[Congressional Record (Bound Edition), Volume 154 (2008), Part 2]
[Senate]
[Pages 2776-2778]
[From the U.S. Government Publishing Office, www.gpo.gov]




                 TO AMEND THE FEDERAL RULES OF EVIDENCE

  Mr. SALAZAR. Mr. President, I ask unanimous consent that the Senate 
proceed to the immediate consideration of Calendar No. 580, S. 2450.
  The PRESIDING OFFICER. The clerk will report the bill by title.
  The legislative clerk read as follows:

       A bill (S. 2450) to amend the Federal Rules of Evidence to 
     address the waiver of the attorney-client privilege and the 
     work product doctrine.

  There being no objection, the Senate proceeded to consider the bill.
  Mr. LEAHY. Mr. President, today I hope we pass a bipartisan bill that 
will go a long way in reducing the costs of litigating disputes in our 
civil justice system. This bill creates a new Federal Rule of Evidence 
regarding electronic disclosure of privileged material that would limit 
the consequences of inadvertent disclosure. The new rule would provide 
predictability and uniformity in a discovery process that has been made 
increasingly difficult with the growing use of e-mail and other 
electronic media. This legislation contains the full text of Judicial 
Conference recommendations and is supported by all sectors of the legal 
community.
  I ask unanimous consent to have printed in the Record the Judicial 
Conference's Committee Note to illuminate the purpose of the new 
Federal Rule of Evidence and how it should be applied.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                 Explanatory Note on Evidence Rule 502

       This new rule has two major purposes:
       (1) It resolves some longstanding disputes in the courts 
     about the effect of certain disclosures of communications or 
     information protected by the attorney-client privilege or as 
     work product--specifically those disputes involving 
     inadvertent disclosure and subject matter waiver.
       (2) It responds to 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. This concern is especially 
     troubling in cases involving electronic discovery. See, e.g., 
     Hopson v. City of Baltimore, 232 F.R.D. 228, 244 (D.Md. 2005) 
     (electronic discovery may encompass ``millions of documents'' 
     and to insist upon ``record-by-record pre-production 
     privilege review, on pain of subject matter waiver, would 
     impose upon parties costs of production that bear no 
     proportionality to what is at stake in the litigation'').
       The rule seeks to provide a predictable, uniform set of 
     standards under which parties can determine the consequences 
     of a disclosure of a communication or information covered by 
     the attorney-client privilege or work-product protection. 
     Parties to litigation need to know, for example, that if they 
     exchange privileged information pursuant to a confidentiality 
     order, the court's order will be enforceable. Moreover, if a 
     federal court's confidentiality order is not enforceable in a 
     state court then the burdensome costs of privilege review and 
     retention are unlikely to be reduced.
       The rule makes no attempt to alter federal or state law on 
     whether a communication or information is protected under the 
     attorney-client privilege or work-product immunity as an 
     initial matter. Moreover, while establishing some exceptions 
     to waiver, the rule does not purport to supplant applicable 
     waiver doctrine generally.
       The rule governs only certain waivers by disclosure. Other 
     common-law waiver doctrines may result in a finding of waiver 
     even where there is no disclosure of privileged information 
     or work product. See, e.g., Nguyen v. Excel Corp., 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). The rule is not 
     intended to displace or modify federal common law concerning 
     waiver of privilege or work product where no disclosure has 
     been made.
       Subdivision (a). The rule provides that a voluntary 
     disclosure in a federal proceeding or to a federal office or 
     agency, if a waiver, generally results in a waiver only of 
     the communication or information disclosed; a subject matter 
