Sunday, November 29, 2009

A Case Against the Adoption of a "Selective Waiver" Doctrine, by Vlad Frants

Privileges, such as the Attorney-Client privilege, are designed “to encourage full and frank communication”[1] between persons in certain relationships. For example, it is understood that “a lawyer’s assistance can only be safely and readily availed of when free from the consequences or the apprehension of disclosure.”[2] Thus, the confidential nature of privileged communications is naturally in conflict with the truth-seeking purpose of a trial in an American court. Courts have responded to this tension by making sure that “[p]rivileges...[are] narrowly construed and expansions narrowly extended.”[3]

Generally speaking, the Attorney-Client privilege exists where a “communication between the client and the attorney has been made in confidence of the relationship and under circumstances from which it may reasonably be assumed that the communication will remain in confidence.”[4] The Attorney-Client privilege also includes certain communications made by corporate employees to the corporation’s counsel.[5] Yet, the Attorney-Client privilege can be waived.[6] For example, “the privilege once established can be waived if the communication is shared with corporate employees who are not ‘directly concerned’ with or did not have ‘primary responsibility’ for the subject matter of the communication.”[7] Also, the Attorney-Client privilege has been held to become waived when a company discloses its internal investigations to the government.[8] The information then becomes available to others who seek discovery of that material for ensuing civil suits.[9] On the other hand, the Eight Circuit has recognized in Diversified Industries v. Meredith[10] the concept of selective waiver, under which a corporation is permitted to selectively waive the privilege to an agency such as the SEC without effecting a broader waiver.[11] Some courts[12] “have applied selective waiver of the Attorney-Client privilege where disclosures were protected by a confidentiality agreement.”[13] However, most circuits have rejected selective waiver of the Attorney-Client privilege.[14] Despite this, a new Federal Rule of Evidence was proposed, which included and would have codified the selective waiver doctrine. Ultimately, the selective waiver provision[15] was not included in the final rule. Since the codification of selective waiver may come up again, it would be interesting to consider the pros and cons of such a codification. I believe that the rule should not have been adopted – and should never be.

Despite trying to be objective in my analysis, I can rely on only a couple of somewhat palpable, interrelated, arguments for why some could argue that the selective waiver doctrine should have been codified in the Federal Rules. First, a rule protecting selective waiver in circumstances where there is disclosure of information to a government agency, arguably furthers the policy of cooperating with the government.[16] This is because corporations would be more comfortable disclosing information to the government without fear of private parties using the information in civil suits. Second, codification of selective disclosure maximizes the effectiveness and efficiency of government investigations.[17] The reason for this is that the costs of government investigations would theoretically decrease.

On the other hand, I believe that there are strong reasons why the selective waiver doctrine should not be codified into a Federal Rule of Evidence.

First, selective waiver would be fundamentally unfair because it would deprive private parties of information that may be essential to private recovery. Why should the government have access to information that would benefit it, but not private parties? There is no justification for this disparity other than that the government acts for the public interest and private parties act for themselves – however, it is unfair to brand this as always being the case.

Second, the purpose of the Attorney-Client privilege is to “foster frank communication between a client and his or her attorney.”[18] Yet, the purpose of the selective disclosure doctrine is based on public policy concerning the public’s need for cooperation between companies and the government.[19] The selective disclosure doctrine does not seem to fulfill the purpose of the Attorney-Client privilege.[20] Inextricably connected to this point is the notion that the Attorney-Client privilege has historically been narrowly construed and strictly constructed,[21] but that the selective waiver doctrine not only goes beyond the purpose of the Attorney-Client privilege but also borders on the creation of an entirely new privilege.

Third, the selective waiver doctrine does not fulfill the purpose of the Attorney-Client privilege for yet another reason.[22] While there are exceptions to the general rule that disclosure to third parties waives the Attorney-Client privilege, the selective waiver doctrine is very different from the other exceptions.[23] Those exceptions include the presence of interpreters or paralegals, to whom the information is disclosed.[24] In those cases, the theory underlying the Attorney-Client privilege is fulfilled because disclosure to those persons is necessary for the client to obtain legal advice.[25] However, disclosure to the government is not necessary for the client to obtain legal advice.[26]

Since the selective waiver doctrine has been rejected by most of the federal courts,[27] there would have to be some very good reasons for justifying such a rule. Moreover, since privileges are usually created by the states and derived from common law,[28] wouldn’t the codification of the selective waiver doctrine be the first federal codification of a specific privilege, and thus require further justification? On balance, I don’t think this burden of justification has been met. Not only do the quantity and merits of the clear-cut cons outweigh the pros, but the codification of the doctrine raises a number of concerning issues, even if the wording of the proposed rule were to change one day.

