In Spieker v. Quest Cherokee, LLC, No. 07-1225-EFM, 2009 WL 2168892 (D. Kan. July 21, 2009), a federal magistrate judge considered the plaintiff’s renewed motion to compel the production of certain e-mails from Quest. Quest prevailed on an earlier motion to compel because: “(1) defendant’s estimated cost to comply ranged from $82,000 to $375,000; and (2) plaintiffs failed to explain how the disputed ESI discovery is relevant to the issue of class certification.” In the plaintiff’s renewed motion, he argued that the e-mails requested were relevant, the production of the e-mails would not be unreasonably expensive, and Federal Rule of Evidence 502 adequately addressed privilege issues.
The magistrate judge ultimately granted the plaintiff’s motion to compel, because the e-mails were relevant to class certification issues and Quest’s evidence that production costs would be unduly burdensome was unpersuasive. In making its decision, the Court provided guidance on the inadvertent disclosure safe harbor recently enacted in Federal Rule of Evidence 502.
Rule 502 was enacted almost one year ago to address privilege waiver and inadvertent disclosure issues. Among Rule 502’s provisions is subsection (b) that states, “When made in a Federal proceeding or to a Federal office or agency, 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).”
The plaintiffs, as an option to reduce Quest’s costs of reviewing the e-mails at issue for relevance and privilege, offered to enter into a non-waiver agreement under Rule 502 and Federal Rule of Civil Procedure 26(b)(5)(B) in exchange for the production of all e-mails in native format. Rule 502(e) provides that parties to litigation may contractually agree that disclosure of certain materials, even if arguably privileged, does not effect a waiver.
The magistrate judge held that this non-waiver agreement would be ineffective, however, because Rule 502(b)(3) requires that the holder of the privilege take “reasonable steps to prevent disclosure” and “[s]imply turning over all ESI [(“electronically stored information”)] materials does not show that a party has taken ‘the reasonable steps’ to prevent disclosure of its privileged materials.”
The magistrate judge’s decision serves as a reminder that courts use the same standards to analyze privilege waiver issues relating to ESI as for hard copy documents. Thus, even though production costs for ESI are typically substantially higher than for hard copy materials, this disparity is not part of the test for determining whether an inadvertent privilege waiver has occurred. Clients should keep this in mind as they negotiate the scope of electronic discovery and structure document reviews.
As the magistrate judge here noted, Rule 502 only protects against inadvertent disclosure where the producing party establishes that reasonable steps were taken to prevent such disclosure, and it is inadequate to turn over all materials subject to a non-waiver agreement. Simply turning over ESI, even if subject to a non-waiver agreement, could lead to a finding of intentional waiver, which would potentially expose clients to a broad subject matter waiver, depending on the court and jurisdiction in which the litigation is pending.