E-Disc Law Blog

Bow Tie Law's Blog wrote Keep on Trucking: Data Productions or Summaries, an analysis of a recent court decision finding that Rule 34 does not require a party to produce summaries upon request.

Electronic Discovery Law recently posted about a case in which "Inhibited Ability to Participate Meaningfully in Electronic Discovery" Results in Reduction of Rate of Recoverable Attorney's Fees.

Ride The Lightning recently posted Much Ado About Nothing? Computer Forensics and the Melendez-Diaz Case which found that allowing a forensics lab to present a certificate of its findings to the court without producing an analyst for cross examination violated a defendant's Sixth Amendment Right.

Having spent the last two weeks asking questions about FRE 502, I thought I should provide the answer.

Actually, I didn't provide the answer 3E Tisno did.  However, as you can see, FRE 502 may be a little more complex than you think.

A quick hat tip to Unfiltered Orange for pointing this out on Twitter.  Incidentally, if you are interested in following me I am @David_B_Willis on Twitter.

As I noted in a previous post, some courts have applied factors from existing case law in deciding whether or not the production of privileged material results in waiver under FRE 502.  The notes to Rule 502 specifically mention prior case law and the factors used in deciding whether or not a waiver of privilege occurred:

"Cases such as Lois Sportswear, U.S.A., Inc. v. Levi Strauss &
Co., 104 F.R.D. 103, 105 (S.D.N.Y. 1985) and Hartford Fire Ins. Co.
v. Garvey, 109 F.R.D. 323, 332 (N.D.Cal. 1985), set out a multifactor
test for determining whether inadvertent disclosure is a waiver.The stated factors (none of which is dispositive) are the
reasonableness of precautions taken, the time taken to rectify the
error, the scope of discovery, the extent of disclosure and the
overriding issue of fairness. The rule does not explicitly codify that
test, because it is really a set of non-determinative guidelines that
vary from case to case. The rule is flexible enough to accommodate
any of those listed factors. Other considerations bearing on the
reasonableness of a producing party’s efforts include the number of
documents to be reviewed and the time constraints for production."

An interesting example of a court applying these factors in the context of a Rule 502 decision is Rhoads Industries v. Building Materials Corp. of America (E.D. Penn. 2008).  This discovery dispute centered around the production of over 800 privileged emails out of a total production of 78,000 relevant documents.  Initially the Court looked to Rule 502 on its face and noted that there was no dispute over whether the production of the privileged emails was inadvertent.  

However, rather than applying the facts directly to the remaining two elements of Rule 502 the Court made the following decision,
"Consistent with the Committee Note to Rule 502, I conclude that once the producing party has shown at least minimal compliance with
the three factors in Rule 502, but "reasonableness" is in dispute, the
court should proceed to the traditional five-factor test."

The Court then looked at five factors from prior case law to determine whether or not a waiver of privilege occurred: (1) The reasonableness of the precautions taken to prevent inadvertent disclosure in view of the extent of the document production; (2) The number of inadvertent disclosures; (3) The extent of the disclosure; (4) Any delay and measures taken to rectify the disclosure; and (5) Whether the overriding interests of justice would or would not be served by relieving the party of its errors.  

In my opinion, the first factor should have been key.  Indeed this factor closely follows the wording of the second element of Rule 502 and focuses on the reasonableness of the precautions taken to avoid the inadvertent production. Rhoads retained an IT consultant and he acquired specific software to conduct the privilege search.  An attorney was assigned to work with the IT consultant to conduct the privilege review.  But Rhoads only used four words to conduct a keyword search and that search was limited to email address lines. These search terms did not include all of the company's attorneys.  Rhoads conducted a "quality control test" that consisted of simply running a second search on those same terms.  The attorney running the search had no prior experience conducting a privilege review.

The Court went on to discuss the number of disclosures(over 800), the extent of disclosure, and the steps taken to rectify the disclosures before acknowledging that the first four factors overwhelmingly favored the waiver of privilege.  Note that two of those factors capture the essence of the second and third elements of Rule 502, the reasonableness of the precautions taken and the reasonableness of the steps taken to rectify any error.

However, the court found that the final factor, the interests of justice, weighed heavily in favor against waiver.   Based on that single factor from prior case law, the Court decided that there was no waiver in this case.

Clearly, the Rule allows for the application of factors developed in
prior case law when determining whether or not a waiver of privilege
has occurred.  But does the application of these factors that are recognized in the committee notes overcome the wording of the Rule itself?  Alternatively, does the use of prior case law allow a Court the flexibility to achieve the objective of the Rule in reducing the burden of privilege review? 

