Opinion ID: 167649
Heading Depth: 2
Heading Rank: 3

Heading: Case Law on Selective Waiver

Text: 29 In light of this precedent, Qwest will have waived the attorney-client privilege and work-product protection for the Waiver Documents by disclosing them to the SEC and the DOJ, unless this court adopts a selective waiver rule. This court has not yet considered the concept of selective waiver. Our review of the opinions of other circuits; however, indicates there is almost unanimous rejection of selective waiver. Only the Eighth Circuit has adopted selective waiver in circumstances applicable to Qwest.
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31 The Eighth Circuit created the concept of selective waiver in Diversified Industries, 572 F.2d at 611. There, a company defending a civil proceeding sought to protect a memorandum and a report prepared by its counsel that it had previously produced to the SEC in response to an agency subpoena. Id. at 599. The court's discussion of selective waiver is but a single paragraph: 32 We finally address the issue of whether Diversified waived its attorney-client privilege with respect to the privileged material by voluntarily surrendering it to the SEC pursuant to an agency subpoena. As Diversified disclosed these documents in a separate and nonpublic SEC investigation, we conclude that only a limited waiver of the privilege occurred. To hold otherwise may have the effect of thwarting the developing procedure of corporations to employ independent outside counsel to investigate and advise them in order to protect stockholders, potential stockholders and customers. 33 Id. at 611 (citations omitted). 34
35 Most circuits have rejected selective waiver of the attorney-client privilege. The D.C. Circuit was the first circuit to consider the issue after Diversified. In Permian Corp. v. United States, the Department of Energy requested documents from the SEC, which had obtained them from the company. 665 F.2d 1214, 1216-17 (D.C.Cir.1981). After considering the privilege's purpose of protecting the attorney-client relationship by shielding confidential communications, the court held that the company had destroyed the confidential status of the seven attorney-client communications by permitting their disclosure to the SEC staff. Id. at 1219. It found the proposal of selective waiver wholly unpersuasive. Id. at 1220. 36 First, we cannot see how the availability of a limited waiver would serve the interests underlying the common law privilege for confidential communications between attorney and client.... Voluntary cooperation with government investigations may be a laudable activity, but it is hard to understand how such conduct improves the attorney-client relationship. If the client feels the need to keep his communications with his attorney confidential, he is free to do so under the traditional rule by consistently asserting the privilege, even when the discovery request comes from a friendly agency. 37 Id. at 1220-21. The court continued, [t]he client cannot be permitted to pick and choose among his opponents, waiving the privilege for some and resurrecting the claim of confidentiality to obstruct others, or to invoke the privilege as to communications whose confidentiality he has already compromised for his own benefit. Id. at 1221. We believe that the attorney-client privilege should be available only at the traditional price: a litigant who wishes to assert confidentiality must maintain genuine confidentiality. Id. at 1222. The D.C. Circuit reiterated its position in In re Subpoenas Duces Tecum, 738 F.2d 1367, 1370 (D.C.Cir.1984). 38 Using similar reasoning, the First, Second, Third, and Fourth Circuits all have joined the D.C. Circuit in rejecting selective waiver. See United States v. Mass. Inst. of Tech., 129 F.3d 681, 686 (1st Cir. 1997) (Anyone who chooses to disclose a privileged document to a third party, or does so pursuant to a prior agreement or understanding, has an incentive to do so, whether for gain or to avoid disadvantage. It would be perfectly possible to carve out some of those disclosures and say that, although the disclosure itself is not necessary to foster attorney-client communications, neither does it forfeit the privilege. With rare exceptions, courts have been unwilling to start down this path—which has no logical terminus—and we join in this reluctance.); Westinghouse, 951 F.2d at 1425 ([S]elective waiver does not serve the purpose of encouraging full disclosure to one's attorney in order to obtain informed legal assistance; it merely encourages voluntary disclosure to government agencies, thereby extending the privilege beyond its intended purpose.); In re Martin Marietta Corp., 856 F.2d 619, 623-24 (4th Cir.1988) (The Fourth Circuit has not embraced the concept of limited waiver of the attorney-client privilege.); In re John Doe Corp., 675 F.2d 482, 489 (2d Cir.1982) (A claim that a need for confidentiality must be respected in order to facilitate the seeking and rendering of informed legal advice is not consistent with selective disclosure when the claimant decides that the confidential materials can be put to other beneficial purposes.). 