Federal Rule of Evidence 502(d): Reducing the Cost of Clawback

Federal Rule of Evidence 502 was enacted in 2008 in an effort to provide uniformity with regard to the treatment of privilege waivers resulting from the inadvertent disclosure of documents.  Subdivision (b) sets forth the default requirements governing such disclosures.  It calls for an inquiry into (1) whether the disclosure was inadvertent, (2) whether the holder of the privilege took reasonable steps to prevent the disclosure, and (3) whether the holder of the privilege took reasonable steps to rectify the error.

Because these requirements are fact intensive and relatively onerous, parties may wish to allow “clawback” of privileged materials without meeting its requirements.  Subdivision (d) provides a mechanism for doing so.  It grants courts the authority to enter a blanket clawback order (typically included as a provision in a stipulated protective order) providing that inadvertently produced documents can be returned upon demand without waiving the attorney-client privilege, regardless of the circumstances under which they were disclosed.

There is some disagreement among courts regarding the required content of a 502(d) order.  Some recent decisions addressing this issue have begun to apply a less stringent standard that promotes the rule’s purpose of reducing the burden on the parties, however there are still a number of courts that impose much more detailed requirements.  Under the more stringent line of cases, parties who wish to ensure that their clawback order under Rule 502(d) supplants the requirements of Rule 502(b) should make their intent explicit in the language of their stipulated order.  In assessing clawback orders under Rule 502(d), many courts have required that “concrete directives be included in the court order or agreement regarding each prong of Rule 502(b).”[1]  Where a court order or agreement does not provide adequate detail regarding what constitutes inadvertence, what precautionary measures are required, and what the producing party’s post-production responsibilities are to escape waiver (i.e., addressing Rule 502(b) requirements), courts applying this standard often will “default to Rule 502(b) to fill in the gaps in controlling law.”[2]

Fortunately, some recent decisions indicate that courts may be relaxing the requirements necessary to escape the provisions of 502(b).  In Great-West Life & Annuity Insurance Co.  v. American Economy Insurance Co., a District of Nevada court disagreed with U.S. Home Corp. v. Settlers Crossing and held that there was no requirement that “concrete directives be included in the court order or agreement regarding each prong of the 502(b) analysis.”[3]  In that case, standard waiver language in a scheduling order and a protective order indicated that inadvertent disclosure did not constitute a waiver of privilege.  The orders did not address the 502(b) prongs—they contained no language indicating what measures were required to prevent disclosure, and did not discuss the steps necessary to rectify any errors.  The court held that requiring an agreement to include “concrete directives” addressing these prongs could, in some cases, lead to an absurd result whereby parties could explicitly state their desire to supplant 502(b) but nevertheless fail to do so if they do not adequately address its factors.  The court applied the rules of contract interpretation to determine that the scheduling and protective orders were made under the authority of 502(d) and supplanted the reasonableness requirements of 502(b).[4]

Great-West Life accords with the intended purpose of FRE 502—it ensures that parties may easily use 502(b) as a tool to reduce the burden that they face when they wish to clawback inadvertently produced materials.  In a jurisdiction applying this rule, parties will have the security of knowing that their 502(d) agreement will be enforced in the manner intended regardless of whether it addresses 502(b)’s more onerous prongs.

–Caitlin Hawks