Remember, had the Court applied FRE 502 on its face in this case, then it seems fairly certain that it would find that privilege was waived. 

Courts that apply FRE 502 on its face simply look to the three elements defined by Rule 502(b): (1) the disclosure was inadvertent; (2) the holder of the privileged took reasonable steps to prevent disclosure; and (3) the holder promptly took reasonable steps to rectify the error, including(if applicable) following Fed. R. Civ. P. 26(b)(5)(B).

Laethem Equipment Company v. Deere and Company (E.D. Mich. 2008)

In Laethem, the Court strictly applied the factors outlined in FRE 502 to conclude that there was no waiver of privilege.  First, the Court noted that the defendants made no argument that the disclosure was anything other than inadvertent and quickly decided this element. 

Second, the Court found that the plaintiffs took reasonable efforts to protect the privileged matter.  The Court noted that the records at issue were the only privileged material produced and more importantly, that the material was produced in a hurry and outside of the “inspect and copy” procedure that the parties had agreed to prior to the production of any material.  This prevented the plaintiffs from the opportunity to review the material for privilege but demonstrated that reasonable precautions were in place.

Third, the Court found that the plaintiffs took prompt action to secure the return of the privileged material.  The plaintiffs were first aware of the inadvertent production during a deposition.  Plaintiff’s counsel immediately objected during the deposition, then sent a letter to defense counsel demanding return of the material on the same day, and continued to object each time the privileged material was introduced at subsequent depositions.  Within 3 weeks of the initial deposition, the plaintiffs had sought and acquired a court order for the return of the privileged material.

Samson “SAM” Costales v. Ray Schultz and Albuquerque Police Department (D. NM 2008)

In Samson, the Court strictly applied the three elements of FRE 502 to conclude that there was no waiver of privilege.  First, the Court quickly dismissed the “inadvertent” element by noting that the plaintiff did not even argue that the disclosure was intentional. 

The Court did not directly address the second element. However, the Court cited as a significant supporting fact that the actual emails disclosed were accompanied by a cover letter identifying the material as a privilege log covering the privileged emails.  This apparently sufficed to establish that the defendants took reasonable steps to protect the privilege.

Third, the Court noted that the defendants did not immediately rectify the error upon production.  However, as soon as the inadvertent disclosure was brought to their attention defense counsel wrote a letter explaining that the emails were mistakenly produced. 

Reckley v. City of Springfield (S.D. Ohio 2008)

This Court applied FRE 502 strictly, but with minimal analysis, to conclude that there was no waiver of privilege.  First, the Court did not analyze whether the disclosure was inadvertent.  The Court just noted that the Defendants argued the production was inadvertent. 

Second, the Court noted that the produced emails were stamped “ATTORNEY-CLIENT PRIVILEGED” and took that as evidence of reasonable precautions.  Finally, the Court simply stated that the defense counsel took prompt steps to claim the privilege and seek return of the disclosed emails.

Not necessarily the best example of applying the facts to a rule, but clearly an example of a court applying FRE 502 on its face. 

As I discussed in a recent post on new Federal Rule of Evidence 502, the law of privilege particularly as it pertains to electronic discovery changed last year when Congress enacted FRE 502.  The goal of new Rule 502 is to help ease the inreasing costs of electronic discovery by easing the existing rules on waiver of privilege.  But how have courts applied the new rule and is it accomplishing that objective?

From what I have seen there are two approaches that courts have taken.  The first approach I'll refer to as applying FRE 502 on its face.  The second approach I'll refer to as a mixed approach that applies a combination of factors from prior case law regarding waiver of privilege and the factors specifically elicited in FRE 502. 

FRE 502: On Its Face

The methodology of courts applying FRE 502 on its face is fairly simple.  Secion (b) of the Rule itself as it regards a determination of waiver reads as follows:

        "…the disclosure does not operate as a waiver in a Federal or State proceeding 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)."

When courts apply FRE 502 on its face, they simply apply the facts to these 3 elements to determine whether or not a waiver of privilege occurred. 

FRE 502: The Mixed Approach

In its essence, the mixed approach with courts that have applied FRE 502 revolves around flexibly applying the elements of that Rule.  What I mean is, these courts initially apply the elements of FRE 502 on its face.  But when it comes to determining whether the production was "inadvertent," or  the "reasonableness," of certain actions, they look to the relevant Circuit's previous case law on waiver of privilege and apply them to the individual elements of Rule 502.

