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#CaseoftheWeek Episode 30: Why You Need to Understand FRE 502 on Protecting Privileged Documents

Episode 30 of #CaseofthWeek is an analysis of Klein v. Facebook and we look at the differences and scope of FRE 502(d) and 502(b) and the procedure under FRCP 26(b) on clawing back privileged documents.


Good morning. Welcome to our #CaseoftheWeek for June 29th, 2021. My name is Kelly Twigger. I am the CEO and founder of eDiscovery Assistant and the principal at ESI Attorneys. Thanks so much for joining me this week.

As you know, if you tune in with us each week, we are broadcasting live through our partnership with ACEDS for our #CaseoftheWeek series that is available to be streamed on LinkedIn, Twitter and Facebook, as well as YouTube. You can tune in on any platform and in the comments section for whatever platform you’re viewing, you’ll see a public link to the case that will take you to the actual decision in eDiscovery Assistant that we are discussing this week. You will also see in there a link to our 2020 eDiscovery Case Law Report that we did in cooperation with Doug Austin and eDiscovery Today. In that report, you’ll see a breakdown of case law from 2020, as well as write ups of each of the cases and links to a video broadcast that we’ve created on each of the cases on the #CaseoftheWeek series here, as well as additional breakdown of information and how courts are looking at decisions and what issues are key. We’ve also just launched our new website over at eDiscoveryAssistant.com. Please hop on over and take a look. All right. Let’s dive into this week’s case.

This week’s decision comes to us from an antitrust case filed by a class of plaintiffs against Facebook in a matter called Klein versus Facebook. This is a decision from the northern district of California and is from June 3rd, 2021. This is a case that was filed in December 2020, so it’s not incredibly old, was originally designed to Judge Lucy Koh and then was referred to Judge Virginia Demarchi.

In this, the plaintiffs are bringing multiple claims for antitrust violations against Facebook. There is currently a motion to dismiss pending in the case. If you follow these sorts of things, you’ll see from The Wall Street Journal yesterday that District Court in the District of Columbia dismissed a number of antitrust actions against Facebook that were brought by the FTC that are similar to claims in this case. We’ll see what happens there.

The dispute currently before us that we’re looking at today is that the parties disagreed on the entry of FRE 502(d) order. The reason I wanted to raise this with you today is because using a 502(d) order is critical these days when we’re dealing with ESI, and if you’re familiar with Judge Andrew Peck, who was formerly a magistrate judge in the Southern District of New York, Judge Peck has said many times in public speaking engagements that a failure to use a 502(d) order is basically malpractice.

This is an opportunity in using a 502(d) order to protect your client from any inadvertently produced, privileged or otherwise protected information, and so I want to talk to you today a little bit background wise, about how far Federal Rule of Evidence 502(d) came into being and why, and what sort of impact it has here. Then we’re going to address the various disputes that the parties raised in their 502(d) order before the court here and how they were resolved.

Background wise, when we had the original amendments, the Federal Rules of Civil Procedure that really brought electronically stored information into play, in the Federal Rules prior to 2006, when the Federal Rules were amended, we only had the definition of document. In the 2006 amendments, the Federal Rules and Rule 34 and Rule 26(b) specifically defined documents to include electronically stored information or ESI. As part of those amendments in 2006, Rule 26(b)(5) was amended to discuss information that’s produced. In that section of the Rule, they specifically noted that if information produced in discovery is subject to a claim of privilege or of protection as trial preparation material, the party making the claim may notify any party that received the information of the claim and the basis for it.

The section then goes on to describe the process by which the party at the receiving party has to return it. But the key to 26(b)(5), is that the party who inadvertently produces the information has to recognize that they have inadvertently produced it and contact opposing counsel and then, only then, do opposing counsel’s duties kick into play.

Well, that’s pretty problematic because if we inadvertently produce information, the likelihood of realizing you’ve inadvertently produced information is low unless there are some specific analyses that are done. Presumably you’re taking all of your steps done to reasonably protect any attorney-client information prior to production, and there’s not usually a lot of analysis post-production, so the notion under 26(b)5 was a bit hard to stomach for pretty much everybody in the eDiscovery space. As a result there was a lot of public outcry around that section.

