The Rule 502(b) Test

The Rule 502(b) Test

Rule 502(b) protects a mistaken disclosure from waiver only when three conditions are all met, and only when the disclosure was made in a federal proceeding or to a federal office or agency.¹ In that setting, the disclosure does not operate as a waiver in a federal or state proceeding if:

1. the disclosure is inadvertent;²
2. the holder of the privilege or protection took reasonable steps to prevent disclosure; and³
3. the holder promptly took reasonable steps to rectify the error, including (if applicable) following Federal Rule of Civil Procedure 26(b)(5)(B).⁴

The word “and” makes the conditions cumulative, so strength on one cannot cover a failure on another. Sheet Metal Workers’ National Pension Fund v. Palladium Equity Partners, LLC quoted the text as a single conjunctive list when it resolved a dispute over documents the defendants had recalled as privileged.⁵ Because each condition describes what the holder did, the holder is the party who must establish it.

Each condition looks at a different moment. The first asks what the holder intended, the second what it did before production, and the third what it did after it found the error. A holder that screened carefully still loses protection by sitting on a known mistake, and a holder that reacted at once still loses it if it never screened. The structure answers an old danger. Before the rule, a mistaken production by counsel could waive the privilege and, in some circumstances, produce a subject matter waiver.⁶ Rule 502(b) gives relief against waiver by mistaken disclosure to the party that took “reasonable steps” to prevent it and promptly rectified the error.⁷ The subsections that follow take the conditions in the order the events occur.

Inadvertent Disclosure

Inadvertent means unintended. The first condition asks whether the holder meant to produce the privileged document or whether it went out by mistake.⁸ A holder that chose to produce cannot call the choice an accident because it turned out badly. Lawyers run the production, so the practical question is whether the production team meant to send this document.

The text points toward this plain reading. Subsection (a)(1) addresses a waiver that is intentional;⁹ subsection (b)(1) addresses a disclosure that is inadvertent, and the two provisions mirror each other. Coburn Group v. Whitecap Advisors LLC built on that parallel. The court read the structure of Rule 502 to make the (b)(1) analysis “much simpler”: the question is essentially whether the party intended a privileged or work-product protected document to be produced or whether the production was a mistake.¹⁰ Subparts (b)(2) and (b)(3) separately address the reasonableness of the holder’s steps to prevent disclosure and to rectify the error. That separation, the court said, strongly suggests the drafters did not mean a court to weigh facts such as the number of documents produced under (b)(1) only to weigh them again under (b)(2) and (b)(3).¹¹

Confined to intent, the first condition can be decided quickly, and the real contest moves to the two conditions that use the word “reasonable.” Coburn shows how little the first condition ordinarily does. Whitecap’s lawyers received computer hard drives holding about 72,000 pages of potentially responsive documents and produced about 40,000 pages. A work-product protected email went out with them. The court found no real dispute that Whitecap did not intend to produce the email and that producing it was a mistake, and it held the production inadvertent.¹² That finding rested on intent alone. The volume of documents and the review protocol bear on the next condition.

Decisions from before Rule 502 reached the same result for mistaken productions, though they rested on state waiver law and so only illustrate the idea. In KL Group v. Case, Kay & Lynch, a letter protected by Lawyers Title’s privilege was produced in discovery by the law firm Long & Levit. Lawyers Title had not disclosed the letter and had not consented to its disclosure. The Ninth Circuit called the production inadvertent and held, under either Hawaii or California law, that Lawyers Title had not waived its privilege. It cited a California decision finding no waiver where an attorney produced files in response to a subpoena, because the production was not voluntary, and it affirmed the protective order.¹³

SCM Corp. v. Xerox Corp. shows how courts have tested inadvertence on the strength of affidavits. A privileged statement had been included repeatedly in documents forwarded to Litton, IBM, and SCM. The court said that if the documents were in fact individually screened for privileged material before being forwarded, the repeated inclusion would not be easily excused. On the state of the affidavits as they then stood, however, it upheld the claim of inadvertence and found no waiver.¹⁴ The court’s reasoning separates two processes. If no one looked at the forwarded copies, a repeated statement is one mistake repeated; if someone screened each copy and left the statement in, the repetition begins to look like a decision. Proof of inadvertence therefore comes from the people who handled the production, and a claim weakens when their accounts show attention to every item.