For instance, Fidelity & Deposit Co. of Md. v. McCulloch (E.D. Pa. 1996) provided five factors in determining whether a waiver of privilege occurred when one party inadvertently produced privileged material: (1) the reasonableness of the precautions taken to prevent inadvertent disclosure in view of the extent of the document production; (2) the number of inadvertent disclosures; (3) the extent of the disclosure; (4) any delay and measures taken to rectify the disclosure; and (5) whether the overriding interests of justice would or would not be served by relieving the party of its errors.

In Weil v. Investment/Indicators, Research and Management, Inc. (9th Cir. 1981) the court held that when the privilege is voluntarily disclosed without objection by the asserting party's counsel, absent surprise or deception by opposing counsel, it may be unnecessary to look beyond the objective fact of disclosure in ruling on the question of waiver. 

Courts that apply the mixed approach will determine the elements of FRE 502 by applying these factors.  The practical effect is that in some cases, waiver is still determined under prior case law. 

I'll examine the case law applying each of these two approaches over the next couple of days. 

[This post was updated/corrected on March 1]

Federal Rule of Evidence 502 was enacted this past year to help alleviate the costs of electronic discovery.  One of the most expensive aspects of any document review is the privilege review but the importance of preserving the attorney-client privilege and other privileges prohibited attorneys from conscientiously skimping on the privilege review process. 

Rule 502 was enacted in response to the increasing costs brought about by the review of electronic documents with the intent of relaxing the rules when it comes to waiver of any privilege due to the inadvertent production of privileged documents.  Here, you can view the notes associated with Rule 502.

The fact is that cases were no longer being decided on their merits.  A company was forced to look at the cost of identifying relevant information, collecting that information, processing the information into a format sufficient for review, reviewing that information, conducting a privilege review, and then producing those documents to the opposing party.  This cost often exceeded the value of the case itself or was such that the case was not worth bringing or defending.  In short, cases were being decided based on the cost of discovery rather than the merits themselves. 

FRE 502 was enacted to alleviate these costs.  Congress figured that if it could reduce the often harsh federal common law in regards to the waiver of privilege it would allow for the decision of more cases on their merits. 

At its most basic, the rule provides that the production of a document does not waive any associated attorney-client or work product privilege if the production was inadvertent, reasonable precautions to protect privilege were made, and the party took reasonable steps to rectify the error.

The importance of this new rule to small and mid-sized businesses cannot be understated.  Some studies have shown that the average work computer holds 32 gigabytes worth of information.  It could easily cost in excess of $10,000 per gigabyte to process, review and produce electronically stored information.  Do the math and look at the number of employees in your business.  Obviously, any rule that reduces these costs is beneficial.

But how are courts across the country actually employing the rule? Has it done anything to change the standard operating procedures when it comes to electronic discovery in such a way that it makes a discernable impact on how parties chooses to analyze their case?

I’m interested in your opinion and as the week goes on I’m going to look at many of the cases that have applied Rule 502 since its enactment last year to see just how courts are applying the rule. 

I recently discussed the issue of whether or not the disclosure of text messages violated the Stored Communications Act ("SCA").  I thought I would point out a few resources for more information on the subject.

At the end of the post I mentioned a 9th Circuit decision that reached the opposite conclusion, the case of Quon v. Arch Wireless Operating Co. Inc.  You can read a post discussing the basis for that ruling in more detail at the Internet Cases Blog.

For a discussion of a case involving application of the SCA to a trade secrets case, vist the Trade Secrets Vault.

The NP 2.0 Blog recently discussed a case where a former employee was found in violation of the SCA but not the Federal Wiretap Act. 

At least according to one court, the answer is no it does not.  The Stored Communications Act (“SCA”) generally prohibits a “person or entity providing an electronic communication service to the public” from “knowingly divulging to any person or entity the contents of a communication while in electronic storage by that service.” It also prohibits a “person or entity providing remote computing service to the public” from “knowingly divulging to any person or entity the contents of any communication which is carried or maintained on that service.”

An “electronic communications service” (“ECS”)is defined as “any service which provides to users thereof the ability to send or receive wire or electronic communications.”  A “remote computing service” (“RCS”)is defined as “the provision to the public of computer storage or processing services by means of an electronic communication system.”

Depending upon how the third party is defined, there are exceptions to the general prohibition of disclosure.  An ECS may divulge commications with the “lawful consent of the originator or an addressee or intended recipient of such communication.”  An RCS may divulge a communication with the “lawful consent” of the subscriber. 

In Flagg v. Ciry of Detroit, et al. (E.D.Mich. 2008) the court ruled that the SCA does not prevent the discovery of text messages stored by a third party service provider.  The case involved a wrongful death claim against the City of Detroit and several public officials and alleged a coverup of the events leading to that death.  The Plaintiff filed a third party subpeona seeking the production of text messages in the custody of SkyTel which had previously provided text messaging services to the City and its employees.  At the time of the motion that contract had expired but SkyTel maintained an archive with the only known copies of those text messages.