In September of 2008 Federal Rule of Evidence 502 was enacted and there are multiple sections of Rule 502 that deal with the production of privileged or protected information. There are two separate sections of Rule 502 that were really enacted to provide a more workable framework to evaluate when a waiver occurs in the event of inadvertent production. Section 502(b) creates an analysis for waiver based on inadvertent disclosure. The disclosure must be inadvertent — and that word is specifically used in Section 502(b) — the producing party must have taken reasonable steps to prevent disclosure, and then followed the process in 26(b)(5) to recover the privileged material, which means asking for it back. That presents the same problem we already discussed with Rule 26(b)(5).

502(b) essentially eliminates a couple of the smaller sections of Rule 26(b)(5) as it relates to inadvertent production, but it still requires that the party that produced the information go and ask for it back. You also need to show that you took reasonable steps to prevent disclosure in the first place.

Section 502(d) really does something different. 502(d) says the parties can work with the judge to issue an order that says straight out that inadvertent production is not a waiver for the case, meaning that by virtue of Federal Rule of Evidence 502(c) that there is not a waiver for any other federal or state case if there is inadvertent production under a 502(d) order. The language of 502(d) itself says that the controlling effect of a court order, a federal court 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.

That’s really important. If you have a 502(d), you’re preventing yourself from disclosure. But what is noteworthy is that 502(d) does not contain the word inadvertent. 502(b) does contain inadvertent, 502(d) does NOT.

In our case law database in eDiscovery Assistant, we use separate issues for 502(b)and 502(d). There are certain instances where parties do not enter 502(d) orders and thus the analysis when there is inadvertent production of information is done under 502(b).

If you’re any eDiscovery Assistant user or if you’re looking for case law under both individual sections, you’ll want to use those issue tags within the database to sort your data.

OK, specific facts of this case with that background with those rules in mind. As I mentioned, it’s an antitrust case so we’ve really got an asymmetrical litigation where Facebook is providing all of the data. You probably got some data from plaintiff, but as a general rule, Facebook is providing all of the data. That’s always an important consideration from a proportionality perspective, but also from a perspective of drafting these kinds of rules. The party most likely to have an input in production is Facebook, and so Facebook wants to be able to take additional steps to provide a process by which that information can be provided. These cases also involve tons and tons of documents, and because there are also government investigations that are pending here that may not have the same tight controls as private civil litigation, there is a potential for the inadvertent disclosure of information and a need for Facebook to to pay special attention to how the process is to handle data that may be inadvertently produced.

In this case, there are multiple sections of the party’s proposed a 502(d) order and there are disputes about what the language should be for each one. I wanted to address each individual section, in part because it’s really important as you’re considering putting a 502(d) order in place, how you address each one of these issues or whether you need to address them.

There is very simple language in what is the 502(d) order that Judge Peck has always advocated when he was on the bench. That form is included in a eDiscovery Assistant and it’s very simple, essentially mirrors the language of Rule 502(d) and provides that there is no waiver. However, in cases like this case where you want to talk about a broader set of protected documents and not just privileged documents, there needs to be more thought given to the language of the 502(d) order and that’s what we’re looking at in this decision in the Klein case.

OK, so the first issue that the Court looked at is whether the order should be limited to inadvertent productions of privileged material. As I mentioned, this comes up because 502(d) does not contain the word inadvertent, whereas 502(b) does contain the word inadvertent. The Court looks, as the courts regularly do, to the commentary that the legislature drafted when it drafted this Rule and the commentary to Rule 502(d) indicates that this subsection was intended to allow for court orders that protect against waiver in circumstances that do not meet the criteria of 502(b). Here’s the quote of that commentary, “The court order may provide for return of documents without waiver, irrespective of the care taken by the disclosing party.” What we’re doing is eliminating the reasonableness requirement of 26(b)(5) and 502(b).

At the same time, the commentary also reflects that Congress did not intend to authorize the district courts to completely alter applicable law regarding the waiver of privilege. The addendum to the advisory committees note states the following, “This subdivision is designed to enable a court to enter an order, whether on motion of one or more parties on its own motion that will allow the parties to conduct and respond to discovery expeditiously without the need for exhaustive preproduction privilege reviews, while still preserving each party’s right to assert the privilege to preclude use in litigation of information disclosed in such discovery.”

