Clawback Agreement Does Not Prevent Waiver of (Inadvertent) Disclosure of Privileged Documents to Expert

A federal district court ruled that a lawyer’s purportedly inadvertent disclosure of privileged documents to testifying expert results in privilege waiver.  The waiver occurred even though the parties previously entered an anti-waiver clawback agreement governing inadvertent disclosures.  Great–West Life & Ann. Ins. Co. v. Am. Economy Ins. Co., 2013 WL 5332410 (D. Nev. Sept. 23, 2013).

In this insurance-coverageHanding Documents case, Great–West Insurance (GWI) and American Economy Insurance (AEI) entered a clawback agreement supplanting Fed. R. Evid. 502 and declaring that inadvertent disclosure of privileged documents did not result in privilege waiver.  AEI disclosed 12 privileged documents to its testifying insurance expert, who admitted that he reviewed the documents prior to preparing his Rule 26 expert report.

GWI sought production of these documents, arguing that disclosure to the expert waived the privilege.  AEI claimed that its lawyer inadvertently disclosed the 12 privileged documents to its experts and, consequently, the clawback agreement or FRE 502 precluded a waiver finding.

The court did not buy AEI’s argument, noting that disclosure of privileged documents to experts “falls outside” the parties’ clawback agreement and FRE 502.  The court found it irrelevant whether the documents were inadvertently disclosed because of FRCP 26’s bright-line disclosure rule.

With limited exceptions, FRCP 26(b)(4) protects from discovery an attorney’s communications with a testifying expert.  The rule does not, however, protect from discovery privileged documents provided to the expert for report-preparation purposes.

By claiming that it inadvertently disclosed the privileged documents to its expert, AEI attempted to apply the clawback principles of FRE 502 to Rule 26(a) expert disclosures.  But the court easily pierced this argument, finding the clawback agreement inapplicable because it applies to party-to-party disclosures, not disclosures to experts.  FRCP 26 governs disclosure to experts, and disclosing privileged documents to experts waives the privilege regardless whether disclosed intentionally or inadvertently.