Ordinarily, disclosure of confidential information to an unprotected third party operates as a waiver. Under FRE 502, however, disclosure of privileged information will not operate as a waiver when “(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).” All three elements described in FRE 502 must be satisfied to prevent a waiver.
Plaintiffs argue that “[FRE] 502 is applicable to this case[,] and Defendants offer no reason why it would not be ‘just and practicable’ to apply [FRE] 502 to this case as in every other case.” Defendants argue that this Court should apply the three-part inquiry quoted in Judson. The Judson test requires the court to decide (1) whether the disclosed material was privileged, (2) whether the disclosure was inadvertent, and (3) whether the privilege was waived.
There is no question that FRE 502 applies to this case. The 2008 Amendment clearly stated that FRE 502 applies to matters pending on September 19, 2008, “insofar as is just and practicable.” This matter was pending on that date, and this Court finds no reason, and Defendants have pointed to none, that precludes the application of FRE 502.
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To properly assess whether FRE 502(b) overrides Judson, this Court examines each step of the Judson test.
The first step of the Judson test requires the court to determine whether the documents at issue are privileged. This step must remain in place under FRE 502(b), which applies only to privileged information that was inadvertently disclosed. Prior to addressing any of the elements stated in FRE 502(b), therefore, the court must determine whether the documents are privileged. If the documents are not privileged, the inquiry ends. If the documents in question are privileged, then FRE 502(b) applies, and the court must determine whether each of FRE 502(b)’s elements was satisfied. The first element of FRE 502(b), which also is the second step of the Judson test, requires the court to assess whether the party’s disclosure was inadvertent. Therefore, this Court will assess whether a disclosure is inadvertent. FN6
FN6: Inadvertence under FRE 502(b) is not necessarily the same as, and does not necessarily mirror the case law describing, inadvertence under Judson.
Defendants also urge this Court to adopt Judson’s third step, which requires the court to determine, using a “balancing approach,” whether a waiver occurred despite the inadvertent disclosure of privileged information. The balancing approach requires the court to consider “(1) the reasonableness of the precautions taken to prevent disclosure; (2) the time taken to rectify the error; (3) the scope of the discovery; (4) the extent of the disclosure; and (5) the overriding issue of fairness.”
That tack, however, has been at least partially foreclosed by Congressional action. FRE 502 specifically states that inadvertent disclosure “does not operate as a waiver in a Federal . . . proceeding.” In other words, the second and third steps of the Judson test have been folded into the entire FRE 502(b) inquiry. FRE 502 does not, however, prohibit the use of the Judson factors. FED. R. EVID. 502(b) advisory committee’s note (noting that the non-dispositive factors a court may consider “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”). Thus, while “[FRE 502(b)] is flexible enough to accommodate any of those listed factors,” it “does not explicitly codify [the Judson] test[] because [the factors it uses are] a set of non-determinative guidelines that vary from case to case.” Therefore, the court may, but need not, use some or all of the Judson factors to assess whether FRE 502(b)’s requirements have been satisfied.
This Court therefore adopts the following test. First, a court determines whether the disclosed material is privileged. If it is not, the inquiry ends. If the material is privileged, the court applies FRE 502(b). If the court concludes that disclosing party satisfied all of the elements in FRE 502(b), the privilege is not waived. If, however, the disclosing party fails to satisfy any of the FRE 502 elements, the privilege is waived. In applying FRE 502(b), the court is free to consider any or all of the five Judson factors, provided they are relevant, to evaluate whether each element of FRE 502(b) has been satisfied. FN7.
FN7: One court has applied FRE 502(b) in a rather peculiar fashion, choosing to adopt the factors articulated in the committee’s note as a wholesale test of inadvertent disclosure. Rhoads Indus., Inc. v. Bldg. Materials Corp. of Am., 254 F.R.D. 216, 218-27 (E.D. Penn. 2008). Strangely, using only the Judson factors to determine the waiver question eliminates any need to consult the elements required under FRE 502. Such an approach would ignore a Congressional mandate and substitute judicial holdings for legislation. Therefore, this Court concludes that a better approach focuses on the elements required by FRE 502 and uses the Judson factors, where appropriate, to supplement this analysis.
Heriot v. Byrne, 2009 U.S. Dist. LEXIS 22552 at *16-(N.D. Ill. Mar. 20, 2009) (internal citations removed)
