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									 ENVIRONMENTAL LITIGATION IN THE AGE OF
ELECTRONICALLY STORED INFORMATION (ESI)
 Society of Women Environmental Professionals/CBA Environmental Law
                                Section
                    Joint Meeting January 21, 2010


             RULE 502 and The Application of Privilege on ESI




Keith R. Ainsworth
EVANS, FELDMAN & AINSWORTH, L.L.C.
Attorneys at Law
261 Bradley Street
P.O. Box 1694
New Haven, CT 06507-1694
What is Rule 502 and what does it do?

     A. It is a Rule of Evidence – It sets the standards under which electronic documents
        (ESI) may be protected by the attorney-client privilege and thereby rendered
        inadmissible in a federal or state* legal proceeding.



            1. Resolves some conflicts concerning the attorney-client privilege.
            2. Seeks to reduce litigation costs typically arising in the process of privilege
               review and production.
            3. Establishes a presumption against subject matter waiver
            4. Resolves the issue of inadvertent disclosure
            5. Provides for confidentiality orders, and
            6. Upholds party agreements.



     B. First, the generally accepted definition of Attorney-client privilege is:

United States v. United Shoe Machinery Corp., 89 F.Supp. 357, 358-59 (D.Mass.1950):

The privilege applies only if (1) the asserted holder of the privilege is or sought to
become a client; (2) the person to whom the communication was made (a) is a member of
the bar of a court, or his subordinate and (b) in connection with this communication is
acting as a lawyer; (3) the communication relates to a fact of which the attorney was
informed (a) by his client (b) without the presence of strangers (e) for the purpose of
securing primarily either (i) an opinion on law or (ii) legal services or (iii) assistance in
some legal proceeding, and not (d) for the purpose of committing a crime or tort; and (4)
the privilege has been (a) claimed and (b) not waived by the client.


C.

                            Federal Rule of Evidence 502
       Disclosure Made In A Federal Proceeding Or To A Federal Office Or
       Agency; Scope Of A Waiver: FRE 502(a) limits waiver of the privilege normally
FRE
       to the communication or materials disclosed, and not to the entire subject matter
502(a)
       of the communication. The scope of any waiver is therefore confined to the
       information disclosed unless "fairness" requires further disclosure.
FRE    Inadvertent Disclosure: FRE 502(b) clarifies that inadvertent disclosure does
502(b) not result in waiver when the holder of the privilege "took reasonable steps to
       prevent disclosure" and "promptly took reasonable steps to rectify the error."
       Disclosure Made In A State Proceeding: FRE 502(c) addresses circumstances
FRE    where disclosure was first made in a state proceeding and is later considered in a
502(c) federal proceeding. The provision applies the federal or state law that furnishes
       the greatest protection to the privilege and work product.
       Controlling Effect Of A Court Order: FRE 502(d) recognizes that a federal
FRE    court may enter a confidentiality order providing "that the privilege or protection
502(d) is not waived by disclosure connected with the litigation pending before the
       court."
       Controlling Effect Of A Party Agreement: FRE 502(e) allows parties to enter
FRE    into an agreement to limit the effect of any disclosure. Agreements are binding
502(e) on the parties ONLY if the agreement is part of (usually)the order following the
       parties‟ 26(f) planning conference.
       Controlling Effect Of This Rule: FRE 502(f) notes that the rule "applies to
FRE
       State proceedings and to Federal court-annexed and Federal court-mandated
502(f)
       arbitration proceedings" and "even if State law provides the rule of decision." *
FRE    Definitions: FRE 502(g) includes definitions for "attorney-client privilege" and
502(g) "work-product protection."
       Effective Date: FRE 502 applies "in all proceedings commenced after the date
       of enactment ... [Sept. 19, 2008] and, insofar as is just and practicable, in all
       proceedings pending on such date of enactment."


*The constitutionality of Rule 502 may be in doubt as it is a federal rule that attempts to
bind state courts under the tenuous cloak of interstate commerce and the Commerce
Clause.


   D. Why Was Rule 502 Necessary?

 The complexity and cost of ESI reviews in preparation for litigations holds and for
reviews to ensure that discovery production of documents did not include privileged
information.

     1. An example of the kind ESI discovery nightmares which occur can be found in

In Re: VIOXX PRODUCTS LIABILITY LITIGATION, 501 F.Supp.2d 789 (E.D.La.
2007) –In an example of the burdens of e-discovery generally, the court explains how
500,000 documents subject to a privilege claim became the discovery saga that ground
litigation to a halt

      2. N.B.: The protection of attorney-client privileged documents does NOT address
protection of CONFIDENTIAL non-privileged documents (e.g: HIPPA health care
information, financial information, trade secret, patent information).
            This means that clients and their attorneys will be obligated to do expensive and
time consuming reviews of ESI even post-Rule 502 to prevent disclosure of confidential
non-privileged information. (Merck tried to shield such information in the Vioxx multi-
district litigation with mixed degrees of failure).