The reason that that’s very important is that the legislature has set out here is the exact intent of Section 502(d) so the Court is looking at that. When you’re looking at the language of the Federal Rules of Civil Procedure in eDiscovery issues, you will find the comments to those rules are very key in laying out exactly what the legislature intended in drafting those rules. This is no exception.

The Court then enunciated the purpose of the 502(d) order as to provide a mechanism for protecting legitimate claims of privilege without requiring an exhaustive pre or post production review of documents disclosed in discovery, and the mechanism for challenging post production claims of privilege in a way that does not unfairly prejudice a receiving party who may have already relied on the information.

Think about a situation where you’ve inadvertently produced information. You don’t realize it for weeks afterwards and in the meantime, the receiving party has found the information and has legitimately started using it to create strategy, to invoke deposition questions, all kinds of things that the party might have already begun using the information for, and the Court says there has to be a process that does not unfairly prejudice the receiving party who may have already started to use the information because they did not know it was privileged information.

There are multiple sets of circumstances that we’ve been involved in as counsel where there are legitimate questions as to whether or not information is privileged. There can be questions as to whether or not advice given by in-house counsel is business advice versus legal advice. There can be questions as to whether or not a common interest doctrine applies that makes a document subject to privilege. It’s not always cut and dried as to whether or not privilege applies, and so when there are gray areas, the process needs to make sure that it is appropriate for both sides.

The Court really looked at addressing both those concerns and also the inadvertent issue and proposed new language of what the parties had deemed protective documents to make clear that the order applies to documents and accompanying metadata that are produced and disclosed in this action as to which a party asserts a claim of privilege or protection. What the Court really did was revise the party’s proposed language to deal with the issues that it found.

Next section were sections two and five of the proposed order that laid out the procedures that apply when one party issues a clawback notice for a protected document. This is the procedure that we just talked about. The plaintiffs wanted to challenge. They wanted essentially to say that a challenge document should just be sequestered, that they shouldn’t have to destroy or get rid of it until the Court rules on it. On the other hand, Facebook wanted any potential privileged material to be destroyed pending the resolution of a challenge.

The Court really looked back at the analysis of 26(b)(5) as well as the Federal Rule of Evidence and says that the parties dispute here really arises from the language of 26(b)(5) that after being notified of a privilege claim, a party must promptly return a sequester or destroy the specified information and any copies it has and must not disclose the information until the claim is resolved. That language is kind of our baseline.

The Court then notes that both of the party’s positions deviate from that language, right? The language says sequester or promptly return or destroy. They’re both arguing that it should either be sequestered or destroyed. In looking at it, the plaintiffs, the Court says the plaintiffs really want to challenge the actual claim of privilege, which is not contemplated by Rule 26(b)(5), and Facebook wants to require return or destruction of the document to preclude the party from examining it. Neither one of which go to procedure or are consistent with FRCP 26(b)(5).

The Court then notes that if the receiving party is already examined the document and developed work product referring to the document, it’s neither practical or fair to require that that party destroy it pending resolution. What the Court does is really a happy medium. It revises the language to set out a process that essentially says, if the party has already developed work product, that work product has to be sequestered until the challenge is ruled on. If not, then the document needs to be destroyed. Reaching a happy medium to solve process with regard to those sections.

Next challenge really addresses the procedure of when a receiving party discovers a document in a third parties production that it reasonably believes is privileged. This is a situation where the plaintiffs wanted a fixed number of business days for the parties to notify the producing party. Plaintiffs asked for four days; Facebook said that it wasn’t reasonable to have any limit whatsoever. The Court ultimately agreed that 10 days was a reasonable amount of time to notify the producing party.

Next challenge addresses procedures that applied to protected documents in deposition or hearings — and this is a really important area in this particular decision and one that I want you to think about regularly especially if you’re in class action work and you’re dealing in asymmetric litigation. A lot of times what we will find is that parties will wait until a document is put in a deposition to claim privilege. Deposition exhibits are not generally exchanged and a deposition exhibit will be put in front of a witness, and then the party representing the witness will claim privilege and refuse to allow that witness to provide testimony based on that document. So, there are multiple issues here.

