Circuit Consensus: Ninth Circuit Joins Ten Others In Rejecting Selective Waiver of Attorney-Client Privilege

In litigation regarding interference with plaintiff comic book publisher's contractual relationship with heirs to interests of the creators of the Superman comic book-hero, confidential documents disclosed to the government in response to a grand jury summons in a separate criminal case were no longer protected by the attorney-client privilege in the contractual litigation; Ninth Circuit joins ten other circuits in disallowing the selective waiver of the attorney-client privilege in civil cases, in In re Pacific Pictures Corp., __ F.3d __ (9th Cir. April 17, 2012) (No. 11–71844)

The Tuesday, April 15th blog entry, " Federal Circuit Examines Evolution Of The Privilege To Promote Settlement" in the Federal Evidence Blog reported on the Federal Circuit's reasoning for rejecting creation of a new evidentiary privilege applicable to patent cases. Only a day or two after that essay appeared, the Ninth Circuit provided another example of defining the scope of a privilege under FRE 501. The case, In re Pacific Pictures Corp., examined whether disclosure of alleged confidential attorney-client communications in response to a grand jury subpoena had the effect of waiving the protections of the attorney-client privilege in other civil litigation as well. The circuit noted that it had "twice deferred" resolving this issue. It now rejected application of a selective waiver theory, as had most other circuits but the Eighth Circuit. Pacific Pictures, __ F.3d at __.

In a somewhat convoluted case, the circuit noted it faced "whether a party waives [the] attorney-client privilege forever by voluntarily disclosing privileged documents to the federal government." This question arose as part of a long-standing royalty dispute between the heirs of the Superman comic creators and the publisher of the comics (D.C. Comics). "Since the Man of Steel made his first appearance in 1938," noted the Ninth Circuit, "he has been fighting for 'truth, justice, and the American way,'" and his creators (Shuster and Siegel) and their heirs "have been fighting for the rights to his royalties for almost as long" against publisher D.C. Comics. Pacific Pictures, __ F.3d at __.

The question of whether the attorney-client privilege had been waived arose in connection with a suit by the comic book publisher alleging that an attorney for the heirs (Toberoff) had waived the heirs privilege by disclosing evidence of his confidential communications with them when the attorney responded to a grand jury summons in a criminal case. Having learned of the disclosure of the alleged confidential attorney-client communications to the government, the publisher sought to compel the discovery of those materials in the their civil suit against the heirs. The trial court ordered production of the evidence, concluding that because there had been "a voluntary disclosure of privileged materials" it had "breache[d] confidentiality and is inconsistent with the theory behind the [attorney-client] privilege, [so that] such disclosure waives that privilege regardless of whether the third party [to whom disclosure was made] is the government or a civil litigant. Having delivered the documents to the government, the [court] concluded, Petitioners could not rely on the attorney-client privilege to shield them from [disclosing the communications to] D.C. Comics." Pacific Pictures, __ F.3d at __.

The circuit rejected the heirs argument that the privilege had been waived. The heirs argued that this selected waiver would not apply to discovery of the communications in the civil suit with the publisher:

[T]here have been multiple legislative attempts to adopt a theory of selective waiver. Most have failed. Given that Congress has declined broadly to adopt a new privilege to protect disclosures of attorney-client privileged materials to the government, we will not do so here.
Pacific Pictures, __ F.3d at __ (citing Report of the Advisory Committee on Evidence Rules, May 15, 2007, at 4, ... (reporting the selective waiver provision separately from the general proposed rule); SEC Statement in Support of Proposed Section 24(d) of the Securities Exchange Act of 1934, 16 Sec. Reg. & L. Rep. 461 (Mar. 2, 1984). But see H.R.Rep. No. 870, 96th Cong., 1st Sess. (1980), codified at 15 U.S.C. § 1312. Univ. of Pa., 493 U.S. at 189 (requiring federal courts to be particularly cautious when legislators have “considered the relevant competing concerns but [have] not provided the privilege”)).

