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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Minding the Three P's of E-Discovery

The electronic discovery process entails many hazards that can cause clients and practitioners to wipe out rather than ride safely to shore.

The 2006 amendments to the Federal Rules of Civil Procedure were intended to provide guidance to parties navigating e-discovery. In reality, judges, litigants, lawyers and technologists are still struggling to frame the discovery boundaries of a vast, ever-expanding world of electronically stored information. Thus, every organization must, to a degree, craft its proactive day-to-day information-management strategy and its reactive litigation approach from an e-discovery standpoint.

Do not panic about embarking on this ride. A legally defensible ESI process can result from minding the "Three P's" -- policies, protocols and preservation. If an organization and its counsel follow these practical tips, they will be best equipped to catch e-discovery's cresting wave.

POLICIES: PROACTIVE PROCEDURES

A proactive records-retention program can enable a much smoother ride once litigation ensues. Once on board, the litigator should inquire into the client's records-retention policy and any related policies as well as its overall compliance with these policies.

Hopefully, the organization has frontloaded some effort to achieve efficiencies and information management benefits from a legally defensible, systematized approach to records retention and destruction. An organization with a pre-existing program can more quickly access ESI in a cost-effective way, which will also allow it to assess the relevant contents of the ESI.

Substantial compliance with a retention program can provide a safe harbor once litigation hits. Indeed, a retention policy is really a destruction policy, "created in part to keep certain information from getting into the hands of others, including the government," the U.S. Supreme Court noted in U.S. v. Arthur Andersen, 544 U.S. 696 (2005). Thus, having an adhered-to policy can serve as a justifiable explanation for why responsive information was not retained.

A retention policy can even serve as a shield from sanctions. In Gippetti v. United Parcel Service Inc., 2008 WL 3264483 (N.D. Cal., 2008), the plaintiff sought spoliation sanctions after alleging that the defendant had inaptly destroyed relevant ESI. At issue in the case were UPS employees' driving records. The defendant company responded that some of the requested documents had been destroyed as part of a routine retention policy, which called for destruction of driving records to cope with sheer volume. The court relied on the policy's routinized approach when denying the spoliation motion.


PROTOCOLS: PRE-EXISTING PLANS

In addition to due diligence as to the client's retention policy and compliance with that policy, the litigator should assess the organization's litigation-hold protocols and efforts undertaken since the instant matter was reasonably anticipated.

Including a litigation-hold protocol as part of a retention policy or program is a risk-management boon. The protocol should memorialize actual practices. At a minimum, it should identify someone -- most likely from the company's legal department -- as the point person for assessing whether a hold is warranted, maintaining a log of situations that did and did not result in a hold and administering issued holds.

Risk insulation can then ensue. First, if an opponent alleges destruction of evidence based on deficiencies in administration of an issued hold, a response can point to an overall defensible protocol followed in the given instance. Second, if an opponent contends that a hold should have been issued but was not, one can point to a systematic assessment approach and perhaps a spreadsheet showing how many demands the organization gets annually and how few ripen into litigation. (See Keithley v. Homestore.com, 2008 U.S. Dist. LEXIS 61741 (N.D. Cal., 2008), as clarified by 2008 U.S. Dist. LEXIS 70246, where the judge expressed dismay at a litigant's lack of a litigation-hold protocol.)

Part of the litigation-hold program should be a generic hold notice, explaining ESI's role as a significant discovery source and the importance of suspending ESI deletion. The form notice should also particularize the organization's key ESI repositories. If the form notice meets those goals and is kept up to date, no one will need to create a new process each time. The form should not be blindly followed but instead should be tailored to each matter, in part because the attorney work-product doctrine only applies if a document is created in "anticipation" of litigation.

As soon as litigation counsel is hired, the lawyer should ascertain what has happened and marshal all writings documenting whatever steps have been taken. Moving forward, it is important for counsel to work with the client to document facts demonstrating compliance.

