Case Law: GATX Corp. v. Appalachian Fuels, LLC
Court Denies Subject Matter Waiver Absent An Attempt to Gain a Tactical Advantage
GATX Corp. v. Appalachian Fuels, LLC, 2010 WL 5067688 (E.D. Ky. Dec. 7, 2010). In this litigation regarding an alleged breach of two leases, the defendant argued the plaintiff intentionally produced hundreds of documents protected by privilege which resulted in a subject matter waiver under Fed.R.Evid. 502. Upon review of over 200 produced documents, the court determined that roughly 25 e-mail communications contained privileged material. In disagreeing with the plaintiff’s claim that these documents were inadvertently produced, the court found that the plaintiff did not demonstrate the steps it took to comply with 502(b) as it failed to identify which document(s) it sought the return of. Noting that attorney-client privilege waiver does not automatically lead to subject matter waiver, the court found that the relatively low number of privileged documents produced did not necessarily warrant a finding that the disclosure was intentional. Further, the court noted that subject matter waiver exists only in cases where a party deliberately discloses privileged information in an attempt to gain a tactical advantage and, because the plaintiff did not use privilege as both a “shield and a sword,” subject matter waiver did not extend to documents withheld in the privilege log.
The issue of subject matter waiver is one that can strike fear in the hearts of counsel. As is the case with most ediscovery issues, not all courts are aligned on this topic. According to the District Court of the District of Columbia, Fed.R.Evid. 502 abolished the “dreaded subject-matter waiver.” The court in that case dismissed the defendants’ arguments that the disclosure of non-privileged information should constitute a waiver of privileged information of the same subject matter, noting the assertion was “flat out wrong,” since the question is whether the information, both disclosed and undisclosed, shares the same subject matter and ought in fairness to be considered together. Trustees of Elec. Workers Local No. 26 Pension Trust Fund v. Trust Fund Advisors, Inc., 2010 WL 558719 (D.D.C. Feb. 12, 2010).
In a slightly older case, the Southern District of Florida determined that voluntary disclosure of work product constituted a subject matter waiver under Rule 502. In this case, the plaintiffs sought production of all work product-protected documents related to the subject matter of a privileged memorandum that the defendant voluntarily produced. Following a similar line of logic as in the Trustees case, the court determined that disclosure of work product results in a subject matter waiver only if the additional materials "ought in fairness to be considered together" with the memorandum. Finding a subject matter waiver to be warranted, the court relied on federal case law, interpreting Rule 502(a) to determine that subject matter waiver was limited to fact work product. Therefore, the court granted the plaintiffs' motion in this respect and ordered the defendant to produce fact work product materials. Chick-Fil-A and CFA-NC Townridge Square, LLC v. ExxonMobil Corp., 2009 WL 3763032 (S.D. Fla. Nov. 10, 2009).
Another example is provided by the District of Colorado in a case from December 2009. In that case, the plaintiff filed a motion for determination of privilege waiver regarding a single relevant document, arguing its production resulted in a subject matter waiver. After its initial determination that the document was protected by both attorney-client privilege and work product, the court relied on Fed.R.Evid. 502(b) to establish the scope of the waiver. First, the court determined the disclosure was intentional – not inadvertent – as defined by Rule 502, since it was originally examined and withheld by the defendants' counsel. Citing the defendants' knowledge of the production and failure to take reasonable steps to rectify the erroneous disclosure, the court held that the defendants had intentionally disclosed the material to gain advantage in litigation, which justified a subject matter waiver. Noting the plaintiff was not entitled to a "discovery free-for-all," the court also held that opinion work product would remain protected. Silverstein v. Federal Bureau of Prisons, 2009 WL 4949959 (D. Colo. Dec. 14, 2009).
As these cases attest, it is important for counsel to take reasonable and documented measures to safeguard privileged materials in the event of an inadvertent disclosure to avoid any waiver. While Rule 502 has provided protections, the Rule does not erase the uncomfortable reality that inadvertent disclosure provides the opponent with potentially case-damaging information. Parties should negotiate a court sanctioned protective order to avoid disparate interpretation of the Rule and help protect privilege. Just remember, Rule 502 is not a “get out of jail free” pass to sloppy discovery.