December 2008 • Vol. 28 No. 11 | An E-Publication of the Los Angeles County Bar Association

New Federal Rule of Evidence 502: Help is on the Way

By Clare Pastore, Associate Professor of the Practice of Law, USC Gould School of Law, and member, LACBA Professional Responsibility and Ethics Committee. She can be reached at cpastore@law.usc.edu. The views expressed are her own.

Clawback, quick peek, nonwaiver pact, selective waiver—Who can keep up with all the devices litigators have developed to manage discovery burdens and privilege waiver in the electronic era, much less remain current on whether courts are respecting the agreements, enforcing them as to litigants, government agencies, and third parties, or rejecting them? With the passage of new Federal Rule of Evidence 502, Congress has made the job a bit easier for lawyers worried about the inadvertent waiver of a privilege or work product protection in cases with voluminous documents. Some commentators, however, believe Congress has overstepped its legislative authority and reached too far into the traditional prerogative of states to control their rules of privilege and their regulation of the professional obligations of attorneys. 

The problem is familiar to anyone who has toiled in the vineyard of discovery in a document-intensive case. Thousands, sometimes hundreds of thousands, of electronic documents must be individually reviewed before responding to a request for production, to comply with requests, and, equally important, to avoid a waiver of privilege or work product protection. The costs of this document review can be staggering, but the consequences of failure to conduct it could likewise be disastrous. This is because courts frequently refuse to reinstate the privilege or protection for an inadvertently disclosed document but worse, may even find a broader “subject matter waiver” eliminating the privilege or work product protection not only for the document in question but also for related documents on the same subject.1 While the Federal Rules of Civil Procedure were amended in 2006 to address the costs and burdens of electronic discovery, the amendments did not address special cost and burden issues that arise from the need to review gigantic numbers of electronic documents for privilege or work product.

Attorneys had on occasion attempted to reduce these costs and burdens by means of devices such as “clawback” or “quick peek” agreements. Under the former, the parties agree that a party producing documents need not first review them for privilege or work product protection. The receiving party reviews the documents, selects those it wishes to retain, and the producing party then reviews only that smaller set of documents for privilege or work product. A clawback agreement allows a party who has produced documents to obtain their return if it finds it has inadvertently produced protected material and requests return within a reasonable time.2 However, courts have varied in their willingness to enforce such agreements. Moreover, the majority of courts refuse to enforce them as to third parties, thus substantially reducing their value to litigants.3 

Congress acted to address the problem with new Federal Rule of Evidence 502, signed into law by the president on September 19, 2008. (Rules mavens will recall that while rules of evidence generally need not be approved by Congress, 28 U.S.C. Section 2074(b) specifies that rules creating, abolishing, or modifying an evidentiary privilege require an act of Congress.) The legislative history of the rule and the advisory committee proceedings leading to its enactment are replete with recognition of the burden of privilege review in the electronic era. For example, the Judicial Conference Committee on Rules of Practice and Procedure noted in 2005, “Electronically stored information is characterized by exponentially greater volume than hard-copy documents. Commonly cited current examples of such volume include the capacity of large organizations’ computer networks to store information in terabytes, each of which represents the equivalent of 500 million typewritten pages of plain text, and to receive 250 to 300 million email messages monthly.”4

The rule entitled “Attorney-Client Privilege and Work Product; Limitation on Waiver” has five substantive sections.

(a) Limitations on scope of waiver. Subsection (a) provides that if a waiver is found, it applies only to the information disclosed unless a broader waiver is made necessary by the privilege holder’s intentional and misleading use of privileged or protected information or communication. Even then, a subject matter waiver cannot result unless the initial disclosure was intentional.

(b) Protections against inadvertent disclosure. Subsection (b) provides that an inadvertent disclosure of privileged or protected information made in a federal proceeding does not operate as a waiver if the privilege holder took reasonable steps to prevent the disclosure and employed reasonably prompt measures to retrieve the mistakenly disclosed communications or information.

(c) Disclosures made in state proceedings. Subsection (c) provides that the subsequent federal effect of a disclosure made in a state court proceeding is determined by whichever law (Rule 502 or state law) is more protective of confidentiality unless the state court has issued an order concerning the consequences of the disclosure.

(d) Controlling effect of federal court order on nonparties and state courts. Under Subsection (d), if a federal court enters an order providing that a disclosure of privileged or protected communications or information does not constitute a waiver, that order is enforceable against all persons or entities in any federal or state proceeding. The disclosure need not have been inadvertent.

(e) Party agreements binding only on parties unless incorporated in court orders. Subsection (e) specifies that parties in a federal proceeding may enter into binding agreements protecting against waiver in that proceeding. But such agreements bind only the parties to the agreement unless they are incorporated into a court order. 

