On September 19, 2008, President George W. Bush signed into law Senate Bill 2450, which amended the Federal Rules of Evidence by adding Rule 502.1 Rule 502 is a response to the dramatic rise in discovery costs in recent years caused by the exponential increase in the number of documents litigants must review to protect privileged material as a result of the proliferation of email and other forms of electronic record-keeping.2
Rule 502 (for the full text, click here) creates a new framework for determining whether the disclosure of communications or information covered by the attorney-client privilege or work product protection constitutes a waiver of the privilege or protection as to other communications or information. The Senate Report noted that under the previous framework the inadvertent production of even a single privileged document in some cases had resulted in a finding that the disclosing party waived the attorney-client privilege or work product protection with respect to not only that specific document and case but to all other documents and cases concerning the same subject matter.3 Because the production of a single privileged document might be held to effect a subject matter waiver, litigants were forced to expend exorbitant amounts of resources in reviewing documents to ensure that no privileged documents were produced. Rule 502 addresses these problems by providing a predictable and consistent standard to govern the waiver of privileged information.4 Senator Patrick J. Leahy (D-VT), Senate Bill 2450’s sponsor, lauds Rule 502 as “a positive step toward modernizing and improving the Federal Rules of Evidence.”5 According to Senator Arlen Specter, one of Senate Bill 2450’s co-sponsors, Rule 502 “ensures that the wheels of justice will not become bogged down in the mud of discovery,” and that Rule 502 was “necessary to protect the attorney-client privilege, to bring clarity to the law, and to ensure fairness for all parties.”6
Rule 502 applies to disclosures made in Federal proceedings or to Federal officers or agencies, inadvertent disclosures made in Federal proceedings or to Federal officers, and, in certain situations, disclosures made in State proceedings. The rule specifically addresses when a subject matter waiver will apply, when an inadvertent disclosure may operate as a waiver, and when disclosures in a State proceeding will constitute a waiver. Additionally, the rule prescribes the controlling effect of court orders and party agreements.
Subject Matter Waiver
When communications or information covered by the attorney-client privilege or work product protection are disclosed in a Federal proceeding or to a Federal officer or agency, 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.7 Essentially, a litigant cannot use the attorney-client privilege or work product protection as both a sword and a shield, producing privileged documents that advance her cause while withholding related documents that impair her cause.8
If a communication or information protected by the attorney-client privilege or work product doctrine is inadvertently disclosed, the disclosure does not operate as a waiver in a Federal or State proceeding if: (1) the disclosure is inadvertent; (2) the holder of the privilege or protection took reasonable steps to prevent disclosure; and (3) the holder promptly took reasonable steps to rectify the error.9 Rule 502 does not prescribe what constitutes “reasonable steps.” Several courts that have addressed whether an inadvertent disclosure constitutes a waiver have formulated multi-factor tests.10 Factors considered by those courts include: the reasonableness of precautions taken; the time taken to rectify the error; the scope of discovery; the extent of disclosure; and the overriding issue of fairness. According to the Advisory Committee, Rule 502 is flexible enough to accommodate any of the listed factors.11 Other considerations bearing on the reasonableness of the producing party’s efforts identified by the Advisory Committee include the number of documents to be reviewed and the time constraints for production.12 The Advisory Committee further suggests that a party that uses advanced analytical software applications and linguistic tools in screening for privilege and work product may be found to have taken “reasonable steps,” and that implementation of an efficient system of records management before litigation may also be relevant.13
Disclosure in a State Proceeding
When a communication or information protected by the attorney-client privilege or work product doctrine is made in a State proceeding and is not the subject of a State-court order concerning waiver, the disclosure does not operate as a waiver in a Federal proceeding if the disclosure: (1) would not be a waiver under Rule 502 if it had been made in a Federal proceeding; or (2) is not a waiver under the law of the State where the disclosure occurred.14 When determining whether Federal or State waiver law applies, Federal courts will apply the law that is most protective of privilege and work product.15
Controlling Effect of Court Orders
A Federal court may order that privilege or protection is not waived by disclosure connected with the litigation pending before the court—in which event the disclosure is also not a waiver in any Federal or State proceeding.16 Rule 502 does not address the enforceability of a State court confidentiality order in a Federal proceeding, as that question is covered both by statutory law and by principles of federalism and comity.17 Thus, even though not explicitly provided for by Rule 502, the Advisory Committee’s Explanatory Note expresses the view that a State court’s order that a disclosure does not waive privilege or protection would be binding in subsequent State and Federal proceedings.18
Controlling Effect of Party Agreements
A Federal court may also incorporate an agreement by the parties on the effect of disclosure into an order, thereby making the agreement binding in subsequent State and Federal proceedings. If such an agreement is not incorporated in an order, it is binding only on the parties to the agreement. While not provided for by Rule 502, an order by a State court incorporating an agreement on the effect of disclosure may also be binding in subsequent State and Federal proceedings.
Rule 502 is effective as of September 19, 2008, the date it was signed into law, and, “insofar as is just and practicable,” in all proceedings pending as of September 19, 2008.