   E. So What Can One Do To Manage the Risk? PROPORTIONALITY

     1. Rule 502 dovetails with Federal Rules of Civil Procedure16, 26, 33, 34, 37, and
45 and Form 35. These changes reflect seven main principles:

      Specific reference to electronic media.
      Mandated early focus on discovery plans.
      Addressing privilege considerations at an early stage.
      Accessibility as a factor in production responsibilities.
      Specified formats for production.
      Potential availability of a safe harbor for honest mistakes.
      Parallel revisions to subpoena obligations.

     Most importantly Rule 26(b)(2)(B) interjects a bit of rationality to the madness that
   is E-discovery by providing:

             A party need not provide discovery of electronically stored
             information from sources that the party identifies as not
             reasonably accessible because of undue burden or cost. On
             motion to compel discovery or for a protective order, the party
             from whom discovery is sought must show that the information
             is not reasonably accessible because of undue burden or cost. If
             that showing is made, the court may nonetheless order discovery
             from such sources if the requesting party shows good cause,
             considering the limitations of Rule 26(b)(2)(C). The court may
             specify conditions of the discovery.

   In short, if otherwise valid e-discovery requests are just too burdensome relative to
   the parties‟ dispute or economic situation or the public interest, the court can issue a
   protective order.

       2. This leads into ZEBULAKE v. UBS WARBURG, LLC, 216 F.R.D. 280, 290
   (S.D.N.Y. 2003) “quick peek” or “clawback” agreements between counsel which
   typically reduce privilege reviews and allow opposing counsel to look at the universe
   of ESI implicated in the litigation, choose the documents that one wants and then
   fight over a sub-universe of the truly relevant documents. Also, provides that
   privileged documents disclosed must be returned (Rule 502 (d))

          1. Upside: Reduces costs and time of privilege review
         2. Downside: (i) “Cat out of the Bag” -- False sense of security as to privileged
   material which may be “discovered” by other means or used despite having to return
   the documents. May violate ethical duty to maintain client confidentiality Rule of
   Prof. Conduct 1.6 (flip side of counsel receiving privileged document may violate
   duty of zealous representation by failing to act on privileged information - RPC 1.3)

                         (ii) Confidential non-privileged material may be disclosed that
   harms financial or litigation advantage.

   F. Methods for Protecting the Privilege
         1. privilege chain of custody, which tracks how ESI is reviewed for privilege
         2. Procedure for how ESI is sequestered when privilege is claimed and
         3. QA/QC or quality assurance sampling to ensure that production materials
            disclosed do not include any privileged ESI (e.g.: issue tagging for
            privileges into a spreadsheet or privilege log )
         4. Use separate software and e-mail servers for litigation department in-house
            at client.
         5. Create rules for minimizing or limiting (limitations on propagation) ESI
            communications between counsel and client in anticipation of litigation.


   G. Some Reported Cases on Rule 502

Amobi v. D.C. Department of Corrections., 2009 U.S. Dist. LEXIS 114270, 20-21 (D.D.C.
Dec. 8, 2009) Waiver of privilege found where attorney disclosed a counsel memo, but
yet “the protection of the work-product privilege has been waived and plaintiff does not
have to return, sequester, or destroy the memorandum” because defendant‟s counsel
failed to demonstrate that any efforts had been taken to protect the information.

Coburn Group, LLC v. Whitecap Advisors, LLC, 640 F.Supp.2d 1032 (N.D.Ill. Aug. 7,
2009) No waiver of privilege found where three e-mails out of 40,000 documents were
disclosed where “reasonable steps” as provided under Rule 502(b) were taken to
clawback the ESI. Prompt action is awarded with protection where the action is in good
faith.

Peterson v. Bernardi, 80 Fed. R. Evid. Serv. 134 (D.N.J. July 24, 2009) (Civil No. 07-
2723-RMB-JS) Plaintiff could not show that the disclosed ESI were privileged and
despite reasonable measures to protect information yet, in “the interests of fairness and
justice” in order to avoid “an injustice” notwithstanding, several ESI documents were
saved from waiver under FRE 502(b)

Clarke v. J.P. Morgan Chase & Co., Case No. 08-cv-02400 (CM) (DF) (SDNY Apr. 10,
2009) waiver of privilege found where e-mail counsel disclosed, albeit unintentionally,
was done after counsel “had ample opportunity to discover and assert the claimed
privileged status of the e-mail”.
HERIOT v. BYRNE, 257 F.R.D. 645 (N.D. Ill. March 20, 2009) NO waiver of
privilege due to computer consultant‟s disclosure of privileged ESI which had been so
designated by counsel
   Under Rule 502(c), court holds “the unfairness of penalizing Plaintiffs for an error that
it neither caused nor anticipated”. But see, Innis Arden Gold Club v. Pitney Bowes
(below) issuing sanctions for environmental consultant‟s destruction of e-mails and other
ESI which prevented independent testing of their data.

