[Senate Report 110-264]
[From the U.S. Government Publishing Office]
Calendar No. 580
110th Congress Report
SENATE
2d Session 110-264
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A BILL TO AMEND THE FEDERAL RULES OF EVIDENCE TO ADDRESS THE WAIVER OF
THE ATTORNEY-CLIENT PRIVILEGE AND THE WORK PRODUCT DOCTRINE
_______
February 25, 2008.--Ordered to be printed
_______
Mr. Leahy, from the Committee on the Judiciary, submitted the following
R E P O R T
[To accompany S. 2450]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to which was referred the
bill (S. 2450), to amend the Federal Rules of Evidence to
address the waiver of the attorney-client privilege and the
work product doctrine, having considered the same, reports
favorably thereon without amendment and recommends that the
bill do pass.
CONTENTS
Page
I. Background and Purpose of the Bill...............................1
II. History of the Bill and Committee Consideration..................4
III. Section-by-Section Summary of the Bill...........................5
IV. Congressional Budget Office Cost Estimate........................6
V. Regulatory Impact Evaluation.....................................6
VI. Changes to Existing Law Made by the Bill, as Reported............7
I. Background and Purpose of the Bill
A. BACKGROUND
An efficient and cost-effective discovery process is
important to preserving the integrity of our legal system. The
costs of discovery have increased dramatically in recent years
as the proliferation of email and other forms of electronic
record-keeping have multiplied the number of documents
litigants must review to protect privileged material. Outdated
law affecting inadvertent disclosure coupled with the stark
increase in discovery materials has led to dramatic litigation
cost increases.
Currently, the inadvertent production of even a single
privileged document puts the producing party at significant
risk. If a privileged document is disclosed, a court may find
that the waiver applies not only to that specific document and
case but to all other documents and cases concerning the same
subject matter. Furthermore, the privilege can be waived even
if the party took reasonable steps to avoid disclosing it.
The increased use of email and other electronic media in
today's business environment have exacerbated the problems with
the current doctrine on waiver. Electronic information is even
more voluminous and dispersed than traditional record-keeping
methods, greatly increasing the time needed to review and
separate privileged from non-privileged material. As the time
spent reviewing documents has increased, so too has the amount
of money litigants on all sides must spend to protect against
the potential waiver of privilege.
In his floor statement introducing legislation to correct
this problem, Senator Leahy observed:
Billions of dollars are spent each year in litigation
to protect against the inadvertent disclosure of
privileged materials. With the routine use of email and
other electronic media in today's business environment,
discovery can encompass millions of documents in a
given case, vastly expanding the risks of inadvertent
disclosure. The rule proposed by the Standing Committee
is aimed at adapting to the new realities that
accompany today's modes of communication, and reducing
the burdens associated with the conduct of diligent
electronic discovery.
In his statement supporting the proposed legislation, co-
sponsor Senator Specter remarked:
Current law on attorney-client privilege and work
product is responsible in large part for the rising
costs of discovery--especially electronic discovery.
Right now, it is far too easy to inadvertently lose--or
``waive'' the privilege. A single inadvertently
disclosed document can result in waiving the privilege
not only as to what was produced, but as to all
documents on the same subject matter. In some courts, a
waiver may be found even if the producing party took
reasonable steps to avoid disclosure. Such waivers will
not just affect the case in which the accidental
disclosure is made, but will also impact other cases
filed subsequently in State or Federal courts.
In sum, though most documents produced during discovery
have little value, lawyers must nevertheless conduct exhaustive
reviews to prevent the inadvertent disclosure of privileged
material. In addition to the amount of resources litigants must
dedicate to preserving privileged material, the fear of waiver
also leads to extravagant claims of privilege, further
undermining the purpose of the discovery process. Consequently,
the costs of privilege review are often wholly disproportionate
to the overall cost of the case.
B. PURPOSE OF THE BILL
The bill addresses these problems by providing a
predictable and consistent standard to govern the waiver of
privileged information. It improves the efficiency of the
discovery process while preserving accountability. Furthermore,
it does not alter federal or state law on whether information
is protected by the attorney-client privilege or work product
doctrine in the first instance, but merely modifies the
consequences of inadvertent disclosure once a privilege is
found to exist.
The bill provides a new Federal Rule of Evidence 502 to
limit the consequences of inadvertent disclosure, thereby
relieving litigants of the burden that a single mistake during
the discovery process can cost them the protection of a
privilege. It provides that if there is a waiver of privilege,
it applies only to the specific information disclosed and not
the broader subject matter unless the holder has intentionally
used the privileged information in a misleading fashion. An
inadvertent disclosure of privileged information does not
constitute a waiver as long as the holder took reasonable steps
to prevent disclosure and acted promptly to retrieve the
mistakenly disclosed information.