Producing such documentation, including the actual hold notice, may not ultimately be ordered by the court. Indeed, hold notices are protected under attorney-client privilege and attorney work-product doctrine, and a litigant should not readily waive either protection. A litigant that has effectively implemented a hold may gain credibility with the judge by selectively divulging some underlying details. Moreover, at some point, notices and related memos may have to be produced -- thus, becoming a shield against adversarial attack and/or judicial scrutiny.

If a discovery dispute arises, courts afford varying degrees of protection to the hold notice. At an early stage in one case, the court ordered the responding party to disclose factual information contained in the hold notice, including names and titles of 600 employees who received the hold notice. The court, in In re eBay Seller Antitrust Litigation, 2007 WL 2852364 (N.D. Cal., 2007), also acknowledged that details of the responding party's employees' ESI collection and preservation efforts would be fair game not only in the meet-and-confer context but also in a FRCP 30(b)(6) deposition notice of a person familiar with those efforts. However, the defendant in the eBay litigation was not required to disclose the actual notice or any of its privileged contents.

Other courts have afforded broad content protection once the responding party establishes that the notice is likely work-product. In Gibson v. Ford Motor Co., 510 F. Supp. 2d 1116 (N.D. Ga. 2007), the court found that compelled production of the notice or its contents could dissuade other businesses from issuing such instructions. The court in Gibson reasoned that parties should be encouraged to issue such directives.

As litigation proceeds, however, higher expectations may kick in when a tenable argument of bad faith arises. The judge may mandate a detailed inquiry into the responding party's retention practices and hold process. One well-known opinion, Rambus Inc. v. Infineon Technologies AG, Inc., 222 F.R.D. 280 (E.D. 2004), addressed the veil-piercing of both attorney-client privilege and work-product protection based on fraud, arising out of a situation in which the plaintiff had engaged in dubiously timed "shred days."

PRESERVATION OF POTENTIALLY PERTINENT ESI

Simply issuing a litigation-hold notice is not nearly enough to satisfy the preservation obligation. Counsel has to navigate various facets of an obligation that has been coined as the "Zubulake Duty" in the wake of Zubulake v. UBS Warburg, 229 F.R.D. 422 (S.D.N.Y 2004). An attorney has a duty to understand her client's retention program and information management systems. The lawyer should communicate with the client to ensure that all potential sources of relevant information are parsed out. The client's backup regime should also be discussed. It is also highly advisable to periodically check back with "key players" who were hold-notice recipients.

In civil litigation, a vast body of case law addresses preservation's flip-side: spoliation, which refers to the destruction of information reasonably anticipated to be discoverable. Potential sanctions include monetary penalties (attorney fees, costs and/or pay-for-proof sanctions); exclusion of evidence; delay of trial; and, in extreme cases, an adverse inference jury instruction or even dismissal or judgment on the merits.

Among the decisions underscoring the importance of taking the Zubulake Duty seriously is Phoenix Four Inc. v. Strategic Resources Corp., 2006 WL 1409413 (S.D.N.Y., 2006). The court in that case ordered the defendant and its attorneys to each pay more than $25,000 for failing to find "hidden server partitions" containing crucial evidence. The court noted that the attorneys had not employed a methodical approach to discover potential sources of information and had instead relied solely on their client.

In Qualcomm Inc. v. Broadcom Corp., 2008 WL 66932 (S.D. Cal, 2008), the attorneys ignored several warning signs indicating that their client had failed to adequately search for relevant information. In particular, Qualcomm had not produced e-mails from key employees who were part of an e-mail distribution list pertaining to key subject matter and had failed to search the e-mails of individuals listed as most knowledgeable.

Thus, an attorney must execute a plan that actively enables uncovering potential ESI sources and is most likely to ensure that the client engages in comprehensive preservation and collection.
The bottom line? Adhering to systematized proactive and reactive approaches can keep an organization and its counsel upright as they surf the e-discovery waves.

Robert D. Brownstone, law and technology director at Fenwick & West, advises clients on electronic discovery, electronic information management, retention/destruction policies and protocols and information-security matters. Juleen Konkel is a former associate in the firm's intellectual property litigation and electronic information management practice groups. View full post and comment string ...