On Legal Ethics

In California, Rico v. Mitsubishi Motors (2007, 42 Cal.4th 807) established the standard in California, adopting the State Fund (State Compensation Insurance Fund v. WPS, Inc. (1999) 70 Cal.App.4th 644) standard as precedent), that a lawyer who inadvertently receives privileged documents may only read as much as is necessary in order to determine the documents are privileged.

Once that is determined, the attorney must notify the sender immediately and make an effort to resolve the situation. Especially because many lawyers practice multijurisdictionally, however, we should also be familiar with new Federal Rule of Evidence 502 for additional guidance on this important issue.

Federal Rule of Evidence 502

On Sept. 19, 2008, New Federal Rule of Evidence 502 was enacted. The Rule provides that its provisions apply to disclosure of a communication or to information that is protected by the attorney-client privilege is protected as work product.

Subsection (b) states that when a disclosure is 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).

Cases that have analyzed Rule 502 may be instructive. Alcon Manufacturing v. Apotex (2008) 2008 WL 5070465 (cite available at the time of publication of this article) analyzed a scenario of inadvertent production under new Rule 502. Plaintiffs accidentally produced a document containing handwritten privileged information, which the defendants failed to return upon request and instead shared with one or more of their expert witnesses who relied upon it in writing an expert report. The court held that all copies of the document that contained privileged information must be deleted or returned to Plaintiffs and any references to it in an expert report must be redacted.

While both parties in this case relied on FRE 502(b), which lays out the standard to use in order to determine whether or not the production of a document waives the privilege, 502(d) states that a federal court order addressing the issue of waiver governs all parties subject to the order. There was order in this case that expressly addressed inadvertent disclosure. (Id. at 4).

The court pointed out that "one of the primary purposes of FRE 502 is to address the 'widespread complaint that litigation costs necessary to protect against waiver of attorney-client privilege or work product have become prohibitive due to the concern that any disclosure (however innocent or minimal) will operate as a subject matter waiver of all protected communications or information' which is 'especially troubling in electronic discovery.' (citing Fed.R.Evid. 502 advisory committee's note.)" (Id. at 6).

In Rhoads v. Building Materials (2008) 2008 WL 4916026, (cite available at the time of the preparation of this article) a company inadvertently produced more than 800 privileged documents to the defendants. The court analyzed the scenario under FRE 502 and held that the company did not waive the attorney client privilege.

The court explained that FRE 502 states "an inadvertent disclosure of privileged information does not waive the privilege if the holder of the privilege took reasonable steps to prevent disclosure and to rectify the error. (Id. at 1). The court pointed out that the resolution of this issue is often difficult for judges who must determine whether such disclosure was truly inadvertent, or merely careless. (Id.)

The court reiterated the newly enacted national standard under FRE 502(b), inadvertent disclosure, and also noted the Advisory Committee Note to Rule 502 which summarized the multiple factor approach test that is used by a majority of the courts:

"The stated factors (none of which are dispositive) are the reasonableness of precautions taken, the time taken to rectify the error, the scope of discovery, the extent of disclosure and the overriding issue of fairness. The rule does not explicitly codify that test, because it is really a set of non-determinative guidelines that very from case to case. The rule is flexible enough to accommodate any of those listed factors." (Id. at 2).

The court recognized a widely cited case on the issue of the appropriate standard to use regarding relevant factors related to inadvertent disclosure of privileged material as Fidelity & Deposit Co. of Md. V. McCulloch, 168 F.R.D. 516 (E.D.Pa.1996).

The Rhoads court specifically recognized and discussed electronically stored information or "ESI," and the fact that privileged information can often find its way into e-mails and often only be visible to some of the recipients depending on different users use of "reply" and "forward." (Id. at 3.) These issues were the cause of some of the information that Rhoads inadvertently produced. (Id.).

Please tune in next month when we examine inadvertent disclosure as defined and discussed by the ABA Rules of Professional Conduct and related Ethics Opinions.