July 2012 Vol. 9, No. 2

9.2.4

Attorney-Client Privilege, Waiver of

Case:

In re: Pacific Pictures Corp. (9th Cir. 2012) 679 F.3d 1121  

Issue:

Did a party waive the attorney-client privilege as to third parties over assertedly privileged documents by producing those documents to the federal government unredacted in response to a subpoena the party invited and where the government promised the party that, if the party voluntarily complied with the subpoena, the government would not produce the documents to third parties absent court order?

Holding:

Yes. The attorney-client privilege ordinarily protects communications between clients and their attorneys in order to encourage open communication. (679 F.3d 1121, 1126.) A party may waive the privilege by voluntarily disclosing privileged documents to third parties. (Id. at 1126-1127.)

Petitioners consisted of heirs of the creators of Superman, an attorney who controlled various entities working with the heirs to manage preexisting litigation, and the entities themselves.  The heirs had been in a long dispute with D.C. Comics over royalties and sought to block disclosure of privileged documents to D.C. Comics after having voluntarily disclosed them to the federal government as part of a grand jury investigation into the theft of the privileged documents by one of their former lawyers.

Petitioners invoked the doctrine of “selective waiver” adopted by the Eighth Circuit in Diversified Industries, Inc. v. Meredith (8th Cir. 1978) 572 F.2d 596 but rejected by all of the other circuit courts that have considered the doctrine. (679 F.3d at 1127.)  Under the doctrine of selective waiver, a party does not waive the attorney-privilege as to the world at large over documents disclosed only to the government.

The Ninth Circuit joined the majority of its sister circuits in rejecting the theory of selective waiver, finding that it is based on the unjustified concern that officers of public corporations will not cooperate with government investigations. In narrowly interpreting the attorney-client privilege, the Court reasoned that permitting selective waiver of the attorney-client privilege does not further the public policy underlying the attorney-client privilege of encouraging full disclosure to one’s attorney to obtain legal guidance. Rather, selective waiver simply encourages voluntary disclosure to the government and Congress has previously declined to codify a new privilege protecting voluntary disclosures of privileged materials to the government. (679 F.3d at 1127-1128.)

The Court also declined to honor the confidentiality agreement between the heirs and the government with respect to the privileged materials as a limited form of selective waiver.  The Court observed that such “post hoc” contracts do nothing to encourage a party to be frank with its attorney at the time legal advice is sought.  (Id. at 1128-1129.)  The only justification offered for respecting such an agreement was to encourage cooperation with the government, but Congress did not authorize this form of selective waiver and the Court declined to do so.  

The Court also rejected the heirs’ contention that the “common-interest” exception to waiver of the privilege applied.  “[A] shared desire to see the same outcome in a legal matter is insufficient to bring a communication between two parties within this exception.  Instead, the parties must make the communication in pursuit of a joint strategy in accordance with some form of agreement – whether written or unwritten.”  (Id. at 1129, citations omitted.)  There was no evidence that the attorney for the heirs had agreed with the Office of the U.S. Attorney to pursue sanctions against the alleged thief of the documents or was strategizing with the prosecution.  His shared interest with the government was the same as that of anyone who seeks to have the law upheld.  (Ibid.)

The heirs asserted several other theories to dissuade the Court from finding waiver, including arguing that there could be no waiver from involuntary disclosure of the documents in response to a grand jury subpoena for the materials. While the Court agreed that involuntary disclosures do not automatically waive the privilege, this argument failed since the attorney for the heirs invited the subpoena, failed to assert the privilege, and provided the documents unredacted. (Id. at 1130.)

Note:

On May 10, 2012, the Court amended the opinion it originally issued on April 17, 2012 to reflect that there had been no finding of wrongdoing on the part of the attorney accused of taking the assertedly privileged documents.

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