ENVIRONMENTAL LITIGATION IN THE AGE OF
ELECTRONICALLY STORED INFORMATION (ESI)
Society of Women Environmental Professionals/CBA Environmental Law
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.
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
to the communication or materials disclosed, and not to the entire subject matter
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
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
State proceedings and to Federal court-annexed and Federal court-mandated
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
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
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
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
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
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
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)