Commercial Litigation and Arbitration

No Subject Matter Waiver of Work Product Protection by SEC Due to DOJ’s Disclosure of SEC Notes in Criminal Prosecution

From Williams & Connolly LLP v. U.S. Securities and Exchange Commission, 2010 U.S. Dist. LEXIS 78570 (D.D.C. Aug. 4, 2010):

FOIA Exemption 5 incorporates the work product doctrine, which shields "documents and tangible things that are prepared in anticipation of litigation or for trial by or for another party or its representative (including the other party's attorney, consultant, . . . or agent)." FED. R. CIV. P. 26(b)(3); Tax Analysts v. IRS, 117 F.3d 607, 620 (D.C. Cir. 1997). The work product doctrine protects both deliberative materials such as mental impressions, conclusions, opinions, and legal theories and factual materials prepared in anticipation of litigation. *** In his declaration in support of summary judgment, David Frohlich, an Assistant Director in the SEC's Division of Enforcement, explains that the handwritten notes sought by Plaintiff were generated during the Cendant investigation in anticipation of litigation with Mr. Corigliano, Mr. Kearney, and others. *** Plaintiff does not dispute this statement and concedes that these documents qualify as attorney work product. However, Plaintiff contends that the SEC has waived any work product privilege with respect to these documents because similar handwritten notes were disclosed to Plaintiff during the criminal prosecution of Mr. Forbes. According to the declaration of Christopher R. Hart, an attorney at Williams & Connolly LLP, at least eleven of the documents of handwritten notes identified in the Vaughn index were produced by the government during the Forbes matter. *** Plaintiff thus contends that the government has "waived the work product privilege as to entire subject matter of handwritten notes between SEC staff and Corigliano, Kearney, or their respective counsel." ***

As with the attorney-client privilege, a party may waive the work product privilege through disclosure. See In re United Mine Workers of Am. Employee Benefit Plans Litig., 159 F.R.D. 307, 310 (D.D.C. 1994) ("It seems . . . clear in this Circuit that the disclosure of documents protected by the attorney work product privilege waives the protections of the attorney work product privilege as to the documents disclosed."). However, "the test for waiving attorney work product protection is more stringent than the test for waiving attorney-client privilege." Goodrich Corp. v. U.S. Envtl. Prot. Agency, 593 F. Supp. 2d 184, 191 (D.D.C. 2009). Although disclosure of documents waives attorney-client privilege with respect to all other communications related to the same subject matter, the scope of "subject matter waiver" with respect to work product materials is more limited. *** "[A] subject-matter waiver of the attorney work product privilege should only be found when it would be inconsistent with the purposes of the work product privilege to limit the waiver to the actual documents disclosed." *** "Several factors figure into the analysis: whether disclosure was intentional or inadvertent, the breadth of the waiver sought, and the extent to which the requested documents would reveal litigation strategies or trial preparations."***

In this case, the disclosures purportedly giving rise to a waiver were made pursuant to Federal Rule of Criminal Procedure 16, which requires the government to provide to the defendant in a criminal proceeding, upon request, any item that is material to his defense or that the government intends to use in its case-in-chief at trial. *** Thus, the handwritten notes that were produced by the government during the Forbes prosecution were disclosed because they were material to Forbes's case. The fact that some handwritten notes by SEC enforcement staff were material to Forbes's case, however, does not mean that all such handwritten notes involve the same subject matter. Indeed, the fact that only some handwritten notes were disclosed to Forbes indicates that other handwritten notes created during the SEC's investigation involved other subject matter that would not be material to Forbes's defense or prosecution. Based on this limited disclosure to Forbes's attorneys (Williams & Connolly LLP), Plaintiff seeks a waiver extending to all handwritten notes made by the SEC regarding meetings with Corigliano and Kearney and their counsel, regardless of the subject matter of those notes; this could result in the disclosure of any aspect of the SEC's investigation and reveal the SEC's litigation strategy. Finding a waiver in this context would be inconsistent with the policies behind the attorney work product privilege. Cf. Rockwell Int'l Corp. v. U.S. Dep't of Justice, 235 F.3d 598, 606 (D.C. Cir. 2001) (discussing cases in which disclosure of work product material was "necessary to protect the adversary system"). To the extent that Plaintiff claims the SEC has waived its privilege about a specific document that was disclosed, such a disclosure renders Plaintiff's FOIA request for that document moot. See Crooker v. U.S. Dep't of State, 628 F.2d 9, 10 (D.C. Cir. 1980) ("Once the records are produced the substance of the controversy disappears and becomes moot since the disclosure which the suit seeks has already been made.").

Moreover, the disclosures on which Plaintiff's waiver argument is premised were made during a criminal prosecution brought by the Department of Justice, not by the SEC. The distinction is critical. In Martin v. Department of Justice, 488 F.3d 446 (D.C. Cir. 2007), the D.C. Circuit held that the Federal Deposit Insurance Corporation did not waive its work product privilege over a document that it provided to the Department of Justice, which then disclosed it to another party in litigation. *** The Court found that "[s]uch production of privileged information cannot be a waiver of the privilege." *** Accordingly, the Court finds that the disclosure of certain handwritten notes by the Department of Justice during the Forbes prosecution did not waive the SEC's work product privilege with respect to the documents it claims are exempt under Exemption 5.

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