Rule 502(d) nonwaiver orders need not be limited to the “inadvertent” production of privileged or protected information

December 29th, 2009 | By Steve Puiszis

Callan v. Christian Audigier, Inc., 2009 WL 4844422 (C.D.Cal. Oct. 27, 2009)

If you were looking for an ediscovery opinion to lift your spirits during this wintery holiday season, stop, Callan is not the decision for which you’ve been waiting. After reading the opinion, Santa reportedly decided to deliver coal to lawyers who fail to follow Fed. R. Evid 502. The court’s decision in Callan focused on the issue of inadvertent waiver of privilege, and Rule 502(b). However, as we originally explained in one of our blog posts several months ago, the time and effort expended in addressing the issue of inadvertent waiver in Callan could have been avoided had the protective order been drafted in accordance with Fed. R. Evid. 502(d).

The proper framework for analyzing the inadvertent waiver of attorney-client privilege under Fed. R. Evid. 502(b) was discussed in one of our recent blog posts. In that post, we warned that when a party seeks the return of inadvertently produced privileged material under Fed R. Civ. P. 26(b)(5)(B), the failure to explain what steps the party took to prevent the disclosure of privileged information from occurring could result in a finding of waiver under Rule 502(b), no matter how inadvertent the disclosure. Unfortunately, defense counsel made that same mistake in Callan. The court noted that defendants failed to establish the documents in question were privileged and even failed to identify “what privileges purportedly apply to the documents [that were] allegedly inadvertently produced.” As a result, the court awarded attorney’s fees to the plaintiff under Rule 37(a)(5)(B) for responding to the motion. Thus, the failure to meet Rule 502(b)’s elements not only can result in a finding of waiver, it can also result in having to pay your opponent’s attorney’s fees for responding to such a motion. Obviously, care must be taken when seeking the return of inadvertently produced information under Rule 502(b).

The district court in Callan had entered a protective order under Fed. R. Civ. P. 26(c) that included a clawback provision which provided: “The inadvertent production of any discovery material by any party shall be without prejudice to any subsequent claim by the producing party that such discovery material is privileged or attorney-work product and shall not be deemed a waiver of any such privilege or protection.” So, what went wrong? The protective order was limited to the “inadvertent” production of discovery materials and defendants failed to show the materials were inadvertently produced or were privileged. More importantly however, the first misstep occurred in drafting that protective order. As explained below, the real lesson to be learned is that nonwaiver orders under Fed. R. Evid. 502(d) need not be limited to the “inadvertent” production of privileged or protected materials as in Callan.

Nonwaiver orders under Fed. R. Evid. 502(d) should not be limited to the “inadvertent” production of privileged information or attorney work product.

Before drafting your next protective or nonwaiver order, take another look at Subdivision (d) of Rule 502. It provides:

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.

Note that unlike Subdivision (b) of the Rule, which is specifically restricted to the “inadvertent” disclosure of privileged information and requires a showing of reasonable care, Rule 502(d) is not so limited. The word “inadvertent” appears nowhere in the text of Rule 502(d). Also, Rule 502(d), unlike Rule 502(b), does not require that reasonable care be exercised when a production occurs pursuant to this part of the Rule.

The primary rule of statutory construction is to apply the plain language of a statute as written. See, e.g., United States v. Ron Pair Entrers. Inc., 489 U.S. 235, 242 (1989)(explaining the “plain meaning of legislation should [generally] be conclusive” on the issue of legislative intent). Rule 502(d) simply does not require that a court order mandate that reasonable care be taken before it can be entered. Another recognized rule of statutory construction is that the inclusion of a requirement in one section of a statute but not in another section of the same statute signals a different result was intended. Duncan v. Walker, 533 U.S. 167, 173 (2001) (observing “where Congress includes particular language in one section of a statue but omits it in another section of the same Act, it is generally presumed that Congress. acts intentionally and purposely in the disparate inclusion or exclusion”) (internal quotation omitted).

Had the drafters of Subdivision (d) intended to limit Rule 502(d) nonwaiver orders to only the inadvertent production of privileged material or to only those instances where reasonable care was taken, they could have easily mimicked the requirements found in Subdivision (b) of the Rule. Because they did not do so, Rule 502(d) orders are not limited by Rule 502(b)’s requirements. This conclusion is borne out by the Explanatory Note to Subdivision (d) of Rule 502 which explains “the court order may provide for return of documents without waiver irrespective of the care taken by the disclosing party” (emphasis added).

So, take advantage of Rule 502(d). When drafting a nonwaiver order, make it applicable to any production of any discovery material and do not limit it to merely an inadvertent production like the parties in Callan.

It is not uncommon, when drafting nonwaiver orders, to seek the approval of your opponent to the proposed language of the order. Some may even suggest such collaboration is required in light of various “cooperation proclamations.” However, the Explanatory Note to Subdivision (d) provides your opponent’s agreement is not a precondition to the entry of a Rule 502 nonwaiver order. The Note unequivocally states:

Under the rule, a confidentiality order is enforceable whether or not it memorializes the an agreement between the parties to the litigation. Party agreement should not be a condition of enforceability of a federal court’s order.

In theory, given a district court’s inherent authority to control its docket and the scope of discovery in matters pending before it, a court should be able to enter a Rule 502(d) nonwaiver order sua sponte without even requiring a motion from the parties. Nevertheless, it would be a wise to endeavor to gain your opponent’s agreement to the entry of such an order. Should your opponent object to the breadth of your proposed order, explain that it will ultimately benefit both parties and point to the quoted provisions from Rule 502(d)’s Explanatory Note.

Protective/nonwaiver orders are controlling.

The court in Callan made an important point that also merits your attention. The court noted that the defendants, as the moving party, bore the burden of proving they inadvertently disclosed privileged documents to the plaintiff within the meaning of the court’s protective order. The court observed that because the protective order did not address the parties’ burden of proof regarding the alleged inadvertent disclosure, it adopted the “standard practice” which is to place the burden on the party claiming inadvertent disclosure.

Implicit in that ruling is that if the protective order had not been limited to the inadvertent production of discovery materials, the party that bore the burden of proof would not be an issue. More importantly, Callan explains that the terms of the protective order are controlling as to which party bears the burden of proof and suggests that the parties are free to allocate that burden as they see fit. Accordingly, should a court in exercising its discretion limit the entry of a Rule 502(d) nonwaiver order to only the inadvertent production of privileged information, then you should endeavor to address the burden of proof issue in the order. Nothing prevents the parties from shifting the burden to the receiving party to demonstrate that reasonable precautions were not taken.

Accordingly, broadly draft your Rule 502(d) nonwaiver orders so that you can avoid the type of outcome that occurred in Callan and hopefully next year you can avoid Santa delivering coal to your stocking.

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