Rhoads Industries, Inc. v. Building Materials Corporation of America, 254 F.R.D. 216
(E.D. Pa. Nov. 14, 2008) (Civil Action No. 07-4756) Disclosure held not to be a waiver
for over 800 e-mails rendered in a privilege log

Hopson v. City of Baltimore, 232 F.R.D. 228 (D. Md. 2005) ("Specifically, three distinct
positions have been taken by the courts: the „strict accountability‟ approach followed by
the Federal Circuit and the First Circuit (which almost always finds waiver, even if
production was inadvertent, because „once confidentiality is lost, it can never be
restored‟); the lenient approach of the Eighth Circuit and a handful of district courts
(which views waiver as requiring intentional and knowing relinquishment of the
privilege, and finds waiver in circumstances of inadvertent disclosure only if caused by
gross negligence); and the third approach, adopting a „„balancing‟ test that requires the
court to make a case-by case determination of whether the conduct is excusable so that it
does not entail a necessary waiver.‟”)

Lois Sportswear, U.S.A., Inc. v. Levi Strauss & Co., 104 F.R.D. 103, 105 (S.D.N.Y.
1985) (disclosure of 22 privileged documents out of 16,000 pages inspected and 3,000
pages produced was inadvertent after considering factors)

Hartford Fire Ins. Co. v. Garvey, 109 F.R.D. 323, 332 (N.D.Cal. 1985) (If mistaken
disclosure occurs court may apply Lois Sportswear factors, including “(1) the
reasonableness of the precautions to prevent inadvertent disclosure; (2) the time taken to
rectify the error, (3) the scope of the discovery; (4) the extent of the disclosure; and (5)
the „overriding issue of fairness‟,”)

Tucker v. Ohtsu Tire & Rubber Co., 191 F.R.D. 495, 499 (D.Md. 2000) ( 502(c) holds
that a federal court considering the enforceability of a state confidentiality order is
„„constrained by principles of comity, courtesy, and . . . federalism‟‟)

Zubulake v. UBS Warburg LLC, 216 F.R.D. 280, 290 (S.D.N.Y. 2003) (noting use of
“so-called „claw-back‟ agreements that allow the parties to forego privilege review
altogether in favor of an agreement to return inadvertently produced privilege
documents”)

Nguyen v. Execl Corporation, 197 F.3d 200 (5th Cir. 1999) (reliance on an advice of
counsel defense waives the privilege with respect to attorney-client communications
pertinent to that defense)
Ryers v. Burleson, 100 F.R.D. 436 (D.D.C. 1983) (allegation of lawyer malpractice
constituted a waiver of confidential communications under the circumstances)



   H. Four Cases Which Give some Lessons Which Bear on ESI Issues

   Innis Arden Golf Club v. Pitney Bowes, Case No. 3:06 cv 1352 (JBA), 2009 WL
   1416169 (May 21, 2009). Sanctions were issued (barring of causation evidence)
   resulting in dismissal for failure to prove causation for spoliation of evidence
   involving the destruction of testing samples and data relating to soil contamination in
   a CERCLA/22a-16 cost recovery action.

   Byrnie v. Cromwell, 243 F.3d 93, 107-108 (2d Cir. 2001). Holding that a party may
   be sanctioned for the negligent destruction of evidence even in the absence of bad
   faith or intentional misconduct.

   Paylan v. St. Mary‟s Hospital Corp., AC 29811, _____ Conn. App. ___, Adv. Op.
   December 1, 2009. Upholding trial court decision denying use of adverse inference
   under Beers v. Bayliner Marine Corp., 236 Conn. 769 (1996) from spoliation of ESI
   (defendant destroyed a hard drive that was subject to a court order to preserve)
   because Plaintiff failed to present evidence about defendant‟s destruction of the hard
   drive. If one can show that a party intentionally destroyed the evidence and was on
   notice that the evidence should be preserved, a Beers adverse inference may be drawn
   ( albeit a small sanction where critical information is involved).

   This “on notice that the evidence should be preserved” standard can be met by
   sending an ESI preservation letter to opposing counsel at the outset of the case
   (contact author for sample letter).

   N.B.: Simultaneously a copy should be sent to one‟s client in order to avoid spoliation
   claims and to meet one‟s professional responsibility.



   Kronisch v. United States, 150 F.3d 112, 126 (2d Cir. 1998) A party has a duty to
   retain evidence “when a party should have known that the evidence may be relevant
   to future litigation”.

      Your ESI preservation duties may attach many months before suit is filed.
   Zubulake holds that a litigation hold must be put in place once you identify
   responsible parties or reasonable should anticipate that litigation might arise (think
   NOV, demand letters, e-mail discussion of potential litigation internally)

								
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