     waiver (of either privilege or work product) is reserved for 
     those unusual situations in which fairness requires a further 
     disclosure of related, protected information, in order to 
     prevent a selective and misleading presentation of evidence 
     to the disadvantage of the adversary. See, e.g., In re United 
     Mine Workers of America Employee Benefit Plans Litig., 159 
     F.R.D. 307, 312 (D.D.C. 1994) (waiver of work product limited 
     to materials actually disclosed, because the party did not 
     deliberately disclose documents in an attempt to gain a 
     tactical advantage). Thus, subject matter waiver is limited 
     to situations in which a party intentionally puts protected 
     information into the litigation in a selective, misleading 
     and unfair manner. It follows that an inadvertent disclosure 
     of protected information can never result in a subject matter 
     waiver. See Rule 502(b). The rule rejects the result in In re 
     Sealed Case, 877 F.2d 976 (D.C.Cir. 1989), which held that 
     inadvertent disclosure of documents during discovery 
     automatically constituted a subject matter waiver.
       The language concerning subject matter waiver--``ought in 
     fairness''--is taken from Rule 106, because the animating 
     principle is the same. Under both Rules, a party that makes a 
     selective, misleading presentation that is unfair to the 
     adversary opens itself to a more complete and accurate 
     presentation.
       To assure protection and predictability, the rule provides 
     that if a disclosure is made at the federal level, the 
     federal rule on subject matter waiver governs subsequent 
     state court determinations on the scope of the waiver by that 
     disclosure.
       Subdivision (b). Courts are in conflict over whether an 
     inadvertent disclosure of a communication or information 
     protected as privileged or work product constitutes a waiver. 
     A few courts find that a disclosure must be intentional to be 
     a waiver. Most courts find a waiver only if the disclosing 
     party acted carelessly in disclosing the communication or 
     information and failed to request its return in a timely 
     manner. And a few courts hold that any inadvertent disclosure 
     of a communication or information protected under the 
     attorney-client privilege or as work product constitutes a 
     waiver without regard to the protections taken to avoid such 
     a disclosure. See generally Hopson v. City of Baltimore, 232 
     F.R.D. 228 (D.Md. 2005), for a discussion of this case law.
       The rule opts for the middle ground: inadvertent disclosure 
     of protected communications or information in connection with 
     a federal proceeding or to a federal office or agency does 
     not constitute a waiver if the holder took reasonable steps 
     to prevent disclosure and also promptly took reasonable steps 
     to rectify the error. This position is in accord with the 
     majority view on whether inadvertent disclosure is a waiver.
       Cases such as Lois Sportswear, U.S.A., Inc. v. Levi Strauss 
     & Co., 104 F.R.D. 103, 105 (S.D.N.Y. 1985) and Hartford Fire 
     Ins. Co. v. Garvey, 109 F.R.D. 323, 332 (N.D.Cal. 1985), set 
     out a multi-factor test for determining whether inadvertent 
     disclosure is a waiver. The stated factors (none of which is 
     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 vary from 
     case to case. The rule is flexible enough to accommodate any 
     of those listed factors. Other considerations bearing on the 
     reasonableness of a producing party's efforts include the 
     number of documents to be reviewed and the time constraints 
     for production. Depending on the circumstances, a party that 
     uses advanced analytical software applications and linguistic 
     tools in screening for privilege and work product may be 
     found to have taken ``reasonable steps'' to prevent 
     inadvertent disclosure. The implementation of an efficient 
     system of records management before litigation may also be 
     relevant.
       The rule does not require the producing party to engage in 
     a post-production review to determine whether any protected 
     communication or information has been produced

