Trial Magazine

When corporate defendants complain about the costs of litigation and the need to adopt measures to save time and money in reviewing documents (especially ESI) for privilege, remember those cost-saving procedures can be used to conceal some of the most vital documents in the litigation. Here are several ways to negotiate guidelines before production begins to ensure you can challenge privilege designations effectively and stop defendants from hiding responsive documents.

Federal Rule of Evidence 502 governs attorney-client privilege and work product protection. It covers different scenarios in which privileged information is disclosed and what to do if such information is inadvertently disclosed. When first adopted in 2008, the Advisory Committee on Evidence Rules explained that the rule was necessary to respond to the “widespread complaint that litigation costs necessary to protect against the 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.”¹ The Advisory Committee continued that “this concern is especially troubling in cases involving electronic discovery.”²

But the concerns that led to the adoption of Rule 502 are simply a variation on discovery themes in complex litigation. In class actions, for example, consumer plaintiffs routinely face a one-two punch when it comes to discovery obfuscation. First, plaintiffs’ discovery requests are met with near-global objections that locating, reviewing, and producing the responsive documents would be cost-prohibitive—necessitating a Rule 502(d) agreement. Second, corporate defendants complicate matters further with overbroad assertions of privilege that should have gone by the wayside with the adoption of Rule 502(d). You must counter these arguments, as their outcomes often determine the result of the litigation.³

Rule 502 and Its Clawback Provisions

Rule 502(d) provides that “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.”⁴ The purpose of Rule 502(d) was to reduce the cost of discovery and document review; and “clawback” and “quick look” arrangements (or, when a responding party provides documents to the other side without review for privilege) were “a way to avoid the excessive costs of pre-production review for privilege and work product” protections.⁵ Such arrangements could help provide “predictability” when planning for “privilege and work product review and retention.”⁶

Regardless, the rule is now often used in complex litigation to justify the ability to claw back documents inadvertently produced by large, well-resourced defendants.

Any Rule 502(d) order should include a provision that prohibits clawback after a witness has testified about the document.

Negotiating a Rule 502(d) Order

Using Rule 502(d), the parties can negotiate and propose clawback orders to federal district courts as either standalone orders, ESI protocols, or privilege log protocols. District courts can then adopt or modify orders as part of their broad case management-related discretion. With the broad use of Rule 502(d) orders in complex litigation, be prepared to negotiate proposed clawback and quick look orders. Consider the following points when negotiating these orders.

1. If a litigant testifies about the document, it cannot be clawed back. No matter who solicits the testimony—whether it is opposing counsel or testimony on redirect—any Rule 502(d) order should include a provision that prohibits clawback after a witness has testified about the document. Failure to include such a provision could result in a clawback of documents despite a witness providing testimony about them.⁷
2. Clawback orders do not shift the burden of finding potentially privileged documents to the receiving party. If the receiving party provides the producing party with notice that potentially privileged documents have been produced, the producing party cannot sit on its hands and wait until the receiving party finds every related document. The producing party must perform a diligent, good-faith review of the documents shortly after receiving such notice, which would include searching for additional, similar privileged materials and issuing clawback notices shortly after finding those additional documents.
3. The cost of excessive clawbacks must be borne by the producing party. If a producing party claws back a certain percentage of the document production, then the producing party should have to pay costs related to the clawback. The percentage should be determined by the size of the production and in close consultation with your ESI vendor about segregating and removing documents and associated data from the document review platform. At the very least, the proposed order should reserve the ability to seek costs for unreasonable or excessive clawback requests.
4. Documents may be sequestered to challenge clawbacks, and the documents may be used to challenge privilege assertions. Litigants should be able to challenge clawbacks, and the parties should negotiate a “sequester” period for challenges, in which the documents may be used solely for the challenges themselves.⁸
5. If the parties cannot agree on the use of categorical privilege logs, they should not be used. Categorical privilege logs have been proposed as time-savers for producing parties—with mixed results. Categorical logs group documents into “categories,” rather than requiring a document-by-document privilege analysis. Although Rule 502(d) quick look orders provide that parties should swiftly produce documents, privilege logs must be produced—especially for clawed-back documents. If the parties cannot agree to categories, then document-by-document logs are the norm.⁹

Countering Wholesale Privilege Assertions

Beyond the challenges of Rule 502(d) orders, plaintiffs may also face assertions of privilege from defendants who over-designate documents that are neither protected as work product nor attorney-client communications.

Opposing counsel have adopted the trend of advancing documents through their corporate counsel’s office to determine whether a privilege exists—often dramatically increasing the time and effort to produce documents for the sole purpose of manufacturing privilege.

“Funneling” of documents through the corporate counsel’s office provides corporations with more spurious claims of privilege than ordinary litigants can claim. Corporate lawyers make extravagant claims of privilege as part of a “scorched earth strategy” to drive up costs for opposing parties. Some of the screening may not seek privileged documents but instead be a way for “smoking guns” to “disappear” through the corporation’s “document maintenance program.”

And, finally, corporate bureaucracies churn out truckloads of potentially privileged documents that are extremely time consuming to review to determine whether they are properly designated.¹⁰ Adding to the frustration are vague privilege logs, which provide little explanation of the privilege claims or use categorical logging without coming to an agreement with opposing counsel in advance.¹¹

To challenge these overbroad claims of privilege, anticipate a producing party’s assertions and build in review processes (via the proposed clawback order, ESI protocol, or protective orders) that allow for a common-sense approach to countering inappropriate designations.

