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May 22, 2013 Articles

FRE 502, "Inadvertence" in Privilege Waiver, and Avoiding Malpractice

It is absolutely necessary to at least consider the implications of a 502(d) order and probably desirable to have one in almost all cases.

By Jeffrey G. Close

Federal Rule of Evidence 502 sets out circumstances and limitations on waiver of otherwise privileged communications or information disclosed in federal proceedings. FRE 502, effective in 2008, is not “new”; but, at the ABA National Institute on E-Discovery and Information Governance in January 2013, an impressive panel of federal district judges and magistrate judges noted that a surprising number of attorneys appearing before the judges were ignorant of its provisions. The panel expressed a general consensus that ignorance of the availability of “claw-back” rights under section 502(d) and a failure to adequately consider FRE 502 in federal discovery practice might be tantamount to malpractice, and could even implicate attorneys’ ethical obligations.

First, it should be noted that the panel did not say it was error not to have a FRE 502(d) order entered, only that it might be tantamount to malpractice or an ethical violation not to adequately consider whether such an order should be entered. Notably, at least one jurist noted the court’s ability to enter such an order sua sponte, and asked whether there was any good reason not to enter such an order.

FRE 502(b)

Prior to the enactment of FRE 502 in 2008, federal courts applied three distinct tests to whether unintentional disclosure of a privileged document or information operated as a waiver of the privilege. See, e.g., Gray v. Bicknell, 86 F.3d 1472, 1483–84 (8th Cir. 1996) (discussing three tests). The “strict” test found waiver upon disclosure, except in exceptional circumstances, and generally applied subject-matter waiver. The “lenient” approach required a showing of knowing or intentional disclosure for the disclosure to operate as a waiver. The “intermediate,” “middle of the road” or Hydraflow approach took into account the totality of circumstances. See Hydraflow, Inc. v. Enidine Inc., 145 F.R.D. 626, 637 (W.D.N.Y. 1993).

Not surprisingly, the middle-of-the-road, or Hydraflow, approach was the most commonly adopted approach. In 2008, FRE 502(b) codified what appears to be a “modified” version of Hydraflow. FRE 502(b) sets forth only three factors, rather than Hydraflow’s five factors: “(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, including (if applicable) following Federal Rule of Civil Procedure 26(b)(5)(B).” But FRE 502 does not define “inadvertent,” or “reasonable steps,” and the committee notes do not help. The case law on the application of these factors is not developed, and it will be interesting to see if the Hydraflow cases are applied in determining “inadvertence” under factor (1) and “reasonable steps” under factor (2). As discussed below, these will be important considerations in drafting a 502(d) order that best meets your client’s needs.

FRE 502(d)—Be Careful What You Wish For

FRE 502(d) provides simply: “A federal court may order that the privilege or protection is not waived by disclosure connected with litigation pending before the court—in which event the disclosure is also not a waiver in any other federal or state proceeding.

Important for purposes of this article is the conspicuous absence in FRE 502(d) of any reference to inadvertent disclosure or reasonable steps. The committee notes and recent case law suggest this omission is meaningful, and that great care must be taken in drafting a 502(d) order that properly serves your client—or “be careful what you wish for.” See, e.g., Brookfield Asset Mgmt., Inc. v. AIG Financial Products Corp., No. 09-Civ. 8285 (PGG)(FM), 2013 WL 142503 (S.D.N.Y. Jan 7, 2013); Rajala v. McGuire Woods, LLP, No. 08-2638 (CM)/(DJW), 2013 WL 50200 (D. Kan. Jan. 3, 2013); Potomac Elec. Pwr. Co. v. U.S., 107 Fed. Ct. 725, 728 (Fed. Cl. 2012); Whitaker Chalk Swindle & Sawyer, LLP v. Dart Oil & Gas Corp., No. 4:08-CV-684-Y, 2009 WL 464989 (N.D. Tex. Feb. 23, 2009).

