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INTERNAL INVESTIGATION PRIVILEGED, JUDGE SAYS A San Francisco federal judge has ruled that an internal corporate securities fraud investigation is protected as attorney-client work product and cannot be turned over to plaintiff lawyers. U.S. District Judge Ronald Whyte issued the decision last week in companion cases, In re McKesson HBOC Securities Litigation, 99-20743, and In re McKesson HBOC ERISA Litigation, 00-20030. McKesson paid $960 million to end the securities litigation earlier this year in an agreement with lead plaintiff firm Bernstein Litowitz Berger & Grossmann. Whyte still needs to approve the settlement; the ERISA case is still alive. McKesson has been under fire on several fronts since a corporate scandal in 1999 that resulted in $9 billion in investor losses. Besides the federal suits, McKesson was also sued in state court, and federal prosecutors indicted a handful of executives. Several have pleaded guilty and are cooperating with the government. McKesson also cooperated. After the allegations came to light, the company hired Skadden, Arps, Slate, Meagher & Flom to conduct the internal investigation, which it then turned over to the feds in a successful bid for leniency. The disclosure was subject to a confidentiality agreement. Defense attorneys representing indicted executives then got the report as part of discovery, and plaintiff lawyers pursuing civil claims have sought the investigation, hoping to use it as a roadmap to successful suits. California’s First District Court of Appeal ruled in McKesson v. San Francisco Superior Court, 115 Cal.App.4th 1229, that plaintiffs could use the report. The state Supreme Court declined to review the case. But Whyte disagreed with state judges’ reasoning. Although McKesson waived attorney-client privilege by turning over the report to government investigators, work product is still protected, he said. — Jeff Chorney PADILLA CASE BACK AT COURT A YEAR EARLY WASHINGTON — The case of alleged enemy combatant Jose Padilla is back before the Supreme Court — roughly a year earlier than expected. Padilla is a U.S. citizen who was arrested on a material witness warrant as he arrived in Chicago from Pakistan in May 2002, and he has been imprisoned ever since. When his challenge to his detention went to the Supreme Court last year in Rumsfeld v. Padilla, the court did not decide the merits, but ruled it had been filed in the wrong place against the wrong person, and should have been directed instead against his official custodian at the Navy brig in South Carolina. Padilla’s lawyers did just that and won a victory in February before Judge Henry Floyd of the U.S. District Court for the District of South Carolina. The government appealed to the Fourth Circuit U.S. Court of Appeals, but now Padilla’s lawyers are asking the high court to take up the case quickly without that intermediate step. Padilla’s brief invoked wartime disputes like the steel seizure case Youngstown Sheet & Tube v. Sawyer, and Ex parte Quirin, where the court also granted review before appeals courts ruled. — Legal Times

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