Originally published December 3, 2008
Keywords: Michigan, Federal Court, Federal Rule of Evidence, FRE, attorney-client privilege, ESI, Laethem, Deere, electronically stored information, privileged materials, waiver
The District Court for the Eastern District of Michigan has ruled that recently adopted Federal Rule of Evidence (FRE) 502 protects against waiver of the attorney-client privilege where the disclosure of electronically stored information (ESI) was inadvertent and the disclosing party took prompt steps to protect the privilege. Laethem Equipment Co. v. Deere and Co., 2008 WL 4997932 (E.D. Mich. 2008).
Sometime in January 2008, Laethem produced to Deere two disks containing volumes of electronically stored data (although Deere disputed the date the disks were produced). Laethem learned that the two disks contained privileged materials when Deere's counsel tried to use privileged materials from the disks during a January 31, 2008, deposition. Laethem's counsel objected during the deposition to the use of the privileged materials, followed up with a letter demanding the return of the privileged materials, repeated the objection and demand during subsequent depositions, and, within three weeks, secured a court order compelling the return of the privileged materials. In a motion to compel, Deere asserted that by producing the two disks, Laethem had waived the attorney-client privilege protecting any material on the disks.
United States Magistrate Judge Paul Komives relied on the newly adopted FRE 502 to reject Deere's call for waiver. According to the court, because it was clear that the disclosure was inadvertent, under the new FRE 502 the waiver issue turned on whether: (i) Laethem took reasonable steps to prevent disclosure; and (ii) Laethem took reasonable steps to rectify the erroneous disclosure after discovering it. As to the first question, the court did not provide much explanation. However, Laethem seemed to be given the benefit of the doubt because the two disks were disclosed outside of the "inspect and copy" procedure agreed to by the parties, which prevented Laethem from conducting a privilege review prior to producing the disks, and because on balance, the volume of disclosed privileged data was small compared to the significant volume of data produced in the case. The court then found the steps Laethem's counsel took after learning of the inadvertent disclosure to be a diligent attempt to rectify the disclosure.
As one of the first cases addressing the new FRE 502, Laethem is instructional for those who are juggling the costs and burdens of discovery in the world of electronic data with the obligations and necessity of protecting attorney-client materials. Clearly, the "reasonable" standards established by FRE 502 will be the subject of much litigation in the future. For instance, when must the reasonable steps to rectify an inadvertent disclosure be made? FRE 502 is silent on this issue. In Laethem, the court presumed without explanation that the clock for reasonable steps started after Laethem learned of the inadvertent disclosure. An argument can be made, and it surely will be in future cases, that FRE 502's clock for reasonable steps to rectify starts after the inadvertent disclosure is made, not when the opposing party first tries to use the disclosed privileged material. The result likely will be a standard that varies among courts and jurisdictions. Also, the question of what constitutes "reasonable steps to prevent disclosure," which was largely ignored by the Laethem court, will also lead to inconsistent benchmarks and standards.
View Mayer Brown's related Client Alert from June 11, 2008, " Inadvertent Document Production Results in Waiver of Privilege," reviewing the Maryland District Court's ruling in Victor Stanley, Inc. v. Creative Pipe, Inc., et al.
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