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Another front has opened up in the ongoing war over privilege. This time it involves documents that a company says it turned over to a federal agency in order to reach a settlement. Does the agency have to keep the documents confidential, or can they be made public? At issue are materials that EnCana Corp., a Calgary, Alberta � based energy company, gave to the federal Commodities Futures Trading Commission earlier this year. The CFTC was investigating allegations that EnCana artificially inflated the price of natural gas it sold in California during the state’s energy crisis of 2000 � 01. E.&J. Gallo Winery, the Modesto, California � based winemaker, subsequently brought its own private action against EnCana over the price-fixing allegations. Gallo initially asked a federal district court judge in Fresno, where it filed suit, to force EnCana to hand over certain materials in discovery. After the Fresno judge refused, Gallo then asked a federal district court judge in Washington, D.C., to issue a subpoena ordering the CFTC to turn over its EnCana documents. EnCana cried foul, arguing that the materials were covered by a “settlement privilege” that kept them confidential. The CFTC disagreed in a later brief, saying that EnCana provided most of the documents prior to settlement talks. In May the D.C. judge granted the subpoena request, and the CFTC gave its EnCana papers to Gallo. Now EnCana is asking the U.S. Court of Appeals for the D.C. Circuit to force Gallo to return the documents and destroy all copies. EnCana’s lawyers at Gibson, Dunn & Crutcher declined to comment publicly on their client’s motion, which was still pending at press time. The question of whether a settlement privilege exists is of keen interest to plaintiffs attorneys who frequently obtain documents from the government, as well as defense lawyers who try to keep such information from getting out. “I think it’s an extremely important decision that the D.C. Circuit court is going to make here,” says Donn Pickett, a partner at Bingham McCutchen who defends companies in antitrust suits. Not surprisingly, other defense attorneys also side with EnCana. Robert Van Nest of Keker & Van Nest in San Francisco says a D.C. Circuit finding that there is no settlement privilege would have a chilling effect on companies trying to reach a deal with regulators. And that, in turn, could hurt the government’s ability to solve its inquiries, he maintains. “In any kind of a government investigation, if you don’t protect that kind of information, people aren’t going to be willing to talk,” Van Nest says. Gallo counsel Steven Williams disagrees vehemently. A partner at Burlingame, California � based Cotchett, Pitre, Simon & McCarthy, Williams argues that material provided to the government is inherently public, and its accessibility is particularly important for parties seeking recourse in the civil courts. A ruling by the D.C. Circuit in favor of the settlement privilege “would hide things in the public domain,” Williams says. “These are public documents, and this is the U.S. government we’re talking about.” The EnCana case isn’t the first time that parties have tried to get their hands on documents a company has given to the government. McKesson Corporation, for example, has been battling for years to limit the circulation of an internal investigation its lawyers conducted into alleged fraud at a 1999 acquisition. San Francisco � based McKesson agreed to share the internal report with the government, which was investigating the problems at the acquired company. Shareholders and other parties subsequently argued that they should also get copies of the report, since it lost its attorney-client privilege when McKesson gave it to the government. But while Gallo was able to circumvent EnCana with its subpoena of the CFTC, the McKesson shareholders are trying to get the report directly from the company.

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