Wednesday, June 21, 2006
The Tenth Circuit joined every other federal circuit aside from the Eighth Circuit in rejecting the "selective waiver" approach to the attorney-client privilege and work product protection, which means that documents provided to the government cannot be withheld on either a privilege or work product claim. The decision arises from the private securities fraud claims filed against Qwest Communications after the Department of Justice and the SEC began investigating the company when it disclosed in 2002 that there were substantial accounting problems. As part of that investigation, Qwest voluntarily turned over to the government more than 220,000 pages that were subject to privilege and work product claims. Qwest settled an SEC civil enforcement action in November 2004 by paying a $250 million penalty. In the consolidated securities class action, the plaintiffs demanded production of the documents turned over to the government, which the district court ordered.
In a mandamus action to the Tenth Circuit, In re Qwest Communications International Inc. Securities Litigation (here), Qwest argued that the court should adopt the selective waiver analysis from the Eighth Circuit decision in Diversified Industries v. Meredith, 572 F.2d 596 (8th Cir. 1977) (en banc), that would permit it to assert the attorney-client privilege and work product protection because it only intended to waive the privilege with regard to the government agencies and not private parties. The court noted that every other circuit has rejected that position with regard to waiver of the attorney-client privilege, and, aside from attorney opinion work product, the same result applied to general work product claims, including the Eighth Circuit. The court rejected the argument that a failure to recognize selective waiver in the current "culture of waiver" would result in less cooperation by corporations with law enforcement investigations, stating:
[H]aving considered the purposes behind the attorney-client privilege and the work-product doctrine as well as the reasoned opinions of the other circuits, we conclude the record in this case is not sufficient to justify adoption of a selective waiver doctrine as an exception to the general rules of waiver upon disclosure of protected material. Qwest advocates a rule that would preserve the protection of materials disclosed to federal agencies under agreements which purport to maintain the attorney-client privilege and work-product protection but do little to limit further disclosure by the government. The record does not establish a need for a rule of selective waiver to assure cooperation with law enforcement, to further the purposes of the attorney-client privilege or work-product doctrine, or to avoid unfairness to the disclosing party. Rather than a mere exception to the general rules of waiver, one could argue that Qwest seeks the substantial equivalent of an entirely new privilege, i.e., a government-investigation privilege. Regardless of characterization, however, the rule Qwest advocates would be a leap, not a natural, incremental next step in the common law development of privileges and protections. On this record, "[w]e are unwilling to embark the judiciary on a long and difficult journey to such an uncertain destination." Branzburg v. Hayes, 408 U.S. 665, 703 (1972).
The Tenth Circuit noted that adoption of a selective waiver provision is better left to Congress and the rulemaking committee of the Judicial Conference, which has proposed a new Evidence Rule 502(c) (here) on this issue, which if adopted will provide:
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.
Without selective waiver in this case, counsel for the plaintiffs now get to wade through a mountain of documents that Qwest will have to produce. (ph)