As far back as 2003, Judge Scheindlin, in one of the cases from the now-famous series of Zubulake decisions, noted that parties could enter into “claw-back” agreements that would allow the “parties to forgo privilege review altogether,” later called “quick peek,” or “sneak peek” agreements. See Zubulake v. UBS Warburg, LLC, 216 F.R.D. 280, 290 (S.D.N.Y. 2003). Judge Scheindlin cited certain Sedona Principles, which suggested that courts should consider entering orders protecting parties against inadvertent waiver of privileges. Although these Sedona Principles,quoted in part by the court, discussed inadvertent production, Judge Scheindlin was prepared to allow parties to agree to claw back for intentionally produced documents. This Zubulake opinion is cited in the Advisory Committee notes to FRE 502(d), for the proposition that “the court order may provide for return of documents without waiver irrespective of the care taken by the disclosing party.” Fed. R. Evid. 502 advisory committee’s notes (emphasis added).

Whitaker Chalk, decided in 2009, involved an attorney-fee dispute. The suit was in federal court on diversity. The plaintiff law firm was involved in defending a state-court action, and sought fees for services it rendered in connection with the state-court action. The defendant in both the federal- and state-court actions was compelled in the federal action, by Rule 26, to produce documents relevant to the fee dispute. It claimed these documents to be privileged in the state-court action. The defendant sought a protective order allowing it to forgo production in the federal action to avoid a claim of waiver in the state-court action. The Whitaker Chalk court denied the motion. The court held that it had the power under FRE 502(d) to enter a protective order allowing for the intentional, if compelled, production of the documents in the case sub judice, without effecting a waiver in the related state-court case. Accordingly, the court compelled the defendant to produce the documents in the federal case.

In 2012, the court in Potomac Elec. distinguished Whitaker Chalk, and refused to enter a requested FRE 502(d) order, which was objected to by the United States. The proposed order would have allowed for intentional disclosure and use of privileged documents and information. The court was concerned about the potential for Potomac’s strategic use of the privileged information in an advice-of-counsel defense (although Potomac denied it “currently” planned to rely on such a defense). Again, the Advisory Committee notes expressly address this concern, explaining that Rule 502 “governs only certain waivers by disclosure. Other common-law waiver doctrines may result in a finding of waiver even where there is no disclosure . . . ” Fed. R. Evid. 502 Advisory Committee’s notes (specifically citing an advice-of-counsel use of privileged communications as an example of where privilege would still be waived under Rule 502) (emphasis added).

More interesting, perhaps, earlier this year, well-respected Magistrate Judge David Waxse, of the U.S. District Court for the District of Kansas, interpreted his own FRE 502(d) order—using the goals of 502(d) in reducing litigation expenses—to hold that “inadvertent disclosure or production of any information or document” within the meaning of his order only precluded a “document dump” intending to overburden the receiving party. McGuire Woods (emphasis in original).In so holding, the court rejected McGuire Woods’s argument that plaintiff should have to show it took “reasonable steps” to protect the privileged documents to claw back documents under the order. The court did not say so, but the court may have relied on the fact that FRE 502(b) separates “inadvertence” (subsection (1)) and the need for “reasonable steps” (subsection (2)). Both are required under FRE 502(b). But the court’s FRE 502(d) order apparently contained no language requiring reasonable steps, only inadvertence. Relying on the “plain language” of its 502(d) order, the court looked only at whether there was any evidence that plaintiff’s counsel had engaged in an intentional “document dump.” Finding no such evidence, the court found the disclosure “inadvertent,” and held that the plaintiff was entitled to claw back the disputed document. Query: What was McGuire Woods’s expectation or understanding when the court entered an order protecting “inadvertently disclosed or produced information or documents”? Did they expect such a lenient standard without a showing of “reasonable steps,” or did they expect something more akin to the Hydraflow approach? We know what they argued on the motion—“reasonable steps”—but it would be interesting to know what they expected at the time the order was negotiated or entered.

Four days later in New York, in a discovery dispute in a billion-dollar lawsuit, Magistrate Judge Frank Maas held that where the 502(d) order contained no language of inadvertence, the court need not look at the reasonableness or circumstances of production, and held that “AIG [had] the right to claw back the [documents], no matter what the circumstances giving rise to their production were.” Brookfield. The court noted the potential importance of the documents to Brookfield, the receiving party, but was bound by the language of the 502(d) order. Query: Is Brookfield having “buyer’s remorse”? Does it wish it had included an inadvertent or reasonable-steps standard in the 502(d) order, making it harder for AIG to reclaim the disclosed document?