39 The most recent circuit to reject selective waiver of the attorney-client privilege is the Sixth Circuit, which issued a comprehensive opinion in In re Columbia/HCA Healthcare Corp. Billing Practices Litigation, 293 F.3d 289 (6th Cir.2002). As in this case, civil plaintiffs in Columbia/HCA Healthcare sought documents the company already had provided to the DOJ and other government agencies. Id. at 292-93. The court reviewed the available case law, which it characterized as falling into three categories: selective waiver is permissible; selective waiver is not permissible in any situation; and selective waiver is permissible in situations where the Government agrees to a confidentiality order. Id. at 295 (citations omitted). It concluded, after due consideration, we reject the concept of selective waiver, in any of its various forms. Id. at 302. First, the uninhibited approach adopted out of wholecloth by the Diversified court has little, if any, relation to fostering frank communication between a client and his or her attorney. Id. (footnote omitted). Secondly, any form of selective waiver, even that which stems from a confidentiality agreement, transforms the attorney-client privilege into `merely another brush on an attorney's palette, utilized and manipulated to gain tactical or strategic advantage.' Id. (quoting Steinhardt Partners, 9 F.3d at 235). Although recognizing [t]here is considerable appeal, and justification, for permitting selective waiver when the initial disclosure is to an investigating arm of the Government, the court stated there is no logical terminus and that private litigants serve a valuable purpose as private attorneys general which should not be thwarted by imposition of selective waiver. Id. at 303 (quotation omitted). 40 In dissent, Judge Boggs stated that [a]s the harms of selective disclosure are not altogether clear, the benefits of the increased information to the government should prevail. Id. at 311. He characterized the court's choice as: 41 [N]ot one whether or not to release privileged information to private parties that has already been disclosed to the government, but rather one to create incentives that permit voluntary disclosures to the government at all. In the run of cases, either the government gets the disclosure made palatable because of the exception, or neither the government nor any private party becomes privy to the privileged material. 42 Id. at 312 (Boggs, J., dissenting). Because of the greater importance of governmental investigations, the fact that increased access to privileged information increases the absolute efficacy of government investigations, and the fact that the government has no other means to secure otherwise privileged information, id. at 311, Judge Boggs would have resolved this open question by holding that there is a government investigation exception to the third-party waiver rule, id. at 308.
43 In a case involving an asserted waiver of the law enforcement privilege, the Seventh Circuit did not foreclose adopting selective waiver. In Dellwood Farms, Inc. v. Cargill, Inc., the government played certain tapes for corporate defense counsel to persuade the company to plead guilty. 128 F.3d 1122, 1124 (7th Cir.1997). The plaintiffs in ensuing civil litigation against the company argued the government had waived its law enforcement privilege by playing the tapes. Id. Any release to the plaintiffs would make the tapes available to individuals who were the targets of then-uncompleted grand jury investigations. Id. The court adopted the government's selective waiver theory in the circumstances of that case, holding that [s]ince there is no indication either that the government was acting in bad faith or that the plaintiffs in the present suits were hurt—and, to repeat, the government is not trying to take advantage of an adversary—interfering with a criminal investigation would be an excessive punishment. Id. at 1127. The court specifically noted, though, that it might find waiver (or, more accurately, forfeiture) if there were conduct that warranted declaring a forfeiture. Id. 44 The Federal Circuit rejected selective waiver in a case involving an entirely different means of waiving attorney-client and work-product protection, namely, the careless disclosure of inadequately screened materials directly to the adversary. See Genentech, Inc. v. United States Int'l Trade Comm'n, 122 F.3d 1409, 1417 (Fed.Cir.1997) (A small number of courts have recognized, in circumstances not present here, a limited waiver that enables the attorney-client privilege to survive certain breaches of confidentiality. This court, however, has never recognized such a limited waiver. Moreover, Genentech has presented no compelling arguments as to why we should apply such a limited waiver theory in this case. (citations omitted)). 