U.S. International Trade Commission (ITC) Chief Administrative Law Judge (ALJ) Charles E. Bullock recently held that production of documents by a third party in response to a subpoena waived privilege.1 This ruling highlights the ITC's more-recent trend of following Federal Rule of Evidence 502(b)'s more-liberal standard on privilege waivers (thus making waivers prospectively less likely), even though the waiving third party in this instance was unable to meet even this standard. Indeed, Chief ALJ Bullock's ruling held that his own pre- Federal Rule of Evidence 502(b) privilege waiver decisions were no longer good law.2
In this case, a non-party produced approximately 6,100 documents within 11 days of service of the subpoena, as required by ITC rules. During the deposition of that non-party's designee a month later, the non-party recalled two of the documents as being privileged. Two months after the deposition, the non-party attempted to recall as privileged several more of the documents produced. The proponent of the subpoena then filed a motion to declare waiver of privilege.
Here, Chief ALJ Bullock applied Federal Rule of Evidence 502(b)'s "clawback" analysis to the non-party's requests for return of the documents.3 The Federal Rules of Evidence, however, do not technically apply at the ITC. Rather, since the ITC is engaged in administrative adjudication, the admissibility of evidence is governed by the much looser standards of the Administrative Procedures Act.4 Nonetheless, the ITC has looked to the Federal Rules of Evidence for guidance on privilege waiver issues.5
While Chief ALJ Bullock found that the non-party's production was inadvertent, he found that it had failed to meet its burden regarding the reasonableness of the steps taken: "A vague reference to reviewing documents for privilege, without an explanation of the methodology for review and production, is insufficient to satisfy a party's burden of establishing that it took reasonable steps to prevent disclosure."6 He did not address the apparent lack of promptness evident from the non-party's delay in requesting return of the documents.
While it seems axiomatic that documents should be carefully reviewed for privilege before production, in the multimillion-page productions that are common in Section 337 litigation, it is statistically inevitable that some privileged documents will slip past the most-diligent review process. Even prior to Federal Rule of Evidence 502, parties have historically dealt with this reality by entering into private clawback agreements. Some ALJs will incorporate them into the ground rules for the investigation,7 while others will not.8 If not incorporated into the ground rules, the parties would likely have to resolve disputes under the private clawback agreement among themselves: The ALJs will not enforce them.9
Even after the apparent incorporation of Federal Rule of Evidence 502 at the ITC, it may be prudent to consider taking a belt-and-suspenders approach—a meticulously documented privilege review process combined with a private clawback agreement among the parties.