The bill provides a new rule to ensure that parties will
take advantage of its protections by remaining enforceable in
subsequent proceedings. If a federal court enters an order
finding that an inadvertent disclosure of privileged
information does not constitute a waiver, that order will be
enforceable against persons in federal or state proceedings.
This protects the rule's ability to limit discovery costs by
ensuring that parties in any given case will know they can rely
on the new waiver rules in subsequent proceedings.
Importantly, the bill respects federal-state comity. The
bill will ensure that if there is a disclosure of privileged
information at the federal level then courts must honor Rule
502 in any subsequent state proceedings. If there is a
disclosure in a state proceeding, then admissibility in any
subsequent federal proceeding will be determined by the law
that is most protective against waiver. However, it does not
apply to any disclosure made in a state proceeding that is
later introduced in a subsequent state proceeding.
Litigants recognize the need to adopt a new waiver doctrine
to adapt to the effects of changing technology in the business
environment. The bill has attracted widespread support from
major legal organizations representing stakeholders on all
sides of modern litigation. Among those groups voicing support
for the measure are the American Bar Association, American
College of Trial Lawyers, U.S. Chamber of Commerce, former
Chairs of the Section of Litigation of the American Bar
Association, Lawyers for Civil Justice, and several private law
firms.
C. STATUTORY REQUIREMENTS
Any rule creating, establishing, or modifying an
evidentiary privilege requires legislation. Under the Rules
Enabling Act, federal rules of procedure proposed by the
Judicial Conference usually take effect after a prescribed
period unless Congress acts to disapprove them. Pursuant to 28
U.S.C. Sec. 2074(b), however, rules concerning evidentiary
privileges must be affirmatively approved by an Act of
Congress.
II. History of the Bill and Committee Consideration
A. DRAFTING OF THE BILL
The Judicial Conference Committee on Rules of Practice and
Procedure has long been concerned about the rising costs of
litigation associated with the current law on waiver of
privileged information. In 2006, then-House Judiciary Committee
Chairman Sensenbrenner suggested that the Judicial Conference
propose a rule that would deal with privilege waiver in a way
that would solve the problems of rising discovery costs. The
Judicial Conference referred the task of drafting a proposed
rule to the Advisory Committee on Evidence Rules.
The Advisory Committee invited eminent judges, lawyers, and
academics to testify before the Committee about the need for
the new evidence rule and how to craft it successfully. For
over a year, the Advisory Committee coordinated the drafting of
the proposed new rule with the Conference of Chief Justices,
revising it by limiting the rule's scope to address the
Conference's federalism concerns. The Advisory Committee also
met with Pennsylvania Chief Justice Ralph Cappy, who chaired
the Conference's group addressing the new rule to satisfy the
Conference's last remaining concern about the proposed rule. As
a result of this collaboration, the Advisory Committee revised
the Committee Note to acknowledge the reciprocity of court
orders by state and federal courts.
At the suggestion of Chairman Sensenbrenner, the Advisory
Committee also considered a new rule that would allow persons
to cooperate with government agencies and disclose privileged
information without waiving the right to assert privilege as to
other parties in subsequent litigation. However, after careful
review of the competing interests involved in these ``selective
waivers,'' the advisory committee determined that it would not
recommend this provision. Unlike inadvertent waivers, which
raise the costs and burdens of the discovery phase of
litigation, an area of great concern to the rules committees,
the selective waiver provision addresses policy matters,
principally the effectiveness of government investigations,
which are largely outside the competence and jurisdiction of
the rules committees.
In April 2006, the Advisory Committee held a conference at
Fordham Law School with a select group of practitioners and
academics to review the draft rule. After making appropriate
changes in response to the feedback at the conference, the
Advisory Committee published the revised rule for public
comment in August 2006. The Committee received more than 70
public comments and heard testimony from 20 live witnesses at
two public hearings.
In April 2007, the Advisory Committee released a revised
proposed Rule 502, taking into consideration the public comment
and witness testimony. The Committee on Rules of Practice and
Procedure and the Judicial Conference approved the revised
rule.
B. INTRODUCTION OF THE BILL AND COMMITTEE CONSIDERATION
On December 11, 2007, Chairman Leahy introduced S. 2450,
incorporating the language proposed by the Judicial
Conference's Advisory Committee. He was joined initially by
Senator Specter and later by Senator Graham on December 17,
2007. The bill was referred to the Senate Committee on the
Judiciary.