45 In contrast is In re M & L Business Machine Co., where the district court applied selective waiver of the attorney-client privilege where disclosures were protected by a confidentiality agreement. 161 B.R. 689 (D.Colo.1993). There, a bank sought a protective order for its counsel's letters and memoranda that it had previously provided to the United States Attorney to assist in an investigation of one of the bank's clients, M & L Business Machines Co. Id. at 691-92. The Bank's cooperation was expressly made subject to the requirement that any information provided under the Letter Agreement be treated as privileged, subject to protection under Fed.R.Crim.P. 16(a)(2) and not be disseminated except as required under federal law or the rules of criminal procedure. Id. at 691. The trustee of M & L then sought production of the materials. After reviewing Diversified, Permian, and other selective waiver cases, the district court stated, while I am wary of extending evidentiary privileges, in the unique circumstances of this case, the policies upon which the above decisions were based lead me to conclude that the Bank has not waived the attorney-client privilege as to the Letters and Memoranda. Id. at 696. Specifically, the court's decision rested on: (1) the substantial steps the bank took to ensure the confidentiality of the materials disclosed; (2) the fact that there was no evidence that the Bank's cooperation with the U.S. Attorney was for the purpose of obtaining some benefit for itself; and (3) the fact that the Bank does not seek to protect the privilege in an investigatory or law enforcement proceeding brought by another federal regulatory agency, but in bankruptcy adversary proceedings akin to one brought by a civil litigant. Id.
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47 Only one circuit has specifically adopted selective waiver in the work-product arena. The Fourth Circuit has approved using selective waiver in relation to opinion work product. In Martin Marietta, the court concluded the company had made testimonial use of non-opinion work product by disclosing it to the government, and that the waiver was comprehensive. 856 F.2d at 625. Noting that opinion work product generally receives greater protection from the courts, however, and that Federal Rule of Civil Procedure 26(b)(3) suggests especial protection for opinion work product, the court declined to hold that the company had waived work-product protection for opinion work product. Id. at 626. 48 In Permian, the D.C. Circuit upheld the district court's finding that the work-product doctrine had not been waived as to the majority of documents. 665 F.2d at 1222. This ruling, however, contains no analysis and may have been the product of the clearly erroneous standard of review applied in that case. Moreover, the D.C. Circuit has since rejected selective waiver of work-product protection in other circumstances, as discussed below. 49
50 Interestingly, the circuit that created selective waiver for attorney-client privilege rejected it in the context of non-opinion work product. In Chrysler Motors, the company had produced a computer tape to its adversaries in civil litigation under a non-waiver/confidentiality agreement. 860 F.2d at 845. When the United States Attorney sought production of the computer tape from the plaintiffs, the company protested. Id. The Eighth Circuit determined that the tape was not opinion work product. Id. at 846. It then held that Chrysler waived any work product protection by voluntarily disclosing the computer tape to its adversaries, the class action plaintiffs, during the due diligence phase of the settlement negotiations. Id. The company's requirement that the plaintiffs enter into the non-waiver/confidentiality agreement was irrelevant; the crucial fact was that the computer tape had not been kept confidential. Id. at 847. 51 As discussed above, the Fourth Circuit applied selective waiver to protect opinion work product, but it declined to apply it to protect non-opinion work product. See Martin Marietta Corp., 856 F.2d at 623. The First Circuit has also rejected selective waiver for non-opinion work product, stating it would take better reason than we have to depart from the prevailing rule that disclosure to an adversary, real or potential, forfeits work product protection. Mass. Inst. of Tech., 129 F.3d at 687. 52 The Third Circuit held that, while work-product protection may be retained where a disclosure furthers the goals underlying the doctrine: 53 When a party discloses protected materials to a government agency investigating allegations against it, it uses those materials to forestall prosecution (if the charges are unfounded) or to obtain lenient treatment (in the case of well-founded allegations). These objectives, however rational, are foreign to the objectives underlying the work-product doctrine. Moreover, an exception for disclosures to government agencies is not necessary to further the doctrine's purposes; attorneys are still free to prepare their cases without fear of disclosure to an adversary as long as they and their clients refrain from making such disclosures themselves. 