The rule is effective immediately and applies to all proceedings commenced after its September 19, 2008 enactment and “insofar as is just and practicable, in all proceedings pending on such date of enactment.”5

At least two things are significant about the new rule. First, it codifies the most widely held of the three positions federal courts have taken on inadvertent disclosure of privileged or work product material. This is the so-called totality of the circumstances test under which an inadvertent disclosure constitutes a waiver only if the disclosing party failed to take reasonable precautions to prevent it or failed to request the return of protected material promptly.6 

Second, although it is a federal rule of evidence, it binds state courts in at least two ways. In those situations where a disclosure of privileged or protected material is first made in a federal proceeding, a later-acting state court is bound by any federal court order finding that privilege or protection is not waived. (Interestingly, the rule does not speak to the later effect in state court of a federal court’s ruling that privilege is waived.) Also, it limits the ability of state courts to determine the state law effect of a waiver, even for material first disclosed in a state proceeding, by mandating that an initial state court disclosure does not constitute a waiver for purposes of a later federal proceeding if it would not have been a waiver in federal court under this rule. 

The rule is also significant for what it leaves out. It does not address the so-called “state-to-state” problem, which refers to the effect of a state court disclosure when subsequently offered in a proceeding in another or different state. Likewise, it does not address the “selective waiver” issue, which refers to the controversy over the permissibility of a person or entity providing information to a government agency without waiving all privileges as to other parties in subsequent litigation.7

Although some commentators have argued that the new rule unconstitutionally exceeds Congress’ power to legislate under either the Commerce Clause or the Necessary and Proper Clause of the Constitution and unconstitutionally impinges on the states’ ability to determine the discoverability and admissibility of evidence in state courts,8 that question is unlikely to be resolved soon. Likewise, the issue of whether an attorney sheltering in the safe harbor of Rule 502 may nonetheless be violating state-imposed ethical duties with regard to confidential client information—especially in a state like California with very strict confidentiality rules—lurks just beneath the surface of Rule 502. Nonetheless, the new rule is likely to have a significant—and salutary—effect on the burgeoning costs of discovery and privilege review in document-intensive cases by limiting inadvertent waiver, encouraging clawback and sneak-peek agreements, and encouraging federal courts to take an active role in discouraging excessive document review costs by issuing nonwaiver orders. 

1 See S. Rep. No. 110-264, at 1-2 (available at http://www.uscourts.gov/rules/S_Rep_110-264.pdf).

2 See Laura C. Daniel, “The Dubious Origins and Dangers of Clawback and Quick-Peek Agreements: An Argument against Their Codification in the Federal Rules of Civil Procedure,” 47 Wm. & Mary L. Rev. 663 (Nov. 2005).

3 See Hopson v. City of Baltimore, 232 F.R.D. 228 (D. Md. 2005) (discussion of the caselaw on confidentiality agreements and orders).

4 September 2005 Summary of the Report of the Judicial Conference Committee on Rules of Practice and Procedure, at 22-23 (available at http://www.uscourts.gov/rules/Reports/ST09-2005.pdf).

5 See Pub. L. 110-322, 122 Stat. 3537.

6 See Charles A. Wright, Arthur R. Miller & Richard L. Marcus, 8 Federal Practice and Procedure-Civil, 2d § 2016.2 (discussing three federal court approaches to inadvertent waiver). 

7 The Judicial Conference’s Committee on Rules of Practice and Procedure noted that the state-to-state waiver issue was not addressed in Rule 502 because of the federalism and comity concerns expressed by the Conference of State Chief Justices. Likewise, the selective waiver issue proved extremely controversial. See September 26, 2007 Letter from Lee H. Rosenthal, Chair, Committee on Rules of Practice and Procedure, to Chair and Ranking Member of Senate Judiciary Committee (available at http://www.uscourts.gov/rules/Hill_Letter_re_EV_502.pdf).

8 See, e.g., Henry S. Noyes, “Federal Rule of Evidence 502: Stirring the State Law of Privilege and Professional Responsibility with a Federal Stick,” Chapman University School of Law Legal Studies Research Paper Series, Paper No. 08-285 (2008), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1273325. Other commentators take the opposite view. See, e.g., Timothy P.Glynn, “Federalizing Privilege,” 52 Am. U. L. Rev. 59 (2003).

Find past ethics articles here.




© 2008 Los Angeles County Bar Association  •  Disclaimer and Proprietary Notice
Privacy Policy  •  Questions@lacba.org  •  Contact  •  Sitemap