Understanding and Addressing Discovery Challenges with Slack
April 3, 2020
Practical & Ethical Considerations for Social Media Discovery
April 23, 2020

Privilege Subject Matter Waiver Under FRE 502

privilege subject matter waiver

Federal Rule of Evidence 502 (“Rule 502”) addresses the evidentiary issues arising from the disclosure of attorney-client privilege or work product information in discovery, inadvertent or otherwise. Litigators are urged to include obtain a Rule 502(d) non-waiver order in all federal court litigation and comparable non-waiver orders in state court matters. As we have previously noted, a simple and properly drafted Rule 502(d) Order can provide producing parties with significant, material protection against privilege waiver in the instant proceeding as well as in any other federal or state proceeding.[1] While more and more litigants have heeded this advice, the recent matter of RTC Industries. v. Fasteners for Retail demonstrates the importance of properly drafting of a Rule 502(d) order, particularly in patent infringement matters wherein one or more parties may be considering relying on an “advice of counsel” defense.[2]

When Rule 502 Meets the Advice of Counsel Defense

In this patent infringement matter pending before the N.D. Illinois, Eastern Division (Chicago), Defendant Fasteners for Retail, Inc. (“FFR”) filed a motion seeking to compel plaintiff RTC Industries, Inc. (“RTC”) to produce all documents and communications pertaining to RTC’s prosecution of specific patents at issue in the litigation. During discovery, RTC produced to FFR some partially redacted documents memorializing the advice of counsel provided to RTC relating to the patents at issue. Additionally, RTC advised FFR its intent to rely on these documents for its defense. In response, FFR demanded RTC produce these documents with the redactions removed. RTC attempted to obtain an agreement from FFR that such production would not constitute subject matter waiver. When FFR refused, RTC nonetheless proceeded to voluntarily hand over the unredacted documents to FFR, relying on the previously agreed-to protective order entered by the court that included a provision purporting to be a “Rule 502(d) Order” which read, in relevant part:

5. Inadvertent Disclosure:

a. The production of privileged or work-product protected documents, electronically stored information or other 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. This shall be interpreted to provide the maximum protection allowed by Federal Rule of Evidence 502.

b. If a receiving party discovers that discovery may have been inadvertently or otherwise unintentionally produced, it shall notify the producing party in writing as soon as reasonably practicable after learning of the disclosure. If a party inadvertently or otherwise produces or provides discovery which it believes is subject to a claim of an applicable privilege, the producing party may give written notice to the receiving party or parties that the information or material is subject to a claim of privilege, and request that the information or material be returned to the producing party or destroyed. …[3]

Unfortunately for RTC, the negotiated Rule 502(d) provision was focused on inadvertent disclosures. RTC’s disclosures to FFR were fully intentional. As such, the court determined that the 502(d) provision did not protect RTC from subject matter waiver in this case, writing:

Here, the title of the Rule 502(d) Order indicates that the language therein applies to “inadvertent” disclosures, not “inadvertent” and “intentional” disclosures (Modified Protective Order, ¶ 5). Furthermore, the parties elsewhere in the Rule 502(d) Order used the phrase “inadvertently or otherwise unintentionally produced” (Id., ¶ 15(b)).7 RTC does not convincingly explain why the word “otherwise” should be a proxy for “intentional” in one part of the Rule 502(d) Order when elsewhere in the order it refers to “unintentional” production.

7RTC contends that the “title does not eliminate the plain language of the paragraph” (RTC’s 1/14/20 Rule 37.2 Resp. at 5-6 n.5). However, here the title does not contradict or eliminate the plain language of Paragraph 5, but instead is consistent with how we read that Paragraph.[4]

Rule 502(a): The Sword or The Shield, But Not Both

The court then turned to Rule 502(a), noting that by intentionally disclosing this information to FFR, RTC was improperly seeking to simultaneously wield the rules as a sword (to defend itself using advice of counsel) and a shield to safeguard other withheld materials related to the same subject matter. The court noted that Rule 502(a) is exactly designed to prevent this situation:

(a) Disclosure Made in a Federal Proceeding or to a Federal Office or Agency; Scope of a Waiver. When the disclosure is made in a federal proceeding or to a federal office or agency and waives the attorney-client privilege or work-product protection, the waiver extends to an undisclosed communication or information in a federal or state proceeding only if:

(1) the waiver is intentional;

(2) the disclosed and undisclosed communications or information concern the same subject matter; and

(3) they ought in fairness to be considered together.[5]

The court concluded that RTC’s willful disclosure in this case met all three elements for subject matter waiver under Rule 502(a).

As noted by the court, the parties may mutually agree to seek a Rule 502(d) order to permit “each other’s use of their respective attorney-client privilege as both a sword and a shield. But such a monumental departure from the well-established principle of subject matter waiver, as codified by Rule 502(a), would have to be clearly and unambiguously spelled out by the parties.”

As to the scope of the subject matter waiver, FFR additionally requested that the court order RTC to produce all related materials noted on their privilege log and order RTC to conduct searches for and produce any other related documents and communications. The court rejected this proposal, limiting the subject matter waiver to documents and communications that met the following three conditions: 1) specified in the privilege log, 2) related to the conception, reduction to practice, or inventorship of inventions contained in the specific patients at issue, and 3) within the time frame of the relevant issues.

Finally, noting that the subject matter waiver was based on the fairness element of Rule 502(a)(3), the court provided RTC with an option: if RTC would disclaim any reliance on the intentionally disclosed emails for purposes of the litigation, it could avoid producing the additional documents under the subject matter waiver and have all of its prior produced materials returned under the condition. In other words, if RTC agreed to drop its sword (using the documents for an advice of counsel defense) it could pick up its shield (asserting privilege).

Conclusion

Rule 502 can present challenges when any party intends to utilize an advice of counsel defense. However, these issues can and should be considered by counsel. That includes considering the scope of your defense, the impact of FRE 502(a) on any intentional disclosures in support of your defense, and how a Rule 502(d) order should be properly crafted to achieve the intent of the parties.


[1] Eric P. Mandel, FRE 502(d): Don’t Litigate Without It, Driven Co-Pilot (January 9, 2019); note: non-waiver orders obtained in a state court will not have the same preclusive effect in other proceedings as provided under Fed. R. Evid. 502(d).

[2] RTC Industries, Inc. v. Fasteners For Retail, Inc., Case No. 17 C 3595, 2020 WL 1148813 (N.D. Illinois, Mar. 9, 2020).

[3] Id. at *6 (emphasis included in original).

[4] Id. at *8.

[5] Fed. R. Evid. 502(a).

Eric P. Mandel
Eric P. Mandel
Eric is an attorney, legal technologist, and privacy professional who has spent the past 13 years focused on solving complex problems at the intersection of law and technology. He has served in senior leadership roles in several trade associations, including The Sedona Conference, the EDRM Institute, the Legal Technology Professionals Institute, and the Association of Certified E-Discovery Specialists, and is a frequent speaker on a broad range of topics relating to electronic discovery, information governance, data regulatory compliance, and data privacy and data protection. Additionally, Eric has worked on numerous leading publications, including The Sedona Principles, Third Edition.
X