Modern litigation has become increasingly document-intensive. Production of millions of pages during discovery is not uncommon, and the electronic age has complicated the discovery process with emails, drafts, and hidden data.
Given the discovery burden, parties incur high costs in identifying and removing documents protected as privileged or as work product. Notwithstanding such efforts, inadvertent disclosures of privileged material have become more common. The consequences of an inadvertent production are exacerbated by the possibility that the production of a privileged document waives the privilege, not only for that document, but also for all documents and communications addressing the same subject matter. See Gray v. Bicknell, 86 F.3d 1472, 1482-84 (8th Cir. 1996) (discussing the varying approaches courts employ to determine whether an inadvertent disclosure waived the attorney-client privilege before upholding district court’s order that the privilege had been waived only as to the inadvertently produced documents); Texaco Puerto Rico, Inc. v. Dep’t of Consumer Affairs, 60 F.3d 867, 883-84 (1st Cir. 1995) (affirming district court ruling that litigant’s inadvertent disclosure of 4 protected documents waived the attorney-client privilege as to 14 other documents concerning the same subject matter).
Recognizing these problems and the inordinate cost generated by current practice, Congress has enacted new Federal Rule of Evidence 502 to provide heightened protection against inadvertent waiver of the attorney-client privilege and work-product protection during discovery. Rule 502 applies to all proceedings that commence after September 19, 2008, and to any actions pending on that date “insofar as is just and practicable.” Fed.R.Evid. 502.
The Rule has four primary functions. First, it eliminates the possibility of an inadvertent “subject-matter” waiver in state or federal court caused by disclosure of a protected document in a federal proceeding. Under Rule 502(a), the attorney-client privilege or work-product protection is preserved for undisclosed communications or information related to the material inadvertently disclosed in a federal proceeding or before a federal agency. In the situation where a litigant discloses protected material, undisclosed communications or information that concern the same subject matter as the disclosed material lose their privileged status only where waiver of the disclosed material was intentional and fairness requires the undisclosed material to be considered with the disclosed material. Fed.R.Evid. 502(a). Protected material remains protected where the disclosure was inadvertent, it does not concern the same subject matter, or fairness does not require that it be considered with the disclosed material. Thus, an inadvertent disclosure cannot waive the attorney-client privilege or work-product protection as to an entire subject matter. Whether the inadvertent disclosure waives the protected status of the revealed document depends on the second feature of Rule 502.
That second feature reduces the likelihood that that inadvertent disclosure of a protected document would result in a waiver of the attorney-client privilege or work-product protection. A disclosure made in a federal proceeding does not operate as a waiver in a federal or state proceeding if the disclosure was inadvertent, the holder of the privilege or protection took reasonable steps to prevent disclosure, and the holder promptly took reasonable steps to rectify the error. Fed.R.Evid. 502(b). Reasonable steps to rectify the error include asserting that the material is privileged or protected and notifying the party in receipt of the material, pursuant to Federal Rule of Civil Procedure 26(b)(5)(B). Id.
Third, the rule clarifies whether a disclosure in a state court proceeding operates as a privilege waiver in a federal proceeding where state law conflicts with federal law. As long as the disclosure made in a state court proceeding is not the subject of a state-court order concerning waiver, the material disclosed in a state proceeding remains privileged or protected in a federal proceeding if the disclosure either (1) would not have been a waiver had it been made in a federal proceeding or (2) would not have been a waiver under applicable state law. Fed.R.Evid. 502(c). The law that prevails in such conflicts is whichever provides greater protection for the privileged or protected materials.
Finally, if a federal court rules that the privilege or protection is not waived with regard to a disclosure inadvertently made in a federal proceeding or before a federal office or agency, that ruling is controlling in any other federal or state proceedings. Fed.R.Evid. 502(d). Rule 502 allows parties to reach a binding agreement as to the effect of a disclosure in a federal proceeding, although any such agreement is binding on only the parties to the agreement. Fed.R.Evid. 502(e). If either party wishes to preserve the privileged or protected status of disclosed material vis-à-vis a third party it should move to have the agreement incorporated into a court order. Id.
Other than the four features discussed above, the law of evidentiary privilege remains unchanged by Rule 502. Whether a document is protected by the attorney-client privilege or work-product protection remains governed by the otherwise applicable privilege law. Fed.R.Evid. 502(g). Furthermore, the rule has no application where a disclosure of privileged or protected material is made in a state proceeding and offered in a subsequent state proceeding on the ground that the privilege or protection was waived by the disclosure. Whether the privilege or protection was waived in that circumstance will be determined by a state court based on state law.
Brian J. Levy is an Associate in the firm’s Insurance and Reinsurance and Litigation Practices. Mr. Levy received his bachelor’s degree from the University of Virginia and his law degree from William and Mary School of Law.