In In re IPO Secs. Litig., 2008 U.S. Dist. LEXIS 11058 (S.D.N.Y. Feb. 14, 2008), Judge Shira A. Scheindlin rejected the argument of Credit Suisse that disclosure of work-product-protected reports to the Securities and Exchange Commission staff pursuant to a confidentiality agreement preserved work product protection. After a lengthy analysis of the cases and the selective waiver provision that was once contained in proposed Federal Rule of Evidence 502 (but which has been removed from the final), her conclusion:

Based on the cases and arguments ..., I conclude that selective waiver is not in the long-term best interests of the government, the adversarial system, or litigants. In the very short term, parties argue for selective waiver so that they can preserve privilege once disclosure has already occurred (as it has here). In the short term, the government supports selective waiver so that it can easily obtain privileged materials from targets of its investigations. But in the long term, the erosion of the attorney-client and attorney work product privileges through such disclosure will reduce incentives for companies to discover and correct their wrongdoings, thus reducing the value of the information available to the government, and ultimately reducing the bargaining ability of individual defendants, as well as the ability of attorneys to prepare for litigation.

This does not mean that there can never be a case for selective waiver. The Second Circuit has emphasized the factual aspects of waiver issues, and counseled a case-by-case approach to selective waiver. Indeed, a case-by-case approach appears reasonable given the variety of possible situations in which a defendant might disclose information to the government. In the end, however, there is a strong presumption against a finding of selective waiver, and it should not be permitted absent special circumstances.

Judge Scheindlin also stressed that an agreement reciting the existence of a “common interest” between the parties does not mean that there necessarily exists a legally-cognizable common interest:

Credit Suisse asserts that it shared common interests with the USAO [United States Attorney’s Office] and SEC, and as a result, disclosure of the Memoranda to those entities did not waive the work product privilege. This assertion is baseless. As in Steinhardt, the SEC and USAO were investigating the possibility of wrongdoing, and Credit Suisse disclosed the Memoranda. to escape or limit liability. Credit Suisse contends that the Memoranda were produced to the SEC pursuant to an agreement that stated the entities had common interests. However, such an agreement cannot manufacture a common interest ipse dixit. Indeed, if the SEC, USAO, and Credit Suisse had any common interest, it was in the disclosure of the Memoranda (Credit Suisse to placate the authorities, and the SEC and USAO to further their investigations).