SCM’s focus on how the documents were screened reflects an older habit of folding review procedures into the inadvertence question, and some courts applying Rule 502(b) still follow it. Coburn itself noted that Heriot v. Byrne asked, in deciding whether a disclosure was inadvertent, about the total number of documents reviewed, the procedures used to review them before production, and the producing party’s actions after it discovered the production. Heriot then applied the first two of those factors again under (b)(2).¹⁵ Because courts differ on where such facts are weighed, a producing party should be ready to prove its screening and its follow-up whichever condition the court uses. The cleaner analysis assigns screening to (b)(2) and follow-up to (b)(3) and leaves (b)(1) to intent. An argument that the holder’s review was sloppy attacks the second condition, and an argument that the holder delayed attacks the third. Neither shows that the production was intended.

Reasonable Steps to Prevent

The second condition turns from the disclosure to the work behind it: did the holder take “reasonable steps to prevent disclosure”?¹⁷ The first condition has already established that the document went out by mistake, so the mistake cannot answer this question. Every review misses something eventually, and a test that demanded perfect screening would protect no one. The court asks instead whether the miss happened despite a sound process or because the holder had none.

The standard is, in substance, a negligence test, and “reasonable” carries no bright-line rules, so courts apply it case by case.¹⁸ In extensive discovery, mistakes are inevitable, and claims of inadvertence are honored “so long as appropriate precautions are taken,” a line Coburn took from Judson Atkinson.¹⁹ Careful lawyers have always reviewed documents before producing them, but electronic data has made that review far more expensive and time-consuming.²⁰ The rule demands diligence, not a page-by-page reading of everything.

The text makes protection depend on what the holder did, so the holder must be ready to show it. Victor Stanley, Inc. v. Creative Pipe put the point plainly: a party that produced privileged documents and then sought their return had to prove that its conduct in reviewing and producing them was reasonable. Producers therefore come to court with sworn accounts from the lawyers who ran the review. In Coburn, the supervising lawyer’s affidavit described a protocol he gave two paralegals with 17 and 16 years’ experience. They were to identify responsive documents by date, mark for his review any correspondence between the general counsel and any employee, and mark as privileged any correspondence between employees and outside counsel.²¹ That kind of instruction mirrors what the supervision rules demand of lawyers. A lawyer must give nonlawyer assistants appropriate instructions about the duty to safeguard client information, and when work goes to an outside company, the lawyer must ensure its personnel understand and follow professional standards.²²

Reasonableness also moves with the parties. Sophistication, expense proportioned to the size of the case, and the resources of the relevant parties all play a role in the calculation.²³ The Rules Committee called the considerations “non-determinative guidelines that vary from case to case,” and it named the number of documents to be reviewed and the time constraints for production among those bearing on a producer’s efforts.²⁴ The commentary lists five factors: (1) the reasonableness of the precautions taken to prevent inadvertent disclosure, considering the scope of the discovery; (2) the number of inadvertent disclosures; (3) the extent of the disclosure; (4) measures taken to rectify the disclosure and the timing of those measures; and (5) whether the overriding interests of justice would or would not be served by relieving a party of its error. The Committee Notes added that the importance of these factors would “vary from case to case,” and judges may also differ in how they weigh carelessness against other considerations.²⁵ The first two factors speak most directly to prevention. The fourth belongs to the third condition, discussed below.

Volume is the usual starting point. Coburn treated the scope of discovery as a logical starting point because, where discovery is extensive, mistakes are inevitable. Whitecap’s lawyers had to work through about 72,000 pages and produced about 40,000.²⁶ Proportion matters as well. A handful of privileged documents missed among a very large set supports a finding of reasonable review more readily than many privileged documents missed from a modest set.²⁷

Time constraints cut the same way. A party working under an accelerated deadline may see privileged documents slip past even a careful review.²⁸ The word “careful” matters: the deadline helps a producer whose process was otherwise sound and does little for one whose process was thin.