The Right and Duty to Choose

Federal Rule of Civil Procedure 26(f)(3)(D) requires parties and their counsel to state their view on whether to seek a 502(d) order. A natural corollary is that the Federal Rules of Civil Procedure, and an attorney’s ethical obligations of competence, require that the stated view be a considered one.

The above cases taken together, and other recent cases, strongly suggest that the parties and their counsel have broad discretion to set the protocol for production and protection of otherwise privileged documents and information, subject to court approval. The advisory notes and Brookfield teach that the parties can choose to waive any requirement for inadvertence, and permit claw-back of even intentionally produced documents under most circumstances. Potomac Elec. teaches that the right is subject to restraints and court approval. McGuire Woods teaches the necessity of careful drafting to effectuate your choice.

That right to choose the protocol for production and protection imposes a duty on counsel to think about, and know how and when to set a protocol that best suits the client. It is hardly ever easy, and will almost always be made with incomplete information. Some things to consider:

  • What is the relative size of your production? If your production is expected to be large and your opponent’s small, you may want to maximize protection, as you may be more likely to slip than your opponent—by sheer numbers.
  • What is the relative sophistication of your client? If your client is sophisticated and likely to keep its privileged documents and information segregated, well marked, and protected, you might be more willing to forgo some protection, and allow claw-back only upon a showing of inadvertence or reasonable steps.
  • What is the relative sophistication of counsel compared to the method and means of document review and production? Again, more sophisticated counsel may be willing to forgo some protection and place a higher burden on opposing counsel.
  • Relatedly, how difficult is it likely to be for each party to identify privilege? How many lawyers or law firms are involved? In-house counsel? If you are at a disadvantage in being certain of identifying your privileged documents, you might choose to opt for more, rather than less, protection from accidental disclosure.
  • How long have the parties known about their respective cases? Sometimes a plaintiff will have been preparing for suit for quite some time before filing, and may be expected to have more pre-filing privileged communications for which counsel would likely want to seek more protection.
  • What is the relative anticipated “danger” of the privileged documents? If you know that your privileged documents have, or are likely to have, inflammatory, ambiguous, or other potentially harmful or “dangerous” statements or information, you will want to seek a corresponding higher level of protection against waiver.


Once you have decided how much protection you want, how do you get what you want? A full discussion of drafting considerations is beyond the scope of this article, but McGuire Woods teaches the need for careful drafting.

Apparently, it was not enough to include a requirement that production be “inadvertent.” If McGuire Woods wanted a showing of “reasonable steps” before a document could be clawed back, it should have said so expressly in the order. It may have been reasonable to expect that “inadvertence” would require an application of a Hydraflow-type analysis before the enactment of FRE 502, as the five factors were often said to determine whether a disclosure was “inadvertent.” But FRE 502(b)’s separation of the concept of inadvertency from “reasonable steps” robs those pre-FRE 502 cases of authority. To read inadvertence to mean “despite the taking of ‘reasonable steps’ to protect the documents or information” would render one or the other surplusage in FRE 502(b). So, “inadvertent” must mean something other than “reasonable steps” in FRE 502.

Finally, for purposes of this article, but not exhaustively, the right of claw-back should almost always, if not always, be expressly limited to a reasonable time after discovery or notice of the disclosure or production. You do not want a situation where you have used a document with one or more witnesses at deposition, only to have your opposing counsel claim privilege three months later as you offer the document for summary judgment, trial, or other matter. Specify what constitutes notice of disclosure (e.g., use as a deposition or motion exhibit; or more broadly, “any use of the document or information that informs or reasonably should inform the producing party of its disclosure or production”) and a fixed time for claw-back thereafter. This may be the singularly most important reason for having a FRE 502(d) order entered—to set clear limits on time and terms for claw-back.


Hopefully, this article provided you with something of use, and convinced you, if you were not otherwise convinced, of the importance of thoughtful consideration and drafting of FRE 502(d) orders in federal discovery practice.


Keywords: litigation, pretrial practice, discovery, Federal Rule of Evidence 502, inadvertent disclosure, reasonable steps


Jeffrey G. Close is a partner with Chapman and Cutler LLP in Chicago, Illinois.

Copyright © 2013, American Bar Association. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. The views expressed in this article are those of the author(s) and do not necessarily reflect the positions or policies of the American Bar Association, the Section of Litigation, this committee, or the employer(s) of the author(s).