54 Westinghouse, 951 F.2d at 1429. 55 Finally, the Sixth Circuit concluded that [m]any of the reasons for disallowing selective waiver in the attorney-client privilege context also apply to the work product doctrine. The ability to prepare one's case in confidence ... has little to do with talking to the Government. Columbia/HCA Healthcare, 293 F.3d at 306. It continued, [e]ven more than attorney-client privilege waiver, waiver of the protections afforded by the work product doctrine is a tactical litigation decision.... [W]hether or not to `show your hand' is quintessential litigation strategy. Id. at 306-07. 56
57 Unlike their treatment of the attorney-client privilege, a few circuits have rejected selective waiver of work-product protection in the particular cases before them, while simultaneously leaving room for applying the doctrine in other circumstances. 58 In In Re Sealed Case, the D.C. Circuit rejected work-product protection against discovery by a grand jury of documents a company had previously made available to the SEC. 676 F.2d 793, 824 (D.C.Cir.1982). The record in that case did not indicate whether the company had entered into a confidentiality agreement with the SEC. Id. at 820. In rejecting selective waiver, the court indicated it was reluctant to supply any such agreement: [t]he SEC or any other government agency could expressly agree to any limits on disclosure to other agencies consistent with their responsibilities under law. But courts should not imply such agreements on a categorical basis. Id. at 824. 59 Shortly thereafter, in In re Subpoenas Duces Tecum, the D.C. Circuit applied Sealed Case to reject a claim of selective waiver for work-product material in circumstances similar to Qwest's case. 738 F.2d at 1371-72. The court, however, did not definitively reject the selective waiver doctrine under all circumstances; rather, the decision rested on three factors: (1) the proposed use of work-product protection was not consistent with the doctrine's purpose, (2) appellants had no reasonable basis for believing that the disclosed materials would be kept confidential by the SEC, and (3) applying waiver would not trench on any policy elements now inherent in this [protection]. Id. at 1372. Noting the company chose to participate in the SEC's voluntary disclosure program, the court stated: 60 That decision was obviously motivated by self-interest. Appellants now want work product protection for those same disclosures against different adversaries in suits centering on the very same matters disclosed to the SEC. It would be unreasonable to suppose that litigation with these other adversaries was not anticipated at the time of disclosure to the SEC. It would also be inconsistent and unfair to allow appellants to select according to their own self-interest to which adversaries they will allow access to the materials. 61 Id. The court emphasized that the company had failed to ensure the SEC would in turn not disclose the materials, stating that companies could protect their materials by not disclosing them, [o]r the company can insist on a promise of confidentiality before disclosure to the SEC. Id. at 1375. 62 Similarly, in Steinhardt Partners, the Second Circuit denied mandamus relief to defendants claiming work-product protection for a memorandum previously disclosed to the SEC. 9 F.3d at 230. Examination of conflicting authority and of the purposes of the work product doctrine convinces us that Steinhardt waived any work product protection by voluntarily submitting the memorandum to the SEC. Id. at 235. The court, however, continued, [i]n denying the petition, we decline to adopt a per se rule that all voluntary disclosures to the government waive work product protection. Crafting rules relating to privilege in matters of governmental investigations must be done on a case-by-case basis. Id. at 236. It especially noted that a per se rule would fail to anticipate situations ... in which the SEC and the disclosing party have entered into an explicit agreement that the SEC will maintain the confidentiality of the disclosed materials. Id. 63 These decisions all involved situations in which the parties failed to enter into a confidentiality agreement before disclosing materials, not circumstances in which the government agreed to strict confidentiality in exchange for disclosure of work product. But see Columbia/HCA Healthcare, 293 F.3d at 307 (rejecting selective waiver for work product, despite existence of confidentiality agreement); Westinghouse, 951 F.2d at 1430 (same). As a consequence, it remains an open question in those circuits whether a stringent confidentiality agreement limiting further dissemination by the government might support selective waiver.