Litigants who grapple with large-scale document and electronic discovery demands should be encouraged by a new Federal Rule of Evidence addressing privilege and work product waivers set to take effect on December 1, 2008. New Rule 502 is intended specifically to curtail the exorbitant costs of electronic document reviews by limiting the circumstances in which an inadvertent disclosure of privileged information will constitute a general waiver of privilege. The Rule is also designed to give parties greater certainty over the collateral consequences of intentional waivers of privilege. The new Rule has six separate provisions, each of which requires some reference to the accompanying commentary for clarification.
- Rule 502(a) provides that when an intentional privilege waiver is made in a Federal proceeding or to a Federal office or agency, the waiver will extend to other undisclosed communications or information only in “unusual situations,” when “fairness” would require it so as to prevent a “selective” or “misleading” presentation of evidence. In other words, absent good reason, a party’s limited intentional waiver in a Federal investigation or case will not translate into a general subject matter waiver down the road. To further its goals of protection and predictability, this provision of the Rule extends to both Federal and State proceedings.
- Rule 502(b) provides that when an inadvertent disclosure is made in a Federal proceeding or to a Federal office or agency, that fact will not operate as a waiver in a Federal or State proceeding, so long as the holder of the privilege took reasonable steps to prevent disclosure in the first place, and to rectify the error promptly. This provision, in particular, is designed to ease the financial burden of an exhaustive page-by-page “privilege review” on parties producing millions of pages of electronic records. The commentary suggests that the use of well-designed records management systems, as well as “advanced analytical software” and “linguistic tools” to screen for privileged documents, will be relevant to whether reasonable steps were taken to prevent disclosures.
- Rule 502(c) provides that, if the disclosure is made in a State proceeding, and absent a contrary State court order or other State waiver principle, the disclosure will not operate as a waiver in a Federal proceeding if it would not have operated as a waiver had it occurred in a Federal proceeding. In other words, parties making a limited or inadvertent disclosure in a State proceeding are afforded the new Rule’s protections in a subsequent Federal proceeding unless there is a specific State court order or provision of law to the contrary.
- Rule 502(d) provides that a Federal court may enter an order directing that disclosures connected with the pending litigation will not constitute a waiver of the privilege or protection in that or any other Federal or State proceeding. This provision is intended to encourage the use of confidentiality orders, and is further intended to assure the producing party that it can enter into a confidentiality or other similar Federal court order with provisions designed to reduce the expense of pre-production review for privileges and work product.
- Rule 502(e) makes clear that agreements about the effect of disclosures between parties in a Federal proceeding are only binding upon the parties, unless the agreements are incorporated into a court order. This provision of Rule 502 reaffirms the “well-established proposition” that agreements between parties are just that, and ultimate protection can only be obtained via Court order.
- Rule 502(f) reiterates that the Rule’s protections are intended to apply in subsequent State proceedings and other identified proceedings without regard to possible limitations contained elsewhere in the Federal Rules of Evidence.
Whether Rule 502 ultimately achieves its primary purpose of reducing the costs associated with electronic document discovery and productions remains to be seen. For a variety of reasons, corporations facing some or all of government investigations, parallel regulatory proceedings, multi-state litigations, and shareholder lawsuits may believe it necessary to conduct extensive document review, whether or not the inadvertent production of a privileged document constitutes a broad privilege waiver. If nothing else, however, the new Rule does create greater certainty and uniformity concerning waiver issues, thereby providing litigants some comfort that potentially significant privilege “judgment calls” made in a given matter will not be open to differing interpretations in multiple jurisdictions.