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You are smart enough to know that you cannot unscramble an egg, unring a bell, unmix a spot of ink from a glass of milk. So what makes you think you can unwaive a privilege? OK, you are smart enough to know you can’t�but you probably know people who aren’t that smart. This article is for them. Pass it on. We are amazed that some lawyers think they can waive a privilege in case A and then assert the privilege in case B. To be fair, some judges seem to think so, too, but these judges need better clerks. The overwhelming majority view is that a privilege waived is a privilege lost. The dangers of disclosing to a third party Let’s start with Privilege 101: Attorney-client communications and attorney work are shielded from discovery and disclosure. But if you disclose privileged material to a third party who is not within the umbrella of privilege, the privilege is waived. Lost. Gone. Finito. “[D]isclosure to a third party almost invariably surrenders the privilege with respect to the world at large; selective disclosure is not an option.” Burden-Meeks v. Welch, 319 F.3d 897, 899 (7th Cir. 2003). We dwell between a rock and a hard place. We represent Public Company Inc. The Securities and Exchange Commission (SEC) is investigating allegations of insider trading by the entire board of directors and senior management. Sinister flocks of plaintiffs’ lawyers circle overhead. Public has commissioned us to conduct an internal investigation and we have prepared a detailed report-indisputably attorney work product and attorney-client material-that discloses embarrassing and even illegal details about certain officers and directors, but which helps establish the innocence of the most senior executives. The SEC has subpoenaed all internal investigation reports, and it doesn’t much care about privilege; the SEC’s view is that an assertion of privilege is an aggravating factor, fair game to use to enhance any sanction eventually assessed against Public. Indeed, we want to disclose the report to the SEC, because we hope to use it to convince the SEC that civil, rather than criminal, sanctions are in order. We want to make the report the focus of our Wells Submission. Um, but we would really, really like to keep the report privileged so that those waiting carrion plaintiffs’ bar are not handed a road map to Public’s demise in private litigation. Don’t disclose the report and the SEC will be miffed, may bring criminal charges. Rock. Disclose and maybe the SEC will go easy, but the civil litigators will feast on the entrails of the report. Hard Place. What to do? In Diversified Indus. v. Meredith, 572 F.2d 596 (8th Cir. 1977), the 8th U.S. Circuit Court of Appeals found that selective disclosure to the government was not a waiver of privilege. In what has come to be known as the “selective waiver” doctrine, the court based its holding on the policy consideration that if voluntary disclosure to the government waives privilege as to subsequent private litigants, parties may be discouraged from cooperating with the government. Similarly, corporations might hesitate to conduct independent investigations of wrongdoing. Id. at 611. Refining the concept, Teachers Insurance & Annuity Association of America v. Shamrock Broadcasting Co., 521 F. Supp. 638 (S.D.N.Y. 1981), allowed an assertion of limited waiver when disclosing confidential information to a government agency, but only when there was an express reservation of right. The court reasoned that “a contemporaneous reservation or stipulation would make it clear that . . . the disclosing party has made some effort to preserve the privacy of the privileged communication, rather than having engaged in abuse of the privilege by first making a knowing decision to waive the rule’s protection and then seeking to retract that decision in connection with subsequent litigation.” Id. at 646 A variation on the theme was played in SEC v. Amster & Co., 126 F.R.D. 28, 30 (S.D.N.Y. 1989), recognizing limited waiver if the privilege holder and government have entered into a binding agreement to preserve the privilege. See also Jobin v. Bank of Boulder, 616 B.R. 689, 695-96 (D. Colo. 1993). The problem is that no other circuit has ever agreed with the 8th Circuit-and it is not altogether clear that the doctrine remains viable even there. In PaineWebber Group Inc. v. Zinsmeyer Trusts Pshp., 187 F.3d 988, 992 (8th Cir. 1999), giving only passing reference to its old holding in Diversified, the 8th Circuit announced that “the attorney/client privilege is waived by the voluntary disclosure of privileged communications, and courts typically apply such a waiver to all communications on the same subject matter.” The other circuits that have addressed the issue have rejected the holding and the rationale of the selective waiver doctrine. In Salomon Bros. Treasury