1. A party should be able to challenge a privilege designation at any time during discovery. You must build in protections when negotiating the case’s protective order so that privilege challenges may occur at any point during discovery. If it takes a litigant several months to march through a privilege log with hundreds of thousands of entries or understand that a company routinely carbon-copied counsel for the sole purpose of manufacturing privilege, a litigant may lose the opportunity to challenge those designations if rigid time lines are adopted for challenges.
2. Privilege assertions must be clearly designated on any log. Understanding the basis for the privilege assertion—whether the document is work product or a privileged communication—is vitally important to challenging the designation and citing the correct case law related to the challenge.¹² Any privilege logging protocol should require a clear designation as to why the document is privileged.¹³
3. Categorical logging allows for mischief, so safeguards should be in place. Categorical logs contain less information than typical privilege logs, and often they do not contain enough information to allow a party to challenge the document’s designation at face value.¹⁴ At no point should litigants adopt categorical logging without first negotiating protections to guard against abuse. For example, opposing counsel should be required to sign an attestation that the defendant has engaged in a good-faith process to ensure that documents were not over-designated. Additionally, you can move for in camera review of a sample set of documents on the defendant’s privilege log to uncover any trend of over-designation.¹⁵
4. Communicate and keep track of everything. Creating a paper trail is, unfortunately, necessary. If a defendant has engaged in practices that continue to frustrate the discovery process, courts will not simply take your word for it—you must demonstrate, in explicit detail, why the process has been frustrated and what was prejudicial about the defendant’s misconduct.¹⁶ In addition, regular meetings with the case’s magistrate judge or special master should be encouraged to point out any misconduct or establish a record for later motion practice.

Putting these guidelines into action early on in discovery is the best way to protect your clients’ cases and make sure responsive documents come to light.

AAJ Resources

• Over–Designation Litigation Group (New!)
• Consumer Privacy/Data Breach Litigation Group
• “Electronic Discovery” Litigation Packet

Amy Keller is a partner at DiCello Levitt in Chicago and can be reached at akeller@dicellolevitt.com.

Notes

1. Fed. R. Evid. 502 Advisory Comm. Notes (emphasis added).
2. Id.
3. For a related discussion concerning sanctions for misrepresenting the level of security required to review a defendant’s documents, see Johnson v. Ford Motor Co., 2018 WL 1512376, at *1 (S.D. W. Va. Mar. 26, 2018).
4. Fed. R. Evid. 502(d).
5. Fed. R. Evid. 502 Advisory Comm. Notes, Subsection (d).
6. Id.
7. See, e.g., Insignia Sys., Inc. v. News Corp., 2021 WL 5086384, at *2 (D. Minn. June 30, 2021). At the very least, the proposed order should provide a very limited period of time in which a clawback may occur. See, e.g., Stipulated Protective Order, In re Equifax Inc. Customer Data Security Breach Litig., 999 F.3d 1247 (11th Cir. 2021) [hereinafter Equifax Protective Order].
8. See, e.g., Second Amended Stipulated Protective Order, In re Marriott Int’l Customer Data Security Breach Litig., 31 F.4th 898 (4th Cir. 2020); Equifax Protective Order, 999 F.3d 1247 (providing that documents may be “sequestered” if clawback is challenged).
9. See Maxus Energy Corp. v. YPF, S.A., 2021 WL 3619900, at *3 (Bankr. D. Del. Aug. 16, 2021). Consult your ESI vendor on how metadata can efficiently provide a substantial amount of information needed for a privilege log. See Am. Mun. Power, Inc. v. Voith Hydro, Inc., 2020 WL 5014914, at *12 (S.D. Ohio Aug. 25, 2020).
10. 23A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure §5442 (1st ed. 2023).
11. See, e.g., In re Aenergy, S.A., 2020 WL 1659834, at *4–6 (S.D.N.Y. Apr. 3, 2020); Certain Companion Prop. & Cas. Ins. Co. v. U.S. Bank Nat’l Ass’n, 2016 WL 6539344, at *3 (D.S.C. Nov. 3, 2016); Franco-Gonzalez v. Holder, 2013 WL 8116823, at *7 (C.D. Cal. May 3, 2013); Chevron Corp. v. Salazar, 2011 WL 4388326, at *2 (S.D.N.Y. Sept. 20, 2011).
12. For example, understanding the difference between work product and privilege is important. See 8 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure §2016.3 (3d ed. 2023).
13. This is also consistent with Federal Rule of Civil Procedure 26. See Fed. R. Civ. P. 26(b)(5)(A).
14. See, e.g., In re Aenergy, S.A., 2020 WL 1659834, at *4–6; Certain Companion Prop., 2016 WL 6539344, at *3; Franco-Gonzalez, 2013 WL 8116823, at *7; Chevron Corp., 2011 WL 4388326, at *2.
15. Courts have several remedies when a party’s privilege log is inadequate or untimely. See Johnson v. Ford Motor Co., 309 F.R.D. 226, 234–35 (S.D. W. Va. 2015); Diamond Resorts U.S. Collection Dev., LLC v. Neally, 2021 WL 8773337, at *2 (M.D. Fla. Dec. 17, 2021).
16. A great example of the need to document specific ways in which defendants (and counsel) have engaged in discovery misconduct is a recent sanctions order against Facebook (now known as Meta). In re Facebook, Inc. Consumer Priv. User Profile Litig., 2023 WL 1871107, at *1 (N.D. Cal. Feb. 9, 2023).