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This is the second of two columns addressing Proposed Fed. R. Evid. 502 (“Attorney-Client Privilege and Work Product; Waiver By Disclosure”), and it analyzes subdivisions (b) through (f). Subdivision (a) was examined in the May 8 Federal Practice column. [ NLJ, May 8, Page 15]. Waiver by Inadvertent Disclosure. Subdivision (b) settles the circuit split concerning the effect of inadvertent disclosure, providing: “(b) Inadvertent disclosure. A disclosure of a communication or information covered by the attorney-client privilege or work product protection does not operate as a waiver in a state or federal proceeding if the disclosure is inadvertent and is made in connection with federal litigation or federal administrative proceedings-and if the holder of the privilege or work product protection took reasonable precautions to prevent disclosure and took reasonably prompt measures, once the holder knew or should have known of the disclosure, to rectify the error, including (if applicable) following the procedures in Fed. R. Civ. P. 26(b)(5)(B).” Four major aspects of a statutory provision This is a salutary provision that adopts the majority rule. Among its most important aspects: It establishes a two-part test that must be satisfied-the holder must have taken reasonable precautions to prevent disclosure, and must take reasonably prompt measure to rectify the error upon discovering the inadvertent production. It is limited to inadvertence. This provision does not sanction intentional disclosure, such as the “quick peek” approach to electronic discovery. See ABA Civil Discovery Standard 32(b) and (d)(ii). This approach is, however, covered by proposed subdivision (d). If the inadvertent disclosure occurs “in connection with federal litigation or federal administrative proceedings,” and if the two-part test is satisfied, then subdivision (b)’s nonwaiver rule applies in state as well as federal court. Only inadvertent disclosure “in connection with federal litigation or federal administrative proceedings” is addressed. What is a federal administrative “proceeding”? Compare subdivision (c), which, if enacted would apply to disclosures “made to a federal public office or agency in the exercise of its regulatory, investigative, or enforcement authority.” As different language is used, a “proceeding” is presumably something more formal than investigation. Selective Waiver. Subdivision (c) adopts the doctrine of selective waiver, permitting a person who has disclosed privileged communications to the government to continue asserting the privilege against others: “[(c) Selective waiver. In a federal or state proceeding, a disclosure of a communication or information covered by the attorney-client privilege or work product protection-when made to a federal public office or agency in the exercise of its regulatory, investigative, or enforcement authority-does not operate as a waiver of the privilege or protection in favor of non-governmental persons or entities. The effect of disclosure to a state or local government agency, with respect to non-governmental persons or entities, is governed by applicable state law. Nothing in this rule limits or expands the authority of a government agency to disclose communications or information to other government agencies or as otherwise authorized or required by law.]“ This is highly controversial and politically charged-and the brackets signify the Advisory Committee’s tentativeness in advancing this proposal. Before I address the merits of selective waiver, there are three aspects of this subdivision warranting attention. If the criteria for selective waiver are satisfied, the absence of waiver applies in both federal and state court. This subdivision applies only when a disclosure is “made to a federal public office or agency in the exercise of its regulatory, investigative, or enforcement authority.” It does not apply to disclosures made to state or local governments, or to nongovernmental entities. The effect of a disclosure to a state or local government office “is governed by applicable state law.” This is very peculiar and should be changed. It means that in a federal-question case, state law will determine waiver questions, even though the question whether a privilege exists is decided under federal law, which may actually conflict with the law of the state determining waiver (e.g., a control-group state). If the same documents are sent to regulators in multiple states, the law of the most pro-waiver state will control. It is difficult to see what the purpose of wholesale incorporation of state waiver law in a federal question proceeding might be. This provision should be limited in impact to state court proceedings. The selective-waiver doctrine is currently a minority view and exists, in the federal system, primarily in the 8th U.S. Circuit Court of Appeals. See Diversified Indus. v. Meredith, 572 F.2d 596 (8th Cir. 1977). Critics voice a legitimate concern that subdivision (c) may encourage