(d) Non-Waiver Orders

502d Drawbacks

We have heard it now for over ten years. Parties need the protection of a non-waiver order under Federal Rule of Evidence 502(d). Nevertheless, clients and counsel who are unaware of possible pitfalls surrounding Rule 502(d) non-waiver orders (“502(d) orders”) could find themselves assuming the cost of an adversary’s privilege review, uncertain about what evidence they can use to prepare their case, or burdened by notice and clawback procedures.

Benefits of 502(d) Orders

Since Rule 502 became effective on December 1, 2008, courts and counsel have slowly embraced the benefits of 502(d) orders. Proponents have asserted that these orders provide much needed protection against arguments that parties waive the attorney-client privilege or the work product doctrine after mistakenly producing such documents in discovery.

This has certainly been the case. Carefully prepared 502(d) orders do insulate producing parties from motion practice over whether a production of privileged information was legally inadvertent. By so doing, 502(d) orders help producing parties avoid the costs and risks of such motion practice—in the instant litigation or other federal or state lawsuits. This, in turn, allows parties to focus on litigating the merits rather than engaging in satellite litigation over privilege.

For parties producing voluminous amounts of relevant information and who thereby risk turning over nonobvious privileged materials, a 502(d) order that places no conditions on the issue of inadvertence makes perfect sense.

Or does it?

Possible Pitfalls from 502(d) Orders

While 502(d) orders may seem to pose no downside for producing parties, the same cannot be said for requesting parties. This is because the burdens of a privilege review could seemingly shift to the requesting party under a non-waiver order. This is particularly the case when a requesting party receives voluminous productions from a producing party.

Since a well-crafted 502(d) order allows “for return of documents without waiver irrespective of the care taken by the disclosing party,” the producing party may not worry about preparing a robust privilege review process. In instances where a producing party implements a limited or faulty privilege review, numerous privileged documents could be produced to the requesting party. Under the 502(d) order, a requesting party must isolate these documents and return them to the other side regardless of whether it identifies the documents or they are identified by the producing party.[1] While doing so from time to time is not unduly burdensome, doing so every week for a period of months—as can happen in cases with rolling productions—may become an onerous task.

Another drawback to a 502(d) order is the potential for disruption at deposition, in motion practice, or even at trial. Producing parties may attempt clawback requests at any time, even as trial approaches. This may include instances where a document has been the subject of examination at deposition, has been attached as an exhibit supporting or opposing a motion, or has been presented at an evidentiary hearing. Without a reasonable limitation on the right to clawback privileged information, a 502(d) order may allow the producing party to interfere—either unwittingly or intentionally—with the requesting party’s efforts to litigate its claims or defenses.

These issues raise concerns for plaintiffs in class actions, qui tam suits, or other asymmetrical-type cases with little information to produce in discovery. As traditional requesting parties in those types of lawsuits, plaintiffs have not had as much incentive to enter into 502(d) orders as a producing party holding massive amounts of electronic data.

However, these issues may also be troublesome for producing parties in symmetrical litigation since they, too, are requesting parties. In commercial or business disputes, for example, these parties seek discovery from litigation adversaries who frequently have large amounts of electronic data. In such instances, a producing party who is also a requesting party may see a downside to 502(d) orders that place no conditions on the issue of inadvertence.

Guidance for Addressing the Issues

Despite the reality of these problems, the solution is not to turn away from 502(d) orders. The benefits of Rule 502(d) still far outweigh the drawbacks. Indeed, the alternative—proving inadvertence as a matter of law under Rule 502(b)—presents a significant risk of waiver to producing parties that can only be obtained after costly motion practice. This is evidenced by the recent decision from In re Qualcomm Litigation in which the court held that Apple, Inc. waived any protection over seven privileged documents that it mistakenly produced in discovery.

Instead, parties should prepare a 502(d) order that includes common sense limitations on the time and scope of a clawback request. One such restriction would be a reasonable limitation on the period of time when clawback requests could be issued. Another provision that could be included is a preclusion on the right to clawback a privileged document that has been used without objection at deposition or at a hearing.

The issue of excessive clawback requests requires a more nuanced approach. In those instances where a producing party’s privilege review has resulted in a disproportionate number of clawback requests, the parties should work cooperatively to address the problem. This could include having the producing party re-examine certain aspects of its review process. Doing so may better ensure that privileged information already produced in discovery is immediately clawed back and that additional productions do not contain privileged information.

Regardless of the solution, parties should be wary of seeking court intervention, which could lead to a determination with which neither party is pleased. Just such a scenario is taking place in the case of Arconic Inc. v. Novelis Inc.,[2] where a special master has recommended scrapping a 502(d) order in favor of a Rule 502(b) arrangement to address the problem of excessive clawback requests. The court is presently considering this issue and will hold a hearing on March 20, 2019 to obtain testimony and other evidence on whether it should abandon the 502(d) order. Stay tuned; we expect to cover how the court eventually decides the dispute.

[1] Ethics rules promulgated by various states also require the requesting party to notify the producing party of any information produced in discovery that it deems to be privileged. Nevertheless, requesting parties can challenge the claim of privilege by showing that the production was not inadvertent if a non-waiver order is not in place or otherwise provides for such a challenge.

[2] Arconic Inc. v. Novelis Inc., No. 17-cv-1434, 2019 WL 911417 (W.D. Pa. Feb. 25, 2019).

Philip Favro
Philip Favro
Philip Favro acts as a trusted advisor to organizations and law firms on issues surrounding discovery and information governance. Phil provides guidance on data preservation practices, litigation holds, data collection strategies, and ESI search methodologies. In addition, he offers direction to organizations on records retention policies and the need to manage dynamic sources of information found on smartphones, cloud applications, and social networks. Phil is available to serve as a special master on issues related to electronic discovery. Phil is a nationally recognized thought leader and legal scholar on issues relating to the discovery process. His articles have been published in leading industry publications and academic journals and he is frequently in demand as a speaker for eDiscovery education programs. Phil is a member of the Utah and California bars. He actively contributes to Working Group 1 of The Sedona Conference where he leads drafting teams and serves as the Steering Committee project manager. Prior to joining Driven, Phil practiced law in Northern California where he advised a variety of clients regarding business disputes and complex discovery issues. He also served as a Judge Pro Tempore for the Santa Clara County Superior Court based in Santa Clara, California.