[[Page 2777]]

     by mistake. But the rule does require the producing party to 
     follow up on any obvious indications that a protected 
     communication or information has been produced inadvertently.
       The rule applies to inadvertent disclosures made to a 
     federal office or agency, including but not limited to an 
     office or agency that is acting in the course of its 
     regulatory, investigative or enforcement authority. The 
     consequences of waiver, and the concomitant costs of pre-
     production privilege review, can be as great with respect to 
     disclosures to offices and agencies as they are in 
     litigation.
       Subdivision (c). Difficult questions can arise when 1) a 
     disclosure of a communication or information protected by the 
     attorney-client privilege or as work product is made in a 
     state proceeding, 2) the communication or information is 
     offered in a subsequent federal proceeding on the ground that 
     the disclosure waived the privilege or protection, and 3) the 
     state and federal laws are in conflict on the question of 
     waiver. The Committee determined that the proper solution for 
     the federal court is to apply the law that is most protective 
     of privilege and work product. If the state law is more 
     protective (such as where the state law is that an 
     inadvertent disclosure can never be a waiver), the holder of 
     the privilege or protection may well have relied on that law 
     when making the disclosure in the state proceeding. Moreover, 
     applying a more restrictive federal law of waiver could 
     impair the state objective of preserving the privilege or 
     work-product protection for disclosures made in state 
     proceedings. On the other hand, if the federal law is more 
     protective, applying the state law of waiver to determine 
     admissibility in federal court is likely to undermine the 
     federal objective of limiting the costs of production.
       The rule does not address the enforceability of a state 
     court confidentiality order in a federal proceeding, as that 
     question is covered both by statutory law and principles of 
     federalism and comity. See 28 U.S.C. 1738 (providing that 
     state judicial proceedings ``shall have the same full faith 
     and credit in every court within the United States . . . as 
     they have by law or usage in the courts of such State . . . 
     from which they are taken''). See also Tucker v. Ohtsu Tire & 
     Rubber Co., 191 F.R.D. 495, 499 (D.Md. 2000) (noting that a 
     federal court considering the enforceability of a state 
     confidentiality order is ``constrained by principles of 
     comity, courtesy, and . . . federalism''). Thus, a state 
     court order finding no waiver in connection with a disclosure 
     made in a state court proceeding is enforceable under 
     existing law in subsequent federal proceedings.
       Subdivision (d). Confidentiality orders are becoming 
     increasingly important in limiting the costs of privilege 
     review and retention, especially in cases involving 
     electronic discovery. But the utility of a confidentiality 
     order in reducing discovery costs is substantially diminished 
     if it provides no protection outside the particular 
     litigation in which the order is entered. Parties are 
     unlikely to be able to reduce the costs of pre-production 
     review for privilege and work product if the consequence of 
     disclosure is that the communications or information could be 
     used by non-parties to the litigation.
       There is some dispute on whether a confidentiality order 
     entered in one case is enforceable in other proceedings. See 
     generally Hopson v. City of Baltimore, 232 F.R.D. 228 (D.Md. 
     2005), for a discussion of this case law. The rule provides 
     that when a confidentiality order governing the consequences 
     of disclosure in that case is entered in a federal 
     proceeding, its terms are enforceable against non-parties in 
     any federal or state proceeding. For example, the court order 
     may provide for return of documents without waiver 
     irrespective of the care taken by the disclosing party; the 
     rule contemplates enforcement of ``claw-back'' and ``quick 
     peek'' arrangements as a way to avoid the excessive costs of 
     pre-production review for privilege and work product. See 
     Zubulake v. UBS Warburg LLC, 216 F.R.D. 280, 290 (S.D.N.Y. 
     2003) (noting that parties may enter into ``so-called `claw-
     back' agreements that allow the parties to forego privilege 
     review altogether in favor of an agreement to return 
     inadvertently produced privilege documents''). The rule 
     provides a party with a predictable protection from a court 
     order--predictability that is needed to allow the party to 
     plan in advance to limit the prohibitive costs of privilege 
     and work product review and retention.
       Under the rule, a confidentiality order is enforceable 
     whether or not it memorializes an agreement among the parties 
     to the litigation. Party agreement should not be a condition 
     of enforceability of a federal court's order.
       Under subdivision (d), a federal court may order that 
     disclosure of privileged or protected information ``in 
     connection with'' a federal proceeding does not result in 
     waiver. But subdivision (d) does not allow the federal court 
     to enter an order determining the waiver effects of a 
     separate disclosure of the same information in other 
     proceedings, state or federal. If a disclosure has been made 
     in a state proceeding (and is not the subject of a state-
     court order on waiver), then subdivision (d) is inapplicable. 
     Subdivision (c) would govern the federal court's 
     determination whether the state-court disclosure waived the 
     privilege or protection in the federal proceeding.
       Subdivision (e). Subdivision (e) codifies the well-
     established proposition that parties can enter an agreement 
     to limit the effect of waiver by disclosure between or among 
     them. Of course such an agreement can bind only the parties 
     to the agreement. The rule makes clear that if parties want 
     protection against non-parties from a finding of waiver by 
     disclosure, the agreement must be made part of a court order.
       Subdivision (f). The protections against waiver provided by 
     Rule 502 must be applicable when protected communications or 
     information disclosed in federal proceedings are subsequently 
     offered in state proceedings. Otherwise the holders of 
     protected communications and information, and their lawyers, 
     could not rely on the protections provided by the Rule, and 
     the goal of limiting costs in discovery would be 
     substantially undermined. Rule 502(f) is intended to resolve 
     any potential tension between the provisions of Rule 502 that 
     apply to state proceedings and the possible limitations on 
     the applicability of the Federal Rules of Evidence otherwise 
     provided by Rules 101 and 1101.
       The rule is intended to apply in all federal court 
     proceedings, including court-annexed and court-ordered 
     arbitrations, without regard to any possible limitations of 
     Rules 101 and 1101. This provision is not intended to raise 
     an inference about the applicability of any other rule of 
     evidence in arbitration proceedings more generally.
       The costs of discovery can be equally high for state and 
     federal causes of action, and the rule seeks to limit those 
     costs in all federal proceedings, regardless of whether the 
     claim arises under state or federal law. Accordingly, the 
     rule applies to state law causes of action brought in federal 
     court.
       Subdivision (g). The rule's coverage is limited to 
     attorney-client privilege and work product. The operation of 
     waiver by disclosure, as applied to other evidentiary 
     privileges, remains a question of federal common law. Nor 
     does the rule purport to apply to the Fifth Amendment 
     privilege against compelled self-incrimination.
       The definition of work product ``materials'' is intended to 
     include both tangible and intangible information. See In re 
     Cendant Corp. Sec. Litig., 343 F.3d 658, 662 (3d Cir. 2003) 
     (``work product protection extends to both tangible and 
     intangible work product'').

