In the age of electronically stored information (ESI), parties to a lawsuit face huge challenges in the area of discovery. Now, when dealing with a discovery request, parties must examine an overwhelming volume of documents to ensure that privileged or otherwise protected information is not inadvertently disclosed to their opponents. Not surprisingly, one of the hottest areas in pre-trial litigation in recent years has been disputes involving electronic discovery.

In an effort to address the problem surrounding electronic discovery and the inadvertent disclosure of privileged information, Congress recently enacted Federal Rule of Evidence 502. This rule sets forth the uniform standard that a disclosure of privileged information does not operate as a waiver 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). Fed. R. E. 502(b) (emphasis added).
While FRE 502 creates a uniform standard and provides protection with respect to inadvertent disclosures of privileged information, it does not explain what constitutes "reasonable steps" under the rule. Therefore, it is still unclear as to what preventive steps and what remedial steps a party must take in order to be protected under the rule. A recent Pennsylvania case, however, interpreted this language. Rhoads Indus., Inc. v. Building Materials Corp. of Am., 2008 WL 4916026 (E.D. Pa. Nov. 14, 2008). In determining whether the steps taken by the plaintiff in that case were "reasonable," the court considered five factors. Because these five factors, consistent with the Advisory Committee Note to FRE 502, were identified in earlier cases as relevant to the issue of inadvertent disclosure of privileged material, the court held that these factors should be the test applied when "reasonableness" is in dispute. These factors include:
  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.
  5. Whether the overriding interests of justice would or would not be served by relieving the party of its errors.
The court also held that this five-factor test should be applied on an objective basis.  

Even though the court in Rhoads interpreted the meaning of "reasonable" under FRE 502, uncertainty still remains. Courts still have to apply this five-factor test to the facts in each case in order to decide whether the producing party of the inadvertent disclosure took reasonable steps to prevent the disclosure and took reasonable steps to rectify the error. While these factors provide some guidance with respect to how courts will decide whether a party's preventive and remedial steps were "reasonable," they certainly do not provide a fail-safe approach to avoiding waiver.

In light of FRE 502 and the decision in Rhoads, there are a few steps that every party faced with a lawsuit should take. First, it is recommended that a party enter into a protective order that not only contains a "clawback" provision allowing a producing party to claim privilege, but that also imposes an affirmative duty on the receiving party to notify the producing party of the inadvertent disclosure of privileged or otherwise protected information. Second, the parties should also agree that the protective order constitutes "reasonable steps" under FRE 502(b)(3), which requires that the holder of the privilege "promptly [t]ake reasonable steps to rectify the error …" Whether such an agreement would actually constitute "reasonable steps" under subsection (b)(3) is not known, but the other side would be hard-pressed to deny reasonableness after the order is agreed to and entered. It should be noted that the order itself would not constitute "reasonable steps" under FRE 502(b)(2), which requires that the holder of the privilege take "reasonable steps" to prevent disclosure. Thus, there is no guarantee that a privilege will not be waived simply because a party enters into a protective order; parties must still take reasonable steps to prevent disclosure.