March 09, 2009
On September 19, 2008, President Bush signed and new Fed. R. Evid. 502 became effective as a limit upon the consequences of disclosing privileged communications in federal and (at least some) state proceedings.
Before passage of Rule 502, federal and state courts followed various rules for the disclosure of privileged communications or work product. At one extreme, disclosure of a privileged communication could mean that a party had waived privilege as to all communications on the same subject matter. At the other extreme, disclosure may not have waived any privilege or work product protection unless the disclosure was intentional -- or at least reckless. Most courts followed a middle ground, in which a waiver might be limited to the information actually disclosed unless particular circumstances dictated either broader or narrower consequences. In December 2006, amendments to Federal Rules of Civil Procedure 16 & 26 gave parties and courts some procedures to regulate the consequences of disclosure in federal civil litigation.
Unlike rules of civil procedure, Evidence Rule 502 declares substantive law that is binding upon both federal and state courts (including bankruptcy courts, through bankruptcy Rule 9017). Rule 502 also is made applicable to federally-annexed or federally-mandated arbitration proceedings. First, the new Rule largely rejects the concept of a broad subject matter waiver:
… waiver extends to an undisclosed communication or information in a Federal or State proceeding only if: (1) the waiver is intentional; (2) the disclosed and undisclosed communications or information concern the same subject matter; and (3) they ought in fairness to be considered together. Rule 502(a).
Second, disclosure of privileged information in a federal or state proceeding does not waive either attorney-client privilege or work product protection, if:
(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). Rule 502(b).
Rule 502 also provides that where a disclosure has been made in state proceedings without an applicable state-court order, then privilege or work product protection is not waived if either the standards of Rule 502 or a state rule of decision would dictate against finding a waiver. Finally, the Rule provides that federal court orders limiting waiver of privilege or work product in a case before it are binding in state as well as federal proceedings.
Passage of Rule 502 is attributable largely to the threat of uncontrolled waiver that could result from inadvertent disclosure of privileged communications, during discovery of large volumes of electronic-form data. Even in relatively straighforward disputes, each witness may have the equivalent of a warehouse of paper on his or her individual computer. The commentary accompanying Rule 502 specifically cites the costs and possible consequences of e-discovery as reasons for enacting the Rule. Thus, the Rule became effective immediately, to “all proceedings commenced after the date of enactment of this Act and, insofar as is just and practicable, in all proceedings pending on such date of enactment.” Pub. Law 110-322(c).