Several of the Defendants, including the City and key personnel opposed the motion on the grounds that such a disclosure violated the SCA.  They specifically pointed to the fact that the SCA did not provide an exception for a court order or subpeona.  The Defendants argued the only relevant exception was for disclosure with the lawful consent of the subscriber, the originator, or the recipient and then stated that they were unwilling to give such consent. 

A key point in this ruling is that the court refused to address the issue of whether the production of those text messages via a third party subpeona would violate the SCA and even went so far as to suggest that the third party would violate the SCA if it produced the text messages.  But the court specifically avoided ruling on that issue.  Instead, the court analyzed whether production via a Rule 34 request for production would violate the SCA. 

Rule 34 requires a part to produce documents not only in its possession but those under its control.  The court analyzed the definition of “control” in case law and found several examples of documents found to be under a party’s “control.”  The court noted that documents under a party’s control include: (1) those which the party has a contract conferring a right of access; (2) documents in the possession of a party’s agent; (3) a corporation has control over documents in the possession of one of its officers or employees; (4) a corporation has control over materials its officers or employees has a legal right to obtain; and (5) records maintained by a third party on the company’s behalf. 

The court found that the City clearly had control over the text messages in SkyTel’s possession on a number of grounds.  The City failed to provide any evidence that its contract did not provide it with the right to access the text messages as the service subscriber.  Even if the text messages were not accessible because of the contract, the City had control over the information because its officers and employees were originators or recipients of the messages and thus had the right to authorize access to the text messages. 

The court then turned to the issue of whether the SCA prohibited the production of those messages.  The court noted that under Rule 34 the text messages would be produced to the City, not the Plaintiffs and that the City would be obligated under Rule 34 to produce relevant non-privileged text messages.  The Defendants’ argument that they refused to give consent to disclosure was irrelevant because Rule 34 required the Defendants to produce relevant non-privileged documents within their control and the text messages in SkyTel’s possession were within the City’s control. 

This left the only issue as what type of consent did the SCA require?  If the service was an RCS which provides “computer storage,” then the consent of the subscriber to the service is sufficient.  The legislative history described an RCS as serving the function of a “virtual filing cabinet.”  If the service was an ECS which provides “electronic storage,” then the consent of the originator or recipient is necessary.  The statute defines ”electronic storage” as “any temporary, intermediate storage of a wire or electronic communication incidental to the electronic transmission thereof,” or “any storage of such communication by an electronic communication service for purposes of backup protection of such communication.” 

The court ruled that the present services provided by SkyTel were the basis for characterizing the consent required.  Remember, the contract for text messaging services had expired previous to the case so the text messages were not stored on a temporary basis.  The text messages in SkyTel’s possession were the only known copy, thus the court ruled they could not qualify as backups.  

Given the current storage of the text messages and their unique status, the Court found that the text messages were being held in an RCS “virtual filing cabinet,” and the only consent required was that of the City.  The Court also noted that even if the text messages were in an ECS, the City was required to produce them because its officers and employees were originators or recipients who could consent to their release under the SCA.

So what did we learn? FIrst, the argument that a third party has the documents and could produce them if we authorized it but we refuse to give that authorization does not work.  Never tell a court, “I could get it if I want to but I don’t so I won’t.”  Rule 34 requires a party to produce documents under its control.  It didn’t help that in a previous motion in opposition to the third party subpeona, SkyTel suggested to the Court that a Rule 34 motion would be an appropriate method of producing the documents. 

An interesting aside here, the court spent a substantial amount of space in a footnote chastizing the attorney for at the time Detroit Mayor Kilpatrick, one of the individual defendants, who apparently sent a letter to SkyTel seeking assurance that it would not produce any text messages in response to civil discovery.  So another lesson might be, don’t tell a third party not to comply with its discovery obligations.

Second, at least according to this court, a third party could violate the SCA if it produced text messages covered by the Act in a method that does not comply with an exception to the general prohibition against disclosure.  Third parties must be careful anytime they are served with such a subpeona and realize that there could be statutes prohibiting the disclosure of such information that could expose them to criminal and civil liability if they comply.   They must take reasonable steps to insure the production of that information does not violate any state or federal laws.

More importantly, other jurisdictions have interpreted the act differently than this court.  See Quon v. Arch Wireless Operating Co., 529 F.3d 892 (9th Cir. 2008).The facts of each particular situation will determine whether or not a third party violates the SCA by producing information in its possession.