## Facts

- Rhoads Industries sued Building Materials Corporation of America (GAF) and related defendants in a civil action.
- During electronic discovery, Rhoads produced over 800 documents later claimed to be protected by attorney–client privilege and/or work-product doctrine and disclosed inadvertently.
- Rhoads used software and keyword searching for privilege screening, relying on an associate with no prior privilege-review experience and an IT consultant; the keyword methodology was insufficiently tested and missed privileged material.
- After defendants identified privileged content, Rhoads promptly asserted inadvertent production and requested return/sequestration under Fed. R. Civ. P. 26(b)(5)(B); defendants segregated the documents and submitted them for in camera review.
- Rhoads took additional remedial steps, including preparing a revised privilege log and providing a “cleansed” drive intended to exclude privileged documents, but there was a roughly three-week delay before detailed re-review and logging of the produced privileged materials.
- A scheduling order required a complete privilege log by June 30, 2008; some disputed documents were not logged by that deadline.
- Defendants moved to deem privilege waived, arguing Rhoads’s screening was careless, its remedial efforts were delayed, and its logging was incomplete.

## Issues

1. Under Fed. R. Evid. 502(b), did Rhoads’s inadvertent production of privileged ESI waive attorney–client privilege or work-product protection given its prevention and remediation efforts?
2. Did Rhoads waive privilege for documents not identified on a privilege log by the court-ordered June 30, 2008 deadline?

## Decision

- The court granted the motion in part and denied it in part.
- For documents inadvertently produced but identified and logged by the June 30, 2008 deadline, the court found no waiver under Fed. R. Evid. 502(b).
- For documents not included on a privilege log by the June 30, 2008 deadline, the court found waiver based on failure to comply with discovery obligations and court orders.

## Legal Principles

- Under Fed. R. Evid. 502(b), inadvertent disclosure does not operate as a waiver if: (1) the disclosure was inadvertent, (2) the holder took reasonable steps to prevent disclosure, and (3) the holder promptly took reasonable steps to rectify the error.
- “Reasonable steps” to prevent disclosure may include use of software tools and search protocols, even if imperfect; the rule does not require flawless privilege screening in large ESI productions.
- Prompt rectification can be satisfied by timely invocation of Fed. R. Civ. P. 26(b)(5)(B), requesting sequestration/return, conferring with the opposing party, and producing corrected materials, even where remediation is not immediate in every respect.
- Independent of Rule 502(b), failure to provide a timely and adequate privilege log as required by Fed. R. Civ. P. 26(b)(5) and a court scheduling order can support a finding of waiver for unlogged documents.

## Conclusion

The court applied Rule 502(b) to protect most inadvertently disclosed privileged ESI from waiver where Rhoads took reasonable preventive measures and acted reasonably to correct the error, but it enforced the court-ordered privilege-log deadline and deemed privilege waived for documents not timely logged.


Rhoads Indus., Inc. v. Bldg. Materials Corp. of Am., 254 F.R.D. 216 (E.D. Pa. 2008)