  Mr. LEAHY. Mr. President, I thank Senator Specter for joining me in 
introducing this bill last December, as the first session of this 
Congress drew to a close. The Judiciary Committee took up and 
unanimously approved the bill during our first business meeting after 
returning from the holiday recess. I urge all Senators to join Senator 
Specter and me to pass this proposal and take a positive step toward 
modernizing and improving the Federal Rules of Evidence.
  Mr. SALAZAR. Mr. President, I ask unanimous consent that the bill be 
read a third time and passed, the motion to reconsider be laid upon the 
table, with no intervening action or debate, and that any statements 
relating to the bill be printed in the Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The bill (S. 2450) was ordered to be engrossed for a third reading, 
was read the third time, and passed, as follows:

                                S. 2450

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. ATTORNEY-CLIENT PRIVILEGE AND WORK PRODUCT; 
                   LIMITATIONS ON WAIVER.

       (a) In General.--Article V of the Federal Rules of Evidence 
     is amended by adding at the end the following:

     ``Rule 502. Attorney-Client Privilege and Work Product; 
       Limitations on Waiver

       ``The following provisions apply, in the circumstances set 
     out, to disclosure of a communication or information covered 
     by the attorney-client privilege or work-product protection.
       ``(a) Disclosure Made in a Federal Proceeding or to a 
     Federal Office or Agency; Scope of a Waiver.--When the 
     disclosure is made in a Federal proceeding or to a Federal 
     office or agency and waives the attorney-client privilege or 
     work-product protection, the waiver extends to an undisclosed 
     communication or information in a Federal or State proceeding 
     only if:
       ``(1) the waiver is intentional;
       ``(2) the disclosed and undisclosed communications or 
     information concern the same subject matter; and
       ``(3) they ought in fairness to be considered together.
       ``(b) Inadvertent Disclosure.--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;

[[Page 2778]]

       ``(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).
       ``(c) Disclosure Made in a State Proceeding.--When the 
     disclosure is made in a State proceeding and is not the 
     subject of a State-court order concerning waiver, the 
     disclosure does not operate as a waiver in a Federal 
     proceeding if the disclosure:
       ``(1) would not be a waiver under this rule if it had been 
     made in a Federal proceeding; or
       ``(2) is not a waiver under the law of the State where the 
     disclosure occurred.
       ``(d) Controlling Effect of a Court Order.--A Federal court 
     may order that the privilege or protection is not waived by 
     disclosure connected with the litigation pending before the 
     court--in which event the disclosure is also not a waiver in 
     any other Federal or State proceeding.
       ``(e) Controlling Effect of a Party Agreement.--An 
     agreement on the effect of disclosure in a Federal proceeding 
     is binding only on the parties to the agreement, unless it is 
     incorporated into a court order.
       ``(f)  Controlling Effect of This Rule.--Notwithstanding 
     Rules 101 and 1101, this rule applies to State proceedings 
     and to Federal court-annexed and Federal court-mandated 
     arbitration proceedings, in the circumstances set out in the 
     rule. And notwithstanding Rule 501, this rule applies even if 
     State law provides the rule of decision.
       ``(g) Definitions.--In this rule:
       ``(1) `attorney-client privilege' means the protection that 
     applicable law provides for confidential attorney-client 
     communications; and
       ``(2) `work-product protection' means the protection that 
     applicable law provides for tangible material (or its 
     intangible equivalent) prepared in anticipation of litigation 
     or for trial.''.
       (b) Technical and Conforming Changes.--The table of 
     contents for the Federal Rules of Evidence is amended by 
     inserting after the item relating to rule 501 the following:

``502. Attorney-client privilege and work-product doctrine; limitations 
              on waiver.''.

       (c) Effective date.--The amendments made by this Act shall 
     apply in all proceedings commenced after the date of 
     enactment of this Act and, insofar as is just and 
     practicable, in all proceedings pending on such date of 
     enactment.

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