Federal Rule of Evidence 502: Protection for Privilege, But No Panacea

January 1, 0001


Recently enacted Federal Rule of Evidence 502 “adopts a national standard that an inadvertent disclosure of privileged information does not waive the privilege if the holder of the privilege took reasonable steps to prevent disclosure and rectify the error.” Rhoads Industries, Inc. v. Building Materials Corp. of America, 254 F.R.D. 216, 217-18 (E.D. Pa. 2008). Given the expense that can be associated with privilege reviews for electronically stored information (ESI), many had hoped that the new rule would alleviate some of this burden by affording parties with shortcuts to traditional review. But while the rule reinforces protections for the litigant with defensible practices, the recent case of Rhoads Industries suggests that, absent further development in the caselaw, parties should continue to exercise diligent precautions in protecting the privilege.

Rule 502 Requires Reasonable Steps to Protect the Privilege

Central to the Rule’s protection against waiver by inadvertent disclosure is subsection (b),which states that a disclosure will not operate as a waiver in a federal or state proceeding so long as (1) the disclosure is inadvertent; (2) the holder of the privilege took reasonable steps to prevent disclosure; and (3) the holder took reasonable steps to rectify the error. Fed. R. Evid. 502(b). In assessing these elements, a court will evaluate the strength of the precautions that a party has taken to protect its privileged materials.

Reasonable Steps: Keyword Searches Must Be Defensible

Given the complexities of ESI review, the Advisory Committee’s note to Rule 502 encourages the use of “advanced analytical software applications and linguistic tools in screening for privilege and work product.” Fed. R. Evid. 502, Advisory Committee Note. While the appropriate use of such tools can constitute “reasonable steps” to prevent disclosure, simply retaining an expert and running key word searches, without testing the results, may not.

In Rhoads, the plaintiff in a breach of contract case inadvertently produced approximately 800 privileged documents, leading the defendant to move for a finding of waiver. Rhoads, 254 F.R.D. at 218. The plaintiff used an expert to assist with electronic discovery and to design keyword searches to cull out potentially privileged communications. But the plaintiff failed to run important search terms (such as the names of outside counsel), and it limited its search to the email address lines, ignoring the bodies of the emails which were likely to contain earlier, and potentially privileged, communication chains. Id. at 224.

In evaluating the reasonableness of the plaintiff’s efforts to prevent disclosure, Judge Baylson noted the risks inherent in relying on keyword searching without quality assurance testing to validate the results. Id. at 224. Although the Court ultimately refused to find waiver as to the documents at issue (1-2% of the production), the opinion suggests that the balance tipped in the plaintiff’s favor due only to the strong interest in protecting the privilege. Id. at 226-227 (finding the majority of factors weighing against plaintiffs but counterbalanced by the interests of justice and the severity of exposing privileged material in such a “high-stakes” litigation).

Rhoads suggests that to protect against waiver by inadvertent disclosure, parties should not only consult with an expert on ESI issues, but should also test whatever methods are employed to ensure that the privilege review process is accurate and defensible. While Rule 502 does not appear to be a panacea, it nevertheless offers protections that will benefit parties who exercise reasonable precautions to uphold their privileges.