Attorney-Client Privilege — Subject Matter Waiver — Discovery Allowed into Whether Client Authorized Counsel to Submit Memorandum and Exhibits to Prosecutors
From Mainstay High Yield Corporate Bond Fund v. Heartland Industrial Partners, LP, 2009 U.S. Dist. LEXIS 100475 (E.D. Mich. Oct. 28, 2009):
Following the failure of Collins & Aikman, the United States Attorney for the Southern District of New York commenced a criminal investigation in which Defendant McCallum was a target. Mr. McCallum retained Massachusetts attorney Denis King, from the law firm Gouston & Storrs. On or about December 29, 2006, Mr. King produced to the U.S. Attorney a 23-page document entitled "A Case for the Non-Prosecution of Elkin McCallum." The parties have referred to this document as the "White Paper." Attached to the document were 16 exhibits. ***
[T]he White Paper contains admissions of criminal (and hence civil) liability, as well as statements regarding Defendant David Stockman's role in fraudulently inflating the value of Collins and Aikman. Indeed, the paper portrays Mr. McCallum as essentially a dupe of Mr. Stockman.
The Plaintiffs obtained a copy of the White Paper in discovery. However, when Mr. McCallum was deposed on August 13, 2009, his attorney instructed him not to answer questions regarding the source of information in the White Paper, or any communications with Mr. King regarding the information in the White Paper, on the grounds of attorney-client privilege.... When Plaintiffs' counsel argued that the submission of the White Paper to the U.S. Attorney waived the privilege, Mr. McCallum's attorney responded:
"And let me state for the record, there is nothing in this document that suggests that Mr. McCallum submitted the document. There is nothing in the record that suggests that Mr. McCallum either authorized or adopted the document." ***
.***In In re Columbia/HCA Healthcare Corporation Billing Practices Litigation, 293 F.3d 289, 302 (6th Cir. 2002), the Sixth Circuit rejected the concept of "selective waiver," holding that when a party releases otherwise privileged information to a government agency, that party cannot then claim attorney-client privilege as to other parties. *** The court stated:
"[A]ny form of selective waiver, even that which stems from a confidentiality agreement, transforms the attorney-client privilege into 'merely another brush on an attorney's palette, utilized and manipulated to gain tactical or strategic advantage.'" Id. at 302-303 (Citing In re Steinhardt Partners, L.P., 9 F.3d 230, 235 (2d Cir. 1993)).
***Insofar as Mr. McCallum authorized his attorney, Mr. King, to disclose otherwise confidential information to the United States Attorney regarding his and Mr. Stockman's role in Collins & Aikman, this case is controlled by In re Columbia/HCA, and the privilege as to not only the White Paper, but as to undisclosed communications between Mr. McCallum and his attorneys regarding the same subject matter, is waived. Assuming that Mr. McCallum authorized, consented to or acquiesced in Mr. King's submission of the White Paper to the U.S. Attorney, it is of no import that the disclosure was made by Mr. King rather than by Mr. McCallum, or that Mr. McCallum did not review the final draft of the document. The voluntary disclosure of privileged information by an individual, or by an attorney acting on behalf of that individual, waives the privilege as to all communications involving the same subject matter. ***
The facts before this Court have all the earmarks of a waiver. The focus of Mr. King's representation was apparently to prevent Mr. McCallum from being indicted, and toward that end, he presented his client for two proffer sessions before the White Paper was submitted. Proffer sessions with the government are generally (although not always) covered by use immunity, and are subject to protections under Kastigar v. United States, 406 U.S. 441, 92 S.Ct. 1653, 32 L.Ed.2d 212 (1972). The government's grant of use immunity is in turn generally subject to the individual's agreement to provide complete and truthful information, including a full statement of his or her role in the matter being investigated. Indeed, the White Paper itself, at p.16, references Mr. McCallum's own prior statements to the government regarding his discussions with Collins and Aikman. The White Paper was clearly prepared for Mr. McCallum's benefit in the criminal investigation, and was submitted only days after three post-proffer telephone conferences with Mr. King. These facts strongly suggest that the White Paper was prepared and submitted with Mr. McCallum's knowledge and approval, and that the disclosure was solidly within the scope of Mr. King's representation. "[A] client may waive the privilege by conduct which implies...a consent to disclosure." United States v. Dakota, 197 F.3d 821, 825 (6th Cir. 1999).
[Footnote 5] Ultimately, Mr. McCallum was not prosecuted. The parties disagree as to whether the White Paper played into the government's decision not to prosecute, given that Mr. McCallum changed lawyers twice after Mr. King was discharged. However, whether the White Paper in fact did the trick for Mr. McCallum is unimportant to the issue of waiver. The more salient point is that it was prepared for the purpose of obtaining an advantage for Mr. McCallum.
Yet, Mr. McCallum now denies that he authorized the disclosure of the information in the White Paper, and claims privilege as to any communications related to the White Paper. He also takes a position in this litigation that is inconsistent with the statements contained in the White Paper.
*** [T]he burden of showing that the privilege was not waived is on Mr. McCallum, and given the strong circumstantial evidence that he at least implicitly authorized the disclosure of privileged information, his burden of showing otherwise appears daunting. Nevertheless, he will be given that opportunity.
I will therefore grant the Plaintiff's motion in part. Both Mr. McCallum and his former attorney, Mr. King, may be deposed on the issue of whether Mr. McCallum consented to or authorized, expressly or by implication, the disclosure of otherwise privileged information to the U.S. Attorney. They may be questioned as to attorney-client discussions regarding whether Mr. McCallum was informed that an advocacy piece was to be submitted to the government, whether he was shown any drafts, whether the contents were discussed, whether Mr. McCallum explicitly placed any limitations on what would be contained in the White Paper, whether the submission of the White Paper was understood to be within the scope of Mr. King's representation, whether it was understood that the White Paper would include a discussion of Mr. McCallum's and Mr. Stockman's roles with regard to Collins and Aikman, whether it was understood that the White Paper would be a follow-up to Mr. McCallum's two proffer sessions with the U.S. Attorney, whether Mr. McCallum requested to review the paper before it was submitted, whether he voiced any objections or asked that the White Paper be withdrawn after he saw it, and any other matter related to the issue of whether Mr. McCallum consented to the disclosure of the White Paper, by implication or otherwise.
Plaintiffs are also entitled to written communications, including emails, between Mr. King and Mr. McCallum regarding Mr. McCallum's knowledge of and consent to submit the White Paper. They are also entitled to any of Mr. King's notes or memoranda memorializing discussions with Mr. McCallum regarding disclosure. If any such documents contain material not specifically related to Mr. McCallum's consent to produce the White Paper, or his knowledge that it would be provided to the government, they may be appropriately redacted.
In permitting this limited line of inquiry, I necessarily find at least a partial waiver of the attorney-client privilege as to issues regarding Mr. McCallum’s knowledge of, or consent or acquiescence to the production of the White Paper. I find this partial waiver based on (1) the strong circumstantial evidence that Mr. McCallum in fact consented to the disclosure, (2) his otherwise uncorroborated denial that he authorized the disclosure, and (3) his disavowal of the facts contained in the White Paper. Under these circumstances, to not permit inquiry at least into the question of whether Mr. McCallum authorized disclosure would be manifestly unfair to the Plaintiffs. A claim of privilege should not be permitted to operate "as a sword rather than a shield."
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