and exacerbate an existing trend by regulators and prosecutors to demand that persons being investigated waive attorney-client privilege and work-product protection. Some critics also express concern that this provision will require Miranda-like warnings to clients about the risk that they may as a practical matter be forced to waive, putting their communications with counsel at risk. Plaintiffs’ counsel also object that their clients should continue to have access to materials disclosed to regulators and prosecutors because it is unfair to permit defendants selectively to waive privilege when it suits their purposes, but conceal damning information when it does not. While these concerns are legitimate, on balance subdivision (c) is desirable. To the extent that prosecutors are able, fairly or unfairly, to compel waiver of attorney-client privilege, it is in the best interests of those being investigated that the scope of the waiver be contained. To the extent that selective waiver facilitates exoneration as well as inculpation, permitting people under investigation to disclose privileged material gives them a freer choice. To the extent that governmental investigations are expedited, the public interest is served. Nor is it unfair to require civil plaintiffs to conduct their own discovery, without the benefit of materials supplied to facilitate governmental investigations or effectively compelled by the government at risk of loss of liberty. Further, as discussed in connection with subdivision (a) [NLJ, May 8], there is a separate line of decisions permitting selective, extrajudicial disclosure in many circuits that otherwise do not recognize the doctrine. Subdivision (c) helps to unify and clarify the law of selective waiver. Court-Ordered Nonwaiver. Proposed Rule 502(d) provides that a court order concerning privilege waiver-e.g., an agreed order that inadvertent production does not effect a waiver-binds third parties: “(d) Controlling effect of court orders. A federal court order that the attorney-client privilege or work product protection is not waived as a result of disclosure in connection with the litigation pending before the court governs all persons or entities in all state or federal proceedings, whether or not they were parties to the matter before the court, if the order incorporates the agreement of the parties before the court.” This is a very constructive provision that resolves a vexing, pre-existing problem-namely, that the court-ordered return and protection of inadvertently produced material in Case 1 did not afford any protection from the discovery demands of litigants in Case 2. As to the latter, the privilege may have been waived, subject to the protections afforded by subdivision (b). A provision with both breadth and limitations Note the breadth of this provision. First, this provision is not limited to inadvertently produced material. The “quick peek” approach to electronic discovery (or, for that matter, massive paper discovery), discussed above, can easily be accommodated. Second, if its criteria are satisfied, this subdivision applies to all state as well other federal proceedings. Third, the phrase “state or federal proceedings” is not limited to judicial, as opposed to administrative or legislative, proceedings. At the same time, note the limitations of subdivision (d): It is limited to federal court orders. An earlier iteration of the rule would have extended to state court orders addressing nonwaiver as well. It is limited to orders governing disclosures made in connection with litigation pending before the court. This will prevent parties from approaching the court for the purpose of obtaining an order (although it would not prevent the commencement of a friendly declaratory judgment action to obtain an order). The order must incorporate an “agreement of the parties before the court.” The purpose of this limitation is not immediately clear, although it does reflect the genesis of such orders in ordinary course. Mere Party Agreements. Under Proposed Rule 502(e), the parties’ agreement concerning privilege waiver must be “so ordered” by the court or it has no binding effect outside of the litigation in which it is entered. This provision is a wake-up call to counsel to ensure that party agreements are incorporated in court orders. Or it is an invitation to the alert to lay a trap for the unwary. Definitions. The definitional subdivision, Proposed Rule 502(f), work-product protection as limited to “materials prepared in anticipation of litigation or for trial.” This is too confining. A great deal of work product is oral or otherwise intangible, and it is protected. See, e.g., 8 Wright, Miller & Marcus, Federal Practice & Procedure at � 2024. Unless this definition is changed, the proposed rule will not determine waiver of all work product. Gregory P. Joseph is a fellow of the American College of Trial Lawyers and a past chair of the Litigation Section of the American Bar Association.

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