Federal litigators aren’t taking sufficient advantage of 2008 amendments to Federal Rule of Evidence 502, which gives them the authority to obtain protective orders that can stem the damage from inadvertent disclosure of confidential information during pretrial discovery.
So says the Sedona Conference in the recently released Sedona Conference Commentary on the Effective Use of Federal Rule of Evidence 502(d) Orders (August 2021).
Although the changes were mainly intended to protect parties against inadvertent disclosure of privileged information when turning over electronically stored information during pretrial discovery — as well as avoiding the prohibitive costs of privilege reviews — thoughtfully drafted protective orders under Rule 502(d) can also guard against the consequences of inadvertent disclosure of privileged information during depositions.
Slow Uptake of Rule 502(d) Orders
The Sedona Conference drafters wrote that lack of understanding of Rule 502(d)’s benefits “has contributed to a surprisingly slow adoption of Rule 502(d) orders as a standard in federal litigation.” The commentary explains in detail how Rule 502 operates in practice, cites many recent cases interpreting the rule, and concludes with a model Rule 502(d) protective order for litigators to consider adopting in their practices.
The Sedona Conference is not alone in calling for wider use of Rule 502(d) orders.
Former U.S. magistrate judge Andrew J. Peck, now senior counsel at DLA Piper in New York, referred to Rule 502(d) orders as “Get Out of Jail Free” cards, suggesting that it is akin to malpractice not to get [a Rule 502(d)] order.”
Without a Rule 502(d) order in place, the test set out in Rule 502(b) must be satisfied in order for a party to successfully claim privilege over inadvertently disclosed information. Rule 502(b) requires the party asserting the privilege to show (a) the disclosure was inadvertent, (b) the party took reasonable steps to prevent the disclosure, and (c) the party took reasonable steps to correct the error.
The inquiries called for under Rule 502(b) can be a high bar to overcome, often creating the evidentiary burdens and outcome uncertainties that the Rule 502 amendments were intended to alleviate.
“The burden of asserting and proving inadvertence lies with the responding party and that burden can require substantial effort and documentation,” the commentary drafters wrote. “Moreover, given the multiple factors to be considered and the discretion of courts in weighing the factors and the evidence presented, both waiver and its scope remain uncertain.”
In fact, the commentary drafters observed that, because an inquiry into the discovery and review processes of the party claiming privilege is an unavoidable part of any Rule 502(b) analysis, application of the rule invites dreaded and disfavored “discovery on discovery” skirmishes.
The cure, a Rule 502(d) protective order, is relatively simple to implement. The commentary drafters explained that Rule 502(d) orders need not be complex. It is enough that the order provides:
(a) the production of privileged or work-product protected documents, including ESI, is not a waiver, whether the production is inadvertent or otherwise, in the particular case or in any other federal or state proceeding, and
(b) nothing contained in the order limits a party’s right to conduct a review for relevance and the segregation of privileged information and work product material prior to production.
Federal court cases uniformly hold that, without an order in place, the test set out in Rule 502(b) — with all its uncertainties and evidentiary burdens — will be applied whenever a party seeks to claw back inadvertently disclosed materials that allegedly are protected by attorney-client privilege or the attorney work product doctrine. See e.g., Great-W. Life & Annuity Ins. Co. v. Am. Econ. Ins. Co., No. 2-11- cv-02082 (D. Nev. Sept. 23, 2013).
Rule 502(d) Orders Are Useful in Deposition Practice
Privileged information can also be inadvertently disclosed in depositions. The issue in depositions is often the “use” of privileged information rather than mere “disclosure.” The commentary drafters suggested that, even in the case of inadvertent (or surprise) use of privileged information during a deposition, a Rule 502(d) protective order may come to the rescue. They explain:
[I]n a deposition, if a document is shown to the deponent and the defending attorney immediately prevents any questioning about the contents of the document, the document has only been “disclosed,” but not “used.” In contrast, if the defending attorney fails to prevent such questioning, the document has been both “disclosed” and “used.” A party’s ability to claw back a “used” document is arguably thornier than the ability to claw back a “disclosed” document, as courts typically hold that the privilege has been waived if the clawback does not occur shortly after the time the responding party learns of the use. Nevertheless, it may not be immediately apparent at the deposition that the document shown to the witness is privileged. Should the defending party have a reasonable time after the deposition to make that determination? Courts have discretion on a case-by-case basis to consider what constitutes timely action and from when it is measured. The parties may, or may not, wish to include provisions addressing this issue in a basic 502(d) order.
It is important to note that parties — even those with Rule 502(d) orders in place — risk losing the privilege if they fail to timely object.
For example, in Hostetler v. Dillard, No. 3:13-cv-0351 (S.D. Miss. Dec. 3, 2014), the court found that attorney-client privilege had been waived when counsel did not object and claim privilege after a nonparty disclosed allegedly privileged communications in a deposition.
In Entrata, Inc. v. Yardi Sys., Inc., No. 2:15-cv-00102 (D. Utah Oct. 29, 2018), the court held that a party had waived privilege by failing to seek to preclude the introduction and use of an allegedly privileged document during a deposition. A protective order provision preventing waiver due to a party’s disclosure of privileged information was of no assistance in this situation.
In Arconic Inc. v. Novelis Inc., No. 17-cv-1434 (W.D. Pa. Feb. 26, 2019), the court held similarly: An objection based on attorney-client privilege must be raised in a timely manner once the document is used or identified.
In Klein v. Facebook, Inc., No. 20-cv-08570-LHK (VKD) (N.D. Cal. June 3, 2021), the court identified a small measure of wiggle room: Yes, a party may not discover that privileged materials have been used in a deposition until after the transcript is prepared, but the privilege must be promptly asserted after discovery.
Finally, in Novartis Pharms. Corp. v. Superior Court, No. D077934 (Cal. App. Ct. May 13, 2021), the court ruled that attorney-client privilege had been waived even though an objection was raised to an inadvertently produced document during the deposition. The court found a five-month delay in requesting the return of the document was not a “prompt request” within the meaning of a protective order previously entered in the case.
Drafting a Strong Rule 502(d) Order
The success of any Rule 502(d) protective order will be determined by the extent to which it addresses reasonably foreseeable disputes caused by inadvertent disclosure of privileged materials, as well as the extent to which it provides clear guidance for resolving such disputes. Matters typically addressed in Rule 502(d) orders include:
Effect of production: Production — “whether inadvertent or otherwise” — of privileged information or attorney work product during discovery is not a waiver of attorney-client privilege. Non-waiver protections extend to both federal and state proceedings.
Scope: Non-waiver agreement covers deposition transcripts, production of documents, interrogatory answers, answers to requests for admission, and all other materials produced or made available for inspection.
Assertions of privilege: The right to assert privilege, and the right to contest assertions of privilege, are subject to time limits and judicial review if necessary.
Handling allegedly privileged materials: Privileged materials can be either sealed and returned, or destroyed, depending on the outcome of the dispute.
An example Rule 502(d) order (PDF), prepared by the Sedona Conference, is available at the U.S. District Court for the Southern District of Florida’s website. Another, shorter Rule 502(d) order is included in the appendix to the Sedona Conference Commentary on the Effective Use of Federal Rule of Evidence 502(d) Orders.
In light of the potential savings of time and money that could be lost attempting to claw back privileged information inadvertently disclosed during a deposition — not to mention the consequences of failing in the attempt — litigators owe it to their clients to at least consider, in every case, the peace of mind offered by securing a strong Rule 502(d) protective order at the outset of litigation.