“I think it was his deposition, really,” a juror told ABC’s “Good Morning America” about what convinced him to vote “guilty” in the sexual assault trial of Bill Cosby, referencing admissions Cosby made under oath in a civil deposition 13 years prior to his criminal trial. For lawyers handling civil matters for clients who are also potentially exposed to criminal prosecution, this juror’s comment highlights an frequent source of anxiety—what is seemingly advisable in civil litigation may have troublesome implications in a criminal proceeding.
Recognizing and planning for the possibility that a civil matter might morph into a criminal one is a critical aspect of rendering sound legal advice. The following considerations are important to developing and implementing a strategy to help protect your client’s rights (and liberty!) while working towards the resolution of civil matters.
When facing potential criminal exposure, civil discovery can be risky. Anything your client says in a deposition or civil trial can be used against them in a criminal case as a “prior statement”—considered nonhearsay under Federal Rule of Evidence 801(d)(2)(A) and most state evidentiary rules. In United States v. Ballard, for example, the Fifth Circuit allowed the use of a defendant’s civil deposition testimony as nonhearsay. 779 F. 2d 287, 291 (5th Cir. 1986) (holding that extrajudicial admissions, if voluntary, are admissible). Most notably, the court found that a criminal defendant’s ignorance at the time of his deposition that he might later be charged with a crime is “inconsequential.” Id. at 291.
‘It Wasn’t Me!’: The Perils of Pleading the Fifth
Your client always has the constitutional right against self-incrimination—he or she is free to “plead” or “take the Fifth” in a civil deposition or trial as protection from making incriminating statements that could later be used in a criminal case. But pleading the Fifth in a civil matter might be exactly what opposing counsel needs for victory in the civil case.
In criminal proceedings, judges must instruct jurors that they cannot draw an inference of guilt from a defendant’s refusal to testify under the Fifth Amendment. However, this protection does not apply to civil cases. Indeed, fact-finders may be permitted to draw “adverse inferences against parties to civil actions when they refuse to testify in response to probative evidence offered against them.” Baxter v. Palmigiano, 425 U.S. 308, 318 (1976).
Note that entities, such as corporations, cannot plead the Fifth. Therefore, an entity cannot withhold documents because those documents would tend to expose the entity to criminal liability or incriminate an individual. See Bellis v. United States, 417 U.S. 85, 89-91 (1974) (holding that a lawyer could not withhold law firm documents, even if those documents tend to incriminate him).
Not all Secrets are Safe: Attorney-Client Privilege
There are limitations on the attorney-client privilege that might surprise even the most seasoned litigator. While an attorney is not required or permitted (absent client waiver) to disclose privileged information to third parties, including law enforcement, that information is not rendered privileged simply by virtue of coming into an attorney’s possession in connection with the representation.
In late 2015, then-Deputy Attorney General Sally Yates distinguished between factual and privileged information. In a speech to the American Banking Association and American Bar Association Money Laundering Enforcement Conference, Yates stated, “Let’s be clear about what exactly the attorney-client privilege means. As we all know, legal advice is privileged. Facts are not.” Yates continued by example of a corporate investigation, “[i]f a law firm interviews a corporate employee during an investigation, the notes and memos generated from that interview may be protected, at least in part, by attorney-client privilege or as attorney work product.” Therefore, Yates noted, a company need not turn over that material in order to earn cooperation “credit.” On the other hand, to be eligible for this credit, “the corporation does need to produce all relevant facts—including the facts learned through those interviews—unless identical information has already been provided.” Id. (emphasis added). The takeaway is that historical facts cannot be cloaked with privilege and the government, during a criminal investigation, will expect disclosure of facts from any party seeking cooperation credit, even if those facts came to light through a privileged internal investigation or civil litigation.
An Unlikely Source: Government Subpoenas for Civil Discovery Civil clients should be aware that the government, in a criminal investigation, can subpoena documents produced during civil litigation. For example, the government may issue a grand jury subpoena to an opposing party in a breach of contract case for the entirety of your client’s document production. The opposing party could move to quash, but the sweeping powers of the grand jury are a high burden to overcome. See United States v. R. Enterprises Inc., 498 U.S. 292, 292 (1991) (“[T]his Court has held that a grand jury may compel the production of evidence or the testimony of witnesses as it considers appropriate.”)
The government can even use the grand jury’s authority to subpoena documents produced in civil litigation by a foreign corporation, despite the fact that the government may not be able to obtain the same documents overseas. See In re Grand Jury Subpoena, 646 F.3d 159 (4th Cir. 2011) (holding that the use of a subpoena to obtain documents produced by a foreign company in civil litigation was not unreasonable because the discovery was initiated by an unrelated party in a civil case).
In most cases, a protective order cannot protect documents from a grand jury subpoena. Many circuits have adopted per se rules favoring grand jury subpoenas over protective orders. See, e.g., In re Grand Jury Subpoena Served on Meserve, Mumper, & Hughes, 62 F.3d 1222, 1226-27 (9th Cir. 1995)); In re Grand Jury Proceedings, 995 F.2d 1013, 1020 (11th Cir. 1993). Others have adopted a modified per se rule or even a balancing test, but the majority of courts will uphold a grand jury subpoena even in the face of a protective order. See, e.g., In re Grand Jury, 286 F.3d 153, 162 (3d Cir. 2002) (strong presumption that a grand jury subpoena supersedes a protective order).
The broad powers of the grand jury coupled with the lack of constitutional protections in civil matters can create a legal minefield for clients and their lawyers to navigate parallel civil and criminal cases. Oftentimes, the risk of incriminating information flowing from the civil to criminal matter or the unknown repercussions of a negative inference in a civil matter compel parties to seek a stay of civil proceedings pending the conclusion of a criminal matter. Particularly where a stay is not possible, it is important to keep these strategic considerations in mind to avoid unintended consequences for you and your client.
Jamila M. Hall is a partner at Jones Day who defends companies and individuals civil and criminal investigations brought by the U.S. Department of Justice and other government agencies related to the Foreign Corrupt Practices Act, the Anti-Kickback Statute, the False Claims Act, securities fraud, and financial fraud. She is a former federal prosecutor.
Kaeley R. Brown is a Jones Day associate who represents clients in civil and criminal matters including white collar, securities fraud, and consumer litigation and investigations.