White Collar & Government Investigations - Production “In Confidence” to the USAO & SEC Waives Work Product in the SDNY
Responding to plaintiffs’ motion to compel in the Credit Suisse Securities IPO litigation, the author of the seminal Zubulake decisions on document preservation and e-discovery, has joined other courts in rejecting a claim of selective waiver based on disclosure of materials from an internal investigation to the U.S. Attorney and the Securities and Exchange Commission.
Noting that the Second Circuit in its 1993 Steinhardt opinion had left open the possible development of a selective waiver rule, Judge Shira Scheindlin adopted a case-by-case approach, starting with a review of the Eighth Circuit’s 1977 recognition of selective waiver in the Diversified Industries case, decisions in the D.C., Third, Sixth and Tenth Circuits rejecting selective waiver, diverse decisions of her colleagues in the Southern District of New York, Congress’s 1984 rejection of a selective waiver rule, the recent Judicial Conference conditional proposal for a new Federal Rule of Evidence, and the SEC’s arguments for selective waiver. Then addressing the facts of Credit Suisse’s disclosure to the federal agencies, Judge Scheindlin rejected the company’s arguments that it had a common interest with the USAO and the SEC and that the asserted confidentiality agreement with those agencies preserved the work product protection. In the circumstances, the simple fact of voluntary disclosure to federal law enforcement was inconsistent with maintenance of the confidentiality required to sustain a counsel privilege. While recognizing that some interests may be served in the short run by allowing selective waiver, Judge Scheindlin observed that the underlying purposes of the work product protection, as well as the attorney-client privilege, would be undermined in the long run by allowing for selective waiver in voluntary production to government law enforcement.
In following the steady trend of decisions considering selective waiver, Judge Scheindlin did not pause to examine the provisions of Credit Suisse’s “confidentiality agreement” with the government. As noted in other opinions addressing the issue, the standard SEC confidentiality agreement expressly acknowledges the authority of that agency to disclose the produced material beyond the agency when deemed appropriate in pursuit of its enforcement duties. Most courts considering that provision have held that it eliminates any reasonable basis for arguing that the counsel privileges were preserved.