I. INTRODUCTION II. INTERNAL INVESTIGATIONS AND WAIVER ISSUES III. MINORITY APPROACHES: "SELECTIVE WAIVER AND
"SELF CRITICAL ANALYSIS
A. Diversified Industries, Inc. v. Meredith and "Limited Waiver"
B. "Self-Critical" Privilege IV. THE MAJORITY APPROACH: STRICT APPLICATION OF THE WAIVER
A. The District of Columbia Circuit's Strict View of Waiver
B. Westinghouse Electric Corp. v. Republic of the Philippines
C. In re Steinhardt Partners, L.P.
D. In re Martin Marietta Corporation V. THE SUPREME COURTS LIKELY TREATMENT VI. CLARIFICATION OF INSTANCES AND SCOPE OF WAIVER VII. CONCLUSION
Internal corporate investigations by outside counsel are now commonplace. When a corporation becomes aware of wrongdoing or a government probe, an internal investigation enables the company to expose the problem and anticipate issues that could subsequently arise in a civil or criminal action. Furthermore, disclosure to the government of the results of an investigation and affirmative action to remedy the situation often will result in more lenient treatment by an enforcement agency.
One of the most important issues in the area of internal corporate investigations is how such disclosure affects the corporation's ability to claim the protections of the attorney-client privilege and the work-product doctrine. Third parties frequently argue that the company's disclosure to the government waives these protections. These third parties often are other government agencies or plaintiffs in civil suits, particularly shareholder-derivative actions. Although