Counsel drafting an order under Federal Rule of Evidence 502(d) or an agreement under Rule 502(e) generally expect to supplant the uncertainty of the privilege waiver analysis under Rule 502(b) and assure near-absolute protection against inadvertent waiver. But two recent decisions frustrate such expectations and offer lessons on how to better assure strong anti-waiver protection. Absolute Activist Value Master Fund Ltd. v. Devine, 262 F. Supp. 3d 1312 (M.D. Fla. 2017); irth Solutions, LLC v. Windstream Communications, LLC, 2018 WL 575911 (S.D. Ohio 2018) (appeal pending).
Rule 502(b) provides that disclosure of attorney-client privileged or work-product protected information “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….
The party asserting the privilege must prove each of these elements.
Rule 502(d) offers additional protection if the court enters an order before disclosure:
A federal court may order that the 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 other federal or state proceeding.
An agreement between the parties can provide benefits similar to a Rule 502(d) order, although limited to the case at issue. See Rule 502(e).
Crafted properly, a Rule 502(d) order can “eliminate the need to refer to rule 502(b), or to establish the elements set forth in that rule” and thus can provide broader, more certain protection against waiver of privilege. The Sedona Conference Commentary on Protection of Privileged ESI, 17 Sedona Conf. J. 95, 130 (2016). But courts occasionally remind litigants that care and clarity in drafting a Rule 502(d) order or Rule 502(e) agreement is important to achieving the full benefit of these rules.
One recent example is Absolute Activist, where the district court found that Rule 502(b) governed, even though the protective order contained broad Rule 502(d) non-waiver language, because the order also stated that “Federal Rule of Evidence 502 … must apply” where there was prompt notice of inadvertent disclosure. 262 F. Supp. 3d at 1320-21.
Another is irth Solutions. The clawback agreement stated that “[i]nadvertent production of privileged documents does not operate as a waiver of that privilege” and required prompt notice of inadvertent production. The court found that “the duty under Rule 502(b)(2) to take ‘reasonable steps to prevent disclosure’ was not displaced” by the broad non-waiver language because the agreement did not specify “what precautionary measures, if any, should be taken to prevent disclosure.” 2018 WL 575911 at *4. See also Maxtena, Inc. v. Marks, 289 F.R.D. 427, 444 n. 16 (D. Md. 2012) (“Although Rule 502 recognizes that the default test set forth in subsection (b) may be superseded by court order or agreement of the parties, … such an order or agreement must provide concrete directives regarding each prong of Rule 502(b)…. Otherwise, Rule 502(b) will be used to fill in the gaps….”).
These cases suggest that even use of broad non-waiver language may not supersede Rule 502(b) if the parties reference Rule 502 generally or fail to address specifically each element of Rule 502(b). Though other courts take a less severe approach to waiver (see, e.g., Rajala v. McGuire Woods, LLP, 2013 WL 50200, at *5 (D. Kan. Jan. 3, 2013); Tadayon v. Greyhound Lines, Inc. 2012 WL 2048257, at *1 (D.D.C. June 6, 2012)), it is wise to draft non-waiver orders and agreements to satisfy even the most stringent standard. Accordingly, given the holdings in Absolute Activist and irth Solutions, parties may want to adopt the following drafting tips for Rule 502(d) orders and Rule 502(e) agreements to maximize protection:
- DO clearly state that the parties intend the order to provide the maximum protection available under Rule 502(d).
- DO state that the parties intend the provisions of the order to override some or all of the elements of Rule 502(b), and specify which ones.
- DO NOT use language from an element of Rule 502(b) that parties are intending to override.
- DO NOT refer generally to Rule 502(b) or Rule 502.
It is not necessary to dispose of all three elements of the Rule 502(b) analysis in the Rule 502(d) order or Rule 502(e) agreement, but the terms should seek to eliminate any implication that a Rule 502(b) element is applicable if the parties actually intend to dispense with it. Most importantly, the parties should make clear any intent to avoid the “reasonable steps to prevent disclosure” element; failure to do so may trigger an unintended and tedious examination of the producing party’s document review procedures.
To illustrate, precise language recently was key to preserving privilege protection in In re Testosterone Replacement Therapy Products Liability Litigation, 301 F. Supp. 3d 917, 925 (N.D. Ill. 2018). The court found that the “drafting choices” of the parties reflected their “intent to create their own guidelines to address inadvertent disclosure and to avoid waiver-related litigation under Rule 502(b).” The court thus reaffirmed that a well drafted Rule 502(d) order or Rule 502(e) agreement can successfully minimize future clawback disputes and maximize privilege protection by effectively overriding a Rule 502(b) analysis and substituting a broader non-waiver approach.