Federal Evidence Review

Although selective waiver of the attorney-client privilege was part of the early discussions of the proposal for reform, recently-enacted FRE 502 does not address selective waiver of the privilege

One missing feature from the recently enacted FRE 502 attorney-client privilege rule is a provision addressing the issue of selective waiver. Apparently, this issue was too controversial to be included in the legislation. However, the debate surrounding the selective waiver issue remains. The circuits are divided on whether a selective waiver rule should apply, with most circuits rejecting the selective waiver doctrine. See In re: Qwest Communications International Inc., Securities Litigation, 450 F.3d 1179 (10th Cir. 2006) (discussing circuit split) (reviewed in 3 FED. EVID. REV. 885 (July 2006)). Because this issue is likely to come up again, it is useful to review recent developments on this issue.

The initial request for the Judicial Conference to consider and propose reform legislation concerning the attorney-client privilege included a request for a proposal which would “allow persons and entities to cooperate with government agencies by turning over privileged information without waiving all privileges as to other parties in subsequent litigation.” See Letter of House Judiciary Committee Chairman James Sensenbrenner, Jr. to Ralph Mecham, Director, Administrative Office of the U.S. Courts (dated Jan. 23, 2006).

The Advisory Committee on Evidence Rules considered the following selective waiver language:

“(c) Selective waiver. — 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.”

The Draft Advisory Committee Note explained the purpose of the provision:

“Subdivision (c): Courts are in conflict over whether disclosure of privileged or protected information to a government agency conducting an investigation of the client constitutes a general waiver of the information disclosed. Most courts have rejected the concept of ‘selective waiver,’ holding that waiver of privileged or protected information to a government agency constitutes a waiver for all purposes and to all parties. See, e.g., Westinghouse Electric Corp. v. Republic of the Philippines, 951 F.2d 1414 (3d Cir. 1991). Other courts have held that selective waiver is enforceable if the disclosure is made subject to a confidentiality agreement with the government agency. See, e.g., Teachers Insurance & Annuity Association of America v. Shamrock Broadcasting Co., 521 F. Supp. 638 (S.D.N.Y. 1981). And a few courts have held that disclosure of protected information to the government does not constitute a general waiver, so that the information remains shielded from use by other parties. See, e.g., Diversified Industries, Inc. v. Meredith, 572 F.2d 596 (8th Cir. 1977). The rule rectifies this conflict by providing that disclosure of protected information to a federal government agency exercising regulatory, investigative or enforcement authority does not constitute a waiver of attorney-client privilege or work product protection as to non-governmental persons or entities, whether in federal or state court. A rule protecting selective waiver in these circumstances furthers the important policy of cooperation with government agencies, and maximizes the effectiveness and efficiency of government investigations. See In re Columbia/HCA Healthcare Corp. Billing Practices Litigation, 293 F.3d 289, 314 (6th Cir. 2002) (Boggs, J., dissenting) (noting that the "public interest in easing government investigations" justifies a rule that disclosure to government agencies of information covered by the attorney-client privilege or work product protection does not constitute a waiver to private parties).

“The Committee considered whether the shield of selective waiver should be conditioned on obtaining a confidentiality agreement from the government agency. It rejected that condition for a number of reasons. If a confidentiality agreement were a condition to protection, disputes would be likely to arise over whether a particular agreement was sufficiently air-tight to protect against a finding of a general waiver, thus destroying the predictability that is essential to proper administration of the attorney-client privilege and work product immunity. Moreover, a government agency might need or be required to use the information for some purpose and then would find it difficult or impossible to be bound by an air-tight confidentiality agreement, however drafted. If a confidentiality agreement were nonetheless required to trigger the protection of selective waiver, the policy of furthering cooperation with and efficiency in government investigations would be undermined. Ultimately, the obtaining of a confidentiality agreement has little to do with the underlying policy of furthering cooperation with government agencies that animates the rule.”

See Draft Advisory Committee Note for Proposed FRE 502, at 8-10 (attached to Report of the Advisory Committee on Evidence Rules (May 15, 2006)).

Ultimately, the Advisory Committee on Evidence Rules unanimously voted to eliminate the selective waiver provision proposed FRE 502. See Minutes of Advisory Committee on Evidence Rules Meeting, at 15 (April 12-13, 2007). The U.S. Judicial Conference also omitted the selective waiver language from the legislative proposal sent to Congress. See Letter of the U.S. Judicial Conference to Congress.

The Advisory Committee on Evidence Rules explained the positions for and against a selective waiver rule:

“During the public comment period, the selective waiver provision was without question the most controversial part of proposed Rule 502. It was adamantly opposed by bar groups and private lawyers; it was enthusiastically favored by government offices and agencies. The basic arguments expressed in favor of selective waiver were 1) it is a necessary tool for corporations to be able to cooperate with government investigations when they would not otherwise do so for fear that the information disclosed to the government could be used by private parties; and 2) it will decrease the costs of government investigations. The basic arguments expressed against selective waiver were 1) it would add more pressure on corporations to waive the privilege— pressure that would only feed into the alleged “culture of waiver” already established by federal agencies; and 2) it would deprive private parties of relevant information that may be necessary for private recovery. (Other arguments for and against selective waiver are described in the summary of public comment attached to proposed Rule 502, as submitted to the Standing Committee as an action item).

“At the Spring meeting Committee members discussed whether the selective waiver provision should be retained in proposed Rule 502. The discussion (and the public comment) indicated that selective waiver raised empirical questions that the Committee was not in a position to determine — most specifically whether selective waiver protection is necessary to encourage corporations to cooperate with government investigations, or instead whether corporations are sufficiently incentivized to cooperate so that selective waiver would be an unjustified protection. Committee members also noted that much of the debate on selective waiver was in essence political. For example, most of those opposed to selective waiver argued that it would only aggravate the “culture of waiver” that currently exists when public agencies seek privileged information from corporations. And most of those in favor denied the existence of a “culture of waiver”. But the Committee determined that 1) whether a culture of waiver was a good or bad thing was essentially a political question, and 2) whether such a culture existed was an empirical question. Neither question could be determined by the Committee during the rulemaking process.

“Some members opposed to selective waiver emphasized that the doctrine has been rejected by almost all federal courts, and therefore any rule adopting selective waiver should bear a heavy burden of justification — one that had not been met during the public comment. Finally, members noted that if a selective waiver provision were included in Rule 502, it would probably have to require state courts to adhere to selective waiver protection for disclosures made to federal regulators. Otherwise the provision could not be relied upon for sufficient protection from the consequences of disclosure. But binding state courts to selective waiver would raise significant problems of federalism, because most states do not recognize selective waiver.”

See Minutes of Advisory Committee on Evidence Rules Meeting, at 15 (April 12-13, 2007). The Committee agreed to provide a separate report on the selective waiver issue.

With FRE 502 now in effect, it appears that the train has long left the station on efforts to include a selective waiver provision as part of attorney-client privilege reform legislation. However, this issue is likely to resurface. Corporations and others who desire to voluntarily provide privileged materials (such as the results of an internal investigation containing privileged materials) probably will want to be protected against a possible court ruling that the voluntarily disclosure is deemed a waiver in subsequent litigation involving third parties.