The bill was listed on the Executive Business Meeting
Agenda on January 24, 2008. On January 31, 2008, the Judiciary
Committee considered the legislation approved it by unanimous
consent. The Committee reported the bill to the full Senate
without amendment.
III. Section-by-Section Summary of the Bill
SECTION 1: ATTORNEY-CLIENT PRIVILEGE AND WORK PRODUCT LIMITATIONS ON
WAIVER
(a) This section amends Article V of the Federal Rules of
Evidence by adding the following provisions as Rule 502:
(a) This section limits the effect of disclosures
made in a Federal proceeding or to a Federal officer or
agency that waive the attorney-client privilege or the
work-product doctrine. The section prevents such a
waiver from extending to undisclosed information or
information in a State or Federal proceeding unless:
the waiver was intentional, the disclosed and
undisclosed information concern the same subject
matter, and in fairness, the undisclosed and disclosed
information should be considered together.
(b) This section prevents inadvertent disclosures
made in Federal proceedings or to a Federal Officer or
agency from operating as a waiver if: the disclosure
was inadvertent, the holder of the privilege or
protection took reasonable steps to prevent disclosure,
and the holder took steps to quickly rectify the
disclosure under Federal Rule of Civil Procedure
26(b)(5)(B).
(c) This section prevents disclosures made in a State
proceeding, which are not the subject of a State-court
order concerning waiver, from constituting a waiver in
Federal court if: the disclosure would not have been a
waiver under this rule if made in Federal court or the
disclosure would not be a waiver under the law of the
State where the disclosure occurred.
(d) This section allows Federal courts to order that
privileged or otherwise protected information is not
waived by disclosure connected with the present
litigation, and provides that such disclosure is not a
waiver in any other Federal or State proceeding.
(e) This section limits agreements made between
parties on the effects of disclosure in a Federal
proceeding to be binding only on the parties to the
agreement unless the agreement is incorporated into a
court order.
(f) This section defines the applicability of this
rule, notwithstanding Rules 101 and 1101, to State
proceedings and to Federal-court annexed and Federal-
court mandated arbitration proceedings, in the
circumstances set out in this rule. Notwithstanding
Rule 501, this rule applies even if State law provides
the rules of decision.
(g) This section defines ``attorney-client
privilege'' as ``the protection that applicable law
provides for confidential attorney-client
communications''; and defines ``work-product
protection'' as ``the protection that applicable law
provides for tangible material (or its intangible
equivalent) prepared in anticipation of litigation or
for trial.''
(b) This section adds Rule 502 to the table of contents for
the Federal Rules of Evidence.
(c) This section makes this rule applicable to all
proceedings commenced after the enactment of this rule and to
all proceedings pending on the date of enactment, if it would
be just and practicable.
IV. Congressional Budget Office Cost Estimate
The Committee on the Judiciary sets forth, with respect to
the bill, S. 2450, the following estimate prepared by the
Director of the Congressional Budget Office under section 402
of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, February 22, 2007.
Hon. Patrick J. Leahy,
Chairman, Committee on the Judiciary,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 2450, a bill to
amend the Federal Rules of Evidence to address the waiver of
the attorney-client privilege and work product doctrine.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Leigh Angres.
Sincerely,
Robert A. Sunshine
(For Peter R. Orszag, Director).
Enclosure.
S. 2450--A bill to amend the Federal Rules of Evidence to address the
waiver of attorney-client privilege and the work product
doctrine
S. 2450 would amend the Federal Rules of Evidence relating
to the disclosure of information gained by a waiver of the
attorney-client privilege and work product protection. The bill
would apply to all proceedings commenced after the date of
enactment, and when practicable, to proceedings pending on such
date. CBO estimates that implementing S. 2450 would have no
significant effect on the federal budget. Enacting the
legislation would not affect direct spending or revenues.
S. 2450 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would not affect the budgets of state, local, or tribal
governments.
The staff contact for this estimate is Leigh Angres. The
estimate was approved by Theresa Gullo, Deputy Assistant
Director for Budget Analysis.
V. Regulatory Impact Evaluation
In compliance with rule XXVI of the Standing Rules of the
Senate, the Committee finds that no significant regulatory
impact will result from the enactment of S. 2450.
VI. Changes to Existing Law Made by the Bill, as Reported
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, changes in existing law made by
S. 2450, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, and existing law in which no
change is proposed is shown in roman):
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;
``(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.