Claw It Back: Updated Protections of New Jersey Rule of Evidence 530 on Inadvertent Disclosure
On July 1, 2020, Amended New Jersey Rule of Evidence 530 (Waiver of Privilege by Contract or Previous Disclosure) became effective.
N.J.R.E. 530, which tracks Federal Rule of Civil Procedure 502, was amended as a result of the increasing use of electronic discovery in litigation and the associated concerns regarding the potential for the inadvertent disclosures. This blog has frequently addressed decisions involving F.R.E. 502, including in 2019, 2018, and 2012. Amended N.J.R.E. 530 includes significant revisions in paragraph(c), which includes provisions that apply “to disclosure of a communication or information covered by the attorney-client privilege or work-product protection.” N.J.R.E. 530(c).
In particular, amended N.J.R.E. 530(c) addresses disclosures made during state proceedings or to state office or agency, N.J.R.E 530(c)(1); inadvertent disclosures, N.J.R.E. 530(c)(2); disclosures made in another forum’s proceeding, N.J.R.E. 530(c)(3); the controlling effect of a court’s order, N.J.R.E. 530(c)(4); and the controlling effect of a party agreement regarding disclosure, N.J.R.E. 530(c)(5). Under the amended Rule, it is clear that a court order regarding disclosure pursuant to N.J.R.E. 530(c)(4) has the potential to have a significant impact on other litigations, as the rule provides that a court order on privilege “is also not a waiver in any other federal or state proceeding.” However, an agreement “on the effect of disclosure in a state proceeding is only binding on the parties to the agreement, unless it is incorporated into a court order.” As is the case with F.R.E. 502, this means that while a N.J.R.E. 503(c) clawback agreement between parties need not technically be court ordered to be enforceable as between the parties, court endorsement of the agreement makes it more widely effective and ultimately, more likely to be enforced.
The most common situation in which an inadvertent disclosure arises is in the course of a civil litigation involving significant volumes of electronic discovery. Pursuant to N.J.R.E. 530(c)(2), an inadvertent disclosure will not operate as a waiver in the state proceeding as long as the: (1) the disclosure was inadvertent; (2) the holder of the privilege took reasonable steps to prevent the inadvertent disclosure; and (3) the holder of the privilege promptly took reasonable steps to correct the error. However, as Federal Court practitioners have learned, this protection embodies a common law standard regarding inadvertent disclosure that often leaves the producing party susceptible to challenge for issues like lack of “reasonable steps” or failure to act “promptly.” An agreement between the parties, on the other hand, can eliminate these loopholes and provide for clawback regardless of the pre- or post-production conduct of the producing party. Again, court endorsement of such a broad clawback order makes it enforceable on non-parties to the agreement and in other matters.
Amended N.J.R.E. 530 should be embraced by practitioners in New Jersey, especially those who frequently litigate cases involving a significant amount of electronic discovery.