Litig. v. Steinhardt Partners L.P., 9 F.3d 230, 235-36 (2d Cir. 1993), the 2d Circuit explained why the doctrine has no legs: “[T]he protection of privilege is not required to encourage compliance with SEC requests for cooperation with investigations . . . .The SEC has continued to receive voluntary cooperation from subjects of investigations, notwithstanding the rejection of the selective waiver doctrine by two circuits and public statements from Directors of the Enforcement Division that the SEC considers voluntary disclosures to be discoverable and admissible.” Although Steinhardt dealt with and spoke of voluntary disclosure, it does not much matter that the disclosure might be forced by subpoena. “[T]he heart of the waiver issue is the provision of information to an adversary as opposed to the voluntary nature of such disclosure.” Hobley v. Burge, 2004 U.S. Dist. Lexis 6858 (N.D. Ill. 2004). Nor does it much matter that the SEC might expressly agree to treat disclosed materials as retaining privilege. In Tenn. Laborers Health & Welfare Fund v. Columbia/HCA Healthcare Corp., 293 F.3d 289 (6th Cir. 2002), the 6th Circuit rejected the notion that an agreement between a litigant and the government could bind other litigants or other courts. Logic 101. Your agreement with the government might-might-bind the government, but how on earth can it bind another litigant who was never a party to that agreement? How can it bind a court in subsequent litigation? In re Lupron Mktg. & Sales Practices Litig., 313 F. Supp. 2d 8 (D. Mass. 2004), is instructive. TAP Pharmaceutical Products Inc. came under government scrutiny for its pricing of its proprietary drug Lupron. TAP entered into a settlement in which TAP pleaded guilty to violations of federal law, paid a criminal fine of $290 million and paid another $585 million in civil restitution. As part of the settlement, TAP agreed to produce material to the government that had been withheld attorney-client privilege. The government agreed to treat the material as if it was protected by grand jury rule 6(e). When later civil litigants sought disclosure of those same materials, TAP sought cover under its agreement and the Diversified selective waiver doctrine. Nice try, no dice. “[E]very Circuit but the Eighth that has addressed the issue has ruled that voluntary disclosures to the government in an enforcement context destroy the attorney-client privilege [citations omitted]. TAP consequently is left with the measly support of a ‘celebrated and controversial’ twenty-five year old opinion [ Diversified] bringing forth a doctrine which . . . has but a paragraph of analysis as its birthright, no Circuit siblings, and moreover, is probably an orphan in its own home.” Id. at 12-13. At least one commentator has suggested that the form of disclosure may make a difference. Note: “Wells Submissions To The SEC As Offers Of Settlement Under Federal Rule Of Evidence 408,” 102 Colum. L. Rev. 1912 (2002). The author argues that a Wells Submission-the document the SEC Division of Enforcement allows you to file in a futile effort to talk them out of the course they have already decided upon-is really an offer of settlement subject to Rule 408. And it is a persuasive argument-for excluding evidence at trial. But admissibility and discoverability are enormously different propositions. So where are we? Rock. Hard place. Choose one. Admissibility, of course, is relevant but not dispositive of discoverability, and two lines of cases have developed that place the burden of demonstrating or refuting admissibility of Rule 408 settlement materials on one side or the other. Bennett v. LaPere, 112 F.R.D. 136 (D.R.I. 1986), places the burden on the opponent of discovery to show that the evidence is not likely to lead to the discovery of admissible evidence. Bottaro v. Hatton Associates, 96 F.R.D. 158 (E.D.N.Y. 1982), on the other hand, reasons that because Congress intended to exclude certain items of evidence, the burden should be placed upon the proponent of discovery to make some “particularized showing” of a likelihood that admissible evidence will be generated by discovery. OK, so where does this leave us? Rock. Hard Place. Choose one. If you care about the privilege, don’t disclose the material. Don’t assume that production with a subpoena pointed at your head is enough. Don’t count on an agreement with the government in case A to persuade the judge in case B. You might as well try to put Humpty Dumpty back together again as unwaive a waived privilege. Jerold S. Solovy and Robert L. Byman are fellows of the American College of Trial Lawyers (ACTL) and partners at Chicago’s Jenner & Block. Solovy, the firm’s chairman, can be reached at [email protected]. Byman, chair of the ACTL Federal Civil Procedure Committee, can be reached at [email protected].

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