There is a question as to how a federal codification of the selective waiver doctrine would effect the application of the doctrine in state courts. I’m not sure how effective the selective disclosure doctrine would be if it did not also apply to state courts. If state courts would be compelled to apply the doctrine, wouldn’t this raise federalism questions? On the other hand, if the doctrine would apply in federal courts but not state courts, this may cause forum shopping. Since an entire case could rise or fall based on a single item of disclosure, is it fair to permit parties to forum-shop on this basis? The answer is probably no because this would turn into too much of a trial tactic and the privilege would, in essence, be misused. Even if a future proposed rule adopts the In re M & L Business Machine Co.[29] version of selective waiver and becomes one where the prerequisite for the shield of selective waiver is that a confidentiality agreement should first be obtained from the government, this would be a bad idea. This is because the privilege would rise or fall based on the structure of the agreement itself and not on the practicality of the privilege – the policy of government cooperation, one of the most important arguments for selective waiver, would clearly be undermined. Ultimately, there would be no certainty as to when certain disclosures would or would not be privileged.

Interestingly, even in the event that the proposed rule were adopted as is, and the company would be protected from having to disclose information to private parties when disclosing to the government, nothing in the present form of the proposed rule prevents the government agencies from sharing the information among each other[30]. Knowing this possibility may hinder the Attorney-Client relationships because the company may be afraid to disclose certain conversations regarding, for instance, the company’s questionable antitrust and securities activities to the Department of Justice (DOJ) for fear that the DOJ will pass along the information to the Securities and Exchange Commission (SEC). Then again, as the court pointed out in In Re Sealed Case,[31] “[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.” Of course, these agencies would first have to agree to do so.

While Judge Boggs made an interesting point in his Sixth Circuit dissent arguing for the selective disclosure doctrine, stating that “[a]s the harms of selective disclosure are not altogether clear, the benefits of the increased information to the government should prevail,”[32] I respectfully disagree, grounding my argument in the notion that the obvious harms, the higher burden of justification, and the serious issues that would arise, weigh against adoption of a selective waiver doctrine in any form.

[1] U.S. v. Schwimmer, 892 F.2d 237, 245 (2nd Cir. 1989)
[2] Id.
[3] U.S. v. Weissman, 195 F. 3d 96, 101 (2nd Cir. 1999).
[4] In re Qwest Comm., 450 F.2d 1179, 1184 (10th Cir. 2006).
[5] See generally Upjohn Co. v. U.S., 449 US 383 (1981)
[6] See generally Hopson v. Mayor, 232 F.R.D. 228 (2005).
[7] Muro v. Target, 243 F.R.D. 301, 308 (2007).
[8] See generally In Re Qwest Communications International, Inc. 450 F.3d 1179 (2006).
[9] Id.
[10] 572 F2D 596, 611 (1977).
[11] In Re Qwest Communications International, Inc. 450 F.3d 1179, 1187 (2006).
[12] See In Re M&L Business Mach. Co., 161 B.R. 689 (D. Colo. 1993).
[13] In Re Qwest Communications International, Inc. 450 F.3d 1179, 1189 (2006).
[14] Id.
[15] The proposed language read as follows:
"In a federal or state proceeding, a disclosure of a communication or information
covered by the Attorney-Client privilege or work product protection when
made to a federal public office or agency in the exercise of its regulatory,
investigative, or enforcement authority does not operate as a waiver of the
privilege or protection in favor of non-governmental persons or entities. The
effect of disclosure to a state or local government agency, with respect to
non-governmental persons or entities, is governed by applicable state law.
Nothing in this rule limits or expands the authority of a government agency to
disclose communications or information to other government agencies or as
otherwise authorized or required by law. F.R.E. 502(c) as originally proposed."
[16] In Re Qwest Communications International, Inc. 450 F.3d 1179, 1192 (2006).
[17] Id.
[18] See In Re Qwest Communications International, Inc. 450 F.3d 1179, 1194 (2006).
[19] Id.
[20] See In Re Qwest Communications International, Inc. 450 F.3d 1179, 1187 (2006).
[21] Id.
[22] See id.
[23] In Re Qwest Communications International, Inc. 450 F.3d 1179, 1193 (2006).
[24] See id at 1193-94.
[25] See id at 1193-94.
[26] See id at 1193-94.
[27] In Re Qwest Communications International, Inc. 450 F.3d 1179, 1189 (2006).
[28] See FRCP 501.
[29] See infra note 14 and accompanying text.
[30] See 676 F.2d 793,824, (D.C. Cir. 1982)
[31] 676 F.2d 793,824, (D.C. Cir. 1982)
[32] See In Re Qwest Communications International, Inc. 450 F.3d 1179, 1187 (2006)(quoting In re Columbia/HCA Healthcare Corp. Billing Practices Litigation, 293 F.3d 289, 311 (6th Cir.2002)).

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  1. Vlad,

    Am going to leave the civil procedure discussion to you (though love the footwork you put together to buttress your arguments!), but wanted to write and thank you for blawgging here. You've been a great addition!

    You probably have exams right around the corner >> Good Luck!

  2. Stef, its been a pleasure. KIT.


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