Screening technology now dominates the inquiry because large productions leave little alternative. In cases with massive document exchanges, computer screening is likely the only feasible way, and the Advisory Committee’s note says a party that uses analytical software applications and linguistic tools to screen for privilege and work product “may be found to have taken ‘reasonable steps’ to prevent inadvertent disclosure.”²⁹ Good records management before litigation begins points the same way, since a well-organized system from which data can be retrieved efficiently is itself evidence of a reasonable effort.³⁰ The word “may” carries weight. A court can still be troubled by limited search terms and minimal hands-on review, and in Rhoads Industries v. Building Materials Corp. the court criticized a producer that limited its email search to address lines and not message bodies and that relied on keyword searches without other quality-assurance measures.³¹ Victor Stanley shows the same failure from the other side. The producer there could not tell the court which keywords it used, why it chose them, who designed the search, or whether anyone tested the results, and the court found waiver. Software counts in the producer’s favor only when the producer can show it used the software with care.

Parties can also settle part of the prevention question in advance. In Race Tires America v. Hoosier Racing Tire Corp., an antitrust suit involving discovery of more than 500,000 documents, the parties agreed that certain search terms raised a “presumption” that each side had conducted a reasonable search.³² An agreement of that kind moves the argument over the adequacy of the terms to the negotiation, before any document is produced. The presumption speaks to the search, so a producer should still be ready to explain the rest of its review.

Prompt Rectification

The third condition looks forward from the moment the holder discovers the mistake. It requires that the holder “promptly took reasonable steps to rectify the error, including (if applicable) following Federal Rule of Civil Procedure 26(b)(5)(B).”³⁴ Two phrases carry the weight. “Promptly” governs timing and “reasonable steps” governs content, so a fast but empty response fails just as a thorough but late one does.

Delay runs from discovery, because a holder cannot act on a mistake it does not know about. The Advisory Committee’s note limits what counts as knowing. A producing party need not conduct a post-production review to find protected material it produced by mistake, but it must follow up on any obvious indications that something was produced inadvertently.³⁵ The first half keeps the burden bounded. The second keeps a holder from ignoring a red flag and then claiming surprise. An obvious indication therefore starts the clock before anyone has confirmed the error.

The rule names its model step. Rule 26(b)(5)(B) lets a party that has produced information it claims is privileged notify any recipient of the claim and its basis. The recipient must then promptly return, sequester, or destroy the information and any copies. It must not use or disclose the information until the claim is resolved, and it must take reasonable steps to retrieve the information if it disclosed it before being notified. It may also promptly present the information to the court under seal for a determination of the claim, while the producing party preserves the information until the claim is resolved.³⁶ E-discovery orders adopt the same structure: when a producing party gives notice that inadvertently produced material is subject to a claim of privilege or protection, the receiving parties’ obligations are those set forth in Rule 26(b)(5)(B).³⁷ Those duties begin only when the recipient is notified, so each day without notice is a day the holder has not invoked them. The next section takes up the mechanics of the notice and the recipient’s duties.

Courts have supplied two reference points for how long is too long. In Palladium, the producer discovered an inadvertent production late on a Friday and notified opposing counsel the following Monday, and that satisfied the promptness requirement. In Ceeglia v. Zuckerberg, a two-month delay in requesting the return of an inadvertently disclosed email was held not reasonable.³⁸ Palladium also shows what follows a prompt notice: the defendants said the plaintiffs had returned 116 of the recalled documents but still held at least 18.³⁹

Between a next-business-day notice and a two-month wait lies a wide gray zone. The Committee Notes list “measures taken to rectify the disclosure and the timing of those measures” among the relevant factors, and the weight of each varies from case to case.⁴⁰ A holder in that zone does best to act as soon as it can and to be ready to explain any gap.