Florida Judge Denies Rule 502(d) Order Citing Concerns Over IRS Agent Training and Temporal Restrictions

In the case of U.S. v. Captive Alternatives, Florida Magistrate Judge Christopher P. Tuite denied the respondent’s Rule 502(d) order request, according to an article by Doug Austin at eDiscovery Today. The request sought permission to produce documents to the IRS without first reviewing them for privilege. Judge Tuite’s decision was based on several factors, including the lack of training of IRS agents investigating Captive to evaluate attorney-client privilege.

The case involved an IRS investigation of the respondent, and the court recommended that the IRS’s petition be largely granted, instructing the respondent to produce documents within specified timelines. A joint motion was filed later, with parties seeking to adopt the court’s recommendations but differing on the applicability of Federal Rule of Evidence 502.

The respondent’s Rule 502(d) order request aimed to authorize the production of materials to the IRS without prior privilege review. The respondent argued that the volume of documents (over 1.1 million) made such a review impractical, and protections were necessary to prevent inadvertent disclosure of privileged information.

Judge Tuite ruled against the respondent, stating that the proceeding was summary and not typical discovery in civil litigation. He emphasized that compliance with the IRS summons initially could have avoided the need for the Rule 502(d) order. The judge also rejected comparisons to other cases involving Microsoft and Facebook, noting key differences.

Concerns were raised about the IRS agents’ lack of training to evaluate privilege and the potential for privileged communications not being readily apparent. The judge highlighted issues with the proposed order, such as the absence of a temporal restriction on designating documents as privileged, allowing challenges to IRS use years after production.

Ultimately, Judge Tuite found the respondent’s proposed Rule 502(d) order problematic on multiple fronts, leading to the denial of the request. The ruling underscored the unique nature of the case and the potential risks and uncertainties associated with granting such an order without adequate safeguards.