In reaching this conclusion, the Ninth Circuit examined many of the same factors as the Federal Circuit had applied in its consideration of an evidentiary privilege applicable to patent cases. While the Ninth Circuit did not explicitly associate its discussion as applying any of the Federal Circuit's six-factor test, there was a rough equivalence between the factors identified by the Federal Circuit and those used by the Ninth Circuit in deciding not to recognize selective waiver of the attorney-client privilege. The table below is based on the table used in the Monday blog article on the Federal Circuit approach, citing factors considered by the circuit in reaching its conclusion. It is supplemented by factors used by the Ninth Circuit in its consideration of the scope of a privilege:

Analysis Of Privilege Factors

Federal Circuit FactorAs Identified Or Applied By Ninth Circuit
Factor 1: Policy Direction of the States:
Is there a consensus among the states as to the existence of the privilege, that may demonstrate that “reason and experience” supported recognition of the proposed privilege? Federal Circuit asks if “[d]enial of the federal privilege [would] ... frustrate the purposes of ... state legislation that was enacted to foster these confidential communications” to be protected by the proposed privilege. See Jaffee, 518 U.S. at 13.
The Ninth Circuit did not specifically address the issue of state approaches to the issue, although it did survey the position of the Circuits on the matter as reflected in case law.
Factor 2: Congressional Considerations:
Federal Circuit considers examines if Congress considered whether the proposed new privilege should be adopted?
Ninth Circuit notes that "there have been multiple legislative attempts to adopt a theory of selective waiver. Most have failed. Given that Congress has declined broadly to adopt a new privilege to protect disclosures of attorney-client privileged materials to the government, we will not do so here," in light of the need to be "particularly cautious" on privileges not defined by Congress. (citations omitted))
Factor 3: Original FRE Proposal:
Federal Circuit examines whether a privilege similar to the proposed privilege had been "recommended by the Advisory Committee of the Judicial Conference in its proposed" Federal Rules of Evidence in 1973-75?
The Ninth Circuit did not address this factor.
Factor 4: Advancing The Public Good:
Federal Circuit examines whether the party seeking judicial recognition of a new evidentiary privilege can demonstrate "...that the proposed privilege will effectively advance a public good.”
Ninth Circuit concluded that providing for a selective waiver in the case would fail to "serve the public good underpinning [of] the attorney-client privilege. That is, 'selective waiver does not serve the purpose of encouraging full disclosure to one's attorney in order to obtain informed legal assistance; it merely encourages voluntary disclosure to government agencies, thereby extending the privilege beyond its intended purpose.'” (citing Westinghouse Elec. Corp., 951 F.2d at 1425."
Factor 5: Number Of Exceptions Necessary:
The Federal Circuit examines whether creation of a privilege would necessitate the development of "numerous exceptions"?
The Ninth Circuit circuit cited and rejected "those who assert that 'an exception ot the third-partty waiver rule need [not] be moored to the justifications of the attorney-client privilege." The Circuit rejects this reasoning because "[i]f we were to unmoor a privilege from its underlying justification, we would at least be failing to construe the privilege narrowly." (citations omitted).
Factor 6: Other Effective Methods Available To Accomplish Goal:
Is creation of a new privilege the only effective way to accomplish the goal of the privilege? The Federal Circuit noted that there were other mechanisms, such as Fed. R. Civ. P. 26, which provide a robust guidance to the issue.
Ninth Circuit notes that the selective waiver in civil cases "has become a highly controversial rule" as it was based on a view that not to provide the selective waiver would thwart "the developing procedure of corporations to employ independent outside counsel to investigate and advise them in order to protect stockholders." But The Ninth Circuit dismisses this policy reason as "unjustified" and that a "rule of selective waiver" is not necessary for the employment of legal consultants or for a company to cooperate with the government in a criminal prosecution.
Factor 7: Position Taken By Other Circuits:
Federal Circuit did not address the position taken by other circuits on this issue, although it was applying Seventh Circuit case law on the evidence issue.
Ninth Circuit notes that the Eighth Circuit recognized a selective waiver, but that the other circuits to address the issue -- the First, Second, Third, Fourth, Sixth, Seventh, Ninth, Tenth and Federal Circuits -- have declined to recognize such a waiver.

While the Ninth Circuit's Pacific Pictures case explores the application of the selective waiver, the case also noted that congressional deliberations on FRE 502, which created limitations on the waiver of the attorney-client privilege, did not manifest support for extending the limitations as contemplated by those arguing for a "selective waiver" rule.


Photo Description: Superman (comic strip). Siegel, Jerry (w), Shuster, Joe (a). Superman. June 13, 1939, McClure Syndicate.


Federal Rules of Evidence