In this particular instance, the plaintiffs claim that they feel that this process will be used to disrupt deposition testimony. At the same time, Facebook wants to ensure that a party should not be permitted to use a document that is privileged in the deposition and then obtain testimony about it.

The Court looks at this and to be honest, this is a place where I feel like we need a better process and I’m going to suggest one in our takeaways. The Court doesn’t really do anything atypical here, but allows for the usual process to apply. If the privilege document is put before the witness, the party must object on the record state the basis for the privilege claim and demand the clawback. If the document can be redacted to remove the privilege information, then it must be done so immediately and the witness can then answer questions on the remainder of the document.

Once the privilege is raised, the opposing party cannot ask questions until the privilege claim is resolved and then the Court also addressed the need to identify privilege after deposition. Say you ask questions about a privileged document and the witness response to them and then upon reviewing the transcript and the exhibits, counsel realize that there should in fact be privilege applied to that document and the testimony should not have been allowed, then the Court set a 10 day limit for Facebook or the parties to respond to that, to make an allegation or to make a claim that information is privileged and should be redacted from the deposition transcript and that the document should be marked privilege.

Those are all the issues raised here that you will want to consider when you’re drafting your 502(d) order. Those are specific instances that you want to deal with. Deposition testimony is going to be a really key one.

Those are the challenges. What are our takeaways? It’s really important that you understand and know the differences between Rule 26(b)(5), Rule 502(b) and Rule 502(d) in protecting the production of privilege or protected material, and that you’re making an active decision on whether or not to have a 502(d) order in your case and what the totality of that 502(d) order is, whether it simply says that there’s no waiver for inadvertent production or whether it goes further, as the order does in this case, to provide specific steps for dealing with individual issues where there is inadvertent production.

Particularly in asymmetrical litigation, where one party is producing more of the documents, you’re going to want to pay attention specifically to how the process is done in this particular issue, where we talked about claiming privilege during a deposition and you need to make a process determination on the spot of whether or not there is privilege or not. Consider whether your judge can be available to resolve issues during the deposition via phone. We’ve often found that that is very quickly resolved issues.

The other way to proceed about this is if you see a potential issue when you’re reviewing documents, i.e. that privilege on a log has been claimed on common interest, or that you feel like there are issues related to business advice that’s given for in-house counsel and that’s being claimed as privileged, then those issues need to be raised before you go into depositions so you can avoid this very issue. We all know if you’re taking depositions that when the flow of information gets interrupted, the flow of conversation with the witness via an exhibit gets interrupted; it’s hard to get back there. You won’t get the same information in a subsequent proceeding that you might have otherwise gotten. It’s very disruptive to the whole process. Anticipate that disruption and plan to handle it.

Next takeaway, with volumes of data on ESI, even small matters can have inadvertent productions. Use the protections of 502(d), just use them. Many states have a provision for exactly the same kind of order. If not, you can draft one and say that it is meant to be interpreted under the rules and commentary of Federal Rule of Evidence 502(d). This is not something the other side should have a problem with. Both parties are always looking at issues dealing with inadvertent production.

The last takeaway really here is put together a template order that makes sense for your cases and have it ready to be used in a matter. There are sample 502(d) orders in eDiscovery Assistant. You can also use the language from this order or other samples which is available.

OK, that’s our #CaseoftheWeek for this week. Thanks so much for joining me. I’ll be back next week with another edition of our #CaseoftheWeek from eDiscovery Assistant. If you are an ACEDS member and interested in using eDiscovery Assistant, there’s a discount available to current ACEDS members and a trial for folks taking the ACEDS exam. If you’re interested in either of those, please drop us a line at ACEDS@eDiscoveryAssistant.com  and one of our team will be in touch. If you are interested in doing a free trial of our case law and resource database and are not a member of ACEDS, please just go to eDiscoveryAssistant.com and you can sign up in the upper right hand corner to get started, or you can reach out to us at support@eDiscoveryAssistant.com if you’re interested in having eDiscovery Assistant available for your organization.

Have a great week. Stay safe and healthy and I’ll see you next week. Thank you.

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