Jump to Navigation | Jump to Content
American Bar Association

Litigation News
Securities »

Subpoenas from Federal Agencies: Will FRE 502(d) Protect Privilege?

By Laura D. Cullison

Practitioners looking for a way to produce documents to a federal agency such as the Securities and Exchange Commission (SEC) while maintaining privilege may find a glimmer of light in Federal Rule of Evidence 502(d). (While the rule discusses both attorney-client privilege and work product, the term “privilege” is used within this article for brevity.) Under Rule 502(a), in a federal proceeding or in a production to a federal agency, any intentional privilege waiver generally is limited to the actual communications or information produced. Under Rule 502(b), inadvertent disclosure will not waive the privilege, as long as the holder of the privilege takes reasonable steps to prevent disclosure and acts promptly to retrieve the inadvertently disclosed documents. Rule 502 was a disappointment for those who had hoped for a rule that would also codify selective waiver: the doctrine (supported by a minority of courts) that the intentional production of privileged documents to a federal agency, such as the SEC, does not act as a waiver of the privilege in other proceedings.

Rule 502(d)
Although the drafters of Rule 502 rejected selective waiver, they included section d within Rule 502, a provision that provides a different means of protecting privileged materials. This section of the rule has been described by some as the most innovative, far-reaching, and novel aspect of Rule 502.

Rule 502(d) states:

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.

As a procedural matter, Rule 502(d) only speaks to litigation “pending before the court.” This would seem to indicate that the drafters did not intend for Rule 502(d) to be applied in actions involving subpoenas issued by federal agencies. However, Judge Shira A. Scheindlin recently suggested in her remarks at a Practicing Law Institute on “Current Issues in Electronic Discovery,” held on December 4, 2009, that if the recipient of the subpoena files a motion to quash the subpoena in federal court, that would create litigation pending before the court and satisfy Rule 502(d). This procedure also avoids the problems raised by a declaratory judgment action. Admittedly, filing a motion to quash raises the separate question of whether the recipient of the subpoena is willing to air the matter in a federal court proceeding. However, absent this step, Rule 502(d) cannot be applied to documents produced in response to a subpoena from a federal agency. This limitation is reinforced in the notes to section d, which state: “[t]he rule provides that when a confidentiality order governing the consequences of disclosure in that case is entered in a federal proceeding, its terms are enforceable against non-parties in any federal or state proceeding.”

In theory, to receive the protection of Rule 502(d), the party who receives a subpoena would move to quash the subpoena, and for the court to enter an order pursuant to Rule 502(d) that privilege is not waived by disclosure of the documents requested in the subpoena. This potential procedure is possible because Rule 502(d), on its face, is not limited to inadvertent disclosures. The inclusion of intentional disclosures in Rule 502(d) is further reflected in the notes to section d, which specifically approve the intentional production of privileged documents under “claw-back” or “quick-peek” agreements that forego privilege review altogether:

the rule contemplates enforcement of “claw-back” and “quick peek” arrangements as a way to avoid the excessive costs of pre-production review for privilege and work product. See Zubulake v. UBS Warburg LLC, 216 F.R.D. 280, 290 (S.D.N.Y. 2003) (noting that parties may enter into “so-called ‘claw-back’ agreements that allow the parties to forego privilege review altogether in favor of an agreement to return inadvertently produced privilege documents”).

Rule 502(d) thus allows for the disclosure of privileged materials, without waiver of privilege in the immediate proceeding or any other federal or state proceeding, if the disclosure is pursuant to court order under Rule 502(d). Such an order can arise by agreement of the parties, but, per the notes, “a confidentiality order is enforceable whether or not it memorializes an agreement among the parties to the litigation.” Agreement of the parties “should not be a condition of enforceability of a federal court’s order.”

This scenario creates the possibility that a privileged document produced in response to an SEC subpoena, subject to a Rule 502(d) order, would be protected from waiver. Moreover, under a claw-back or quick-peek agreement, the privilege is not selectively waived. Rather, via court order, the issue of privilege is put on hold to facilitate the exchange of materials. The questions raised by this suggested approach do not have definitive answers yet, in part because early decisions by the courts are not consistent in their approach to Rule 502(d).

Early Court Decisions
One court, in granting a motion to compel production of a large group of emails, rejected the suggestion that the emails be produced under Rule 502 pursuant to a non-waiver or quick-peek agreement.[1] The court observed:

The difficulty with [the quick-peek proposal] is that Rule 502(b) preserves the privilege if “the holder of the privilege or protection took reasonable steps to prevent disclosure” of the privileged material. Simply turning over all ESI materials does not show that a party has taken “the reasonable steps” to prevent disclosure of its privileged materials . . .[2]

Some commentators have viewed the court’s rejection of a quick peek to confirm the view that Rule 502, including Rule 502(d), only prevents waiver when the disclosure of privileged materials is inadvertent. That is, the privileged material would not have been produced had the party properly identified the material during its privilege review. However, the notes clearly contemplate quick-peek situations where there is no privilege review at all, and yet the privilege is maintained. Perhaps a better way to address this issue is to recognize that, if the court orders the quick peek under Rule 502(d), then any production of privileged materials within the quick peek is inadvertent because the quick peek is court-ordered and not voluntary.

In contrast to the Spieker court’s limited interpretation of Rule 502, another court expansively invoked the non-waiver protections of Rule 502(d) to overcome the defendant’s request for a stay in Whitaker Chalk Swindle & Sawyer, LLP v. Dart Oil and Gas Corp.,[3] In this case, the defendant argued that, without a stay, it would be required to turn over documents that would result in a waiver of privilege in other Texas state-court proceedings. The court disagreed, finding that it was “within this Court’s authority to order discovery to proceed” pursuant to an order under Rule 502(d), and that under such order the defendant “has not waived the attorney-client or work-product privilege.”[4] The court in particular noted that it could not find “any reason why a Texas court would not recognize an order entered under Rule 502.” Rule 502 clearly states that Rule 502(d) orders are effective in federal and state proceedings; however, whether state courts will find any impediment to recognizing a Rule 502(d) order is an unresolved question.[5]

Another recent Rule 502(d) order of note is the October 14, 2009, order entered by the Southern District of New York in SEC v. Bank of America Corp. This much-publicized case concerns, in part, legal advice regarding the disclosures in proxy statements about the merger between Bank of America and Merrill Lynch. The parties in the case created a “Disclosure Stipulation Agreement and Proposed Protective Order” wherein Bank of America agreed to waive the privilege as to certain categories of documents being voluntarily produced to the SEC “while not waiving the privilege with respect to any additional documents.”[6] The court entered the proposed agreement under Rule 502(d) as a means of protecting Bank of America “against any claim that the stipulated waiver here attached implicitly effectuates a broader waiver.” This Rule 502(d) order does not involve a quick peek, but instead takes the parties’ confidentiality agreement and applies its terms to other federal and state proceedings. This decision has been subject to criticism for overreaching the plain language of Rule 502. As some commentators have described the decision, the parties used Rule 502(d) to create their own selective waiver, when the drafters of Rule 502 specifically rejected selective waiver. However, others have suggested that the court’s order simply ensured that the protections found in Rule 502(a), regarding subject-matter waiver, would apply in any other proceedings. All agree that the actual impact of the court’s Rule 502(d) order remains to be seen.

Rule 502(d) Benefits Both Sides
Employing Rule 502(d) when producing documents to a federal agency is consistent with the goals of Rule 502, as stated in the notes, to provide a “predictable, uniform set of standards under which parties can determine the consequences of a disclosure of a communication.” Moreover, both private litigants and federal agencies have reasons to support Rule 502(d). For example, in the case of an SEC subpoena, if the company provides information quickly, it shows a high level of cooperation. For the SEC staff, having early access to information, including privileged information, allows them to efficiently evaluate the issues and determine the appropriate regulatory response. Also, the company may save thousands or even millions of dollars in production and litigation costs by providing the staff with up-front information that could streamline the investigation.

The company’s desire to protect the privilege in other proceedings is obvious. The SEC, however, also shares an interest in maintaining the privilege. The staff wants companies to quickly and efficiently provide information. When companies are harmed in subsequent litigation by sharing privileged information with the SEC, cooperation dries up. When cooperation dries up, it is harder for the SEC to do its job. The SEC recently recognized the benefits of cooperation regarding the Bank of America case: “Bank of America waived all claims of privilege relating to the proxy disclosures made in connection with the merger and several other subjects in order to permit the SEC to conduct a thorough investigation of these subjects . . .”[7] Under Rule 502(d), however, it may be possible for the SEC to investigate thoroughly and for the company to maintain the privilege.

Whether the glimmer of light in Rule 502(d) is substance or illusion remains to be seen, but this provision definitely provides the opportunity for novel approaches to maintaining privilege.

Keywords: Securities, FRE 502(d), privilege

Laura D. Cullison is an associate with Skadden Arps Slate Meagher & Flom LLP in Chicago, Illinois.

This article appears in the Winter 2010 issue of the Securities Litigation Journal from the Securities Litigation Committee.



  1. Spieker v. Quest Cherokee, LLC, 2009 WL 2168892 (D. Kan. July 21, 2009).
  2. Spieker, 2009 WL 2168892, *9.
  3. 2009 WL 464989 (N.D. Tex. Feb. 23, 2009).
  4. Whitaker, 2009 WL 464989, *8.
  5. See Henry S. Noyes, Federal Rule of Evidence 502: Stirring the State Law of Privilege and Professional Responsibility with a Federal Stick, 66 WASH. & LEE L. REV. 673 (2009) (arguing that Rule 502’s application to state court proceedings is unconstitutional).
  6. SEC v. Bank of Am. Corp., 09 Civ 6829, (S.D.N.Y. Oct. 14, 2009).
  7. Ex. Act. Litig. Rel. No. 21371 (Jan. 11, 2010).


Be the first to comment.


We welcome your comments. Please use the form below to post.

Copyright © 2017, American Bar Association. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. The views expressed in this article are those of the author(s) and do not necessarily reflect the positions or policies of the American Bar Association, the Section of Litigation, this committee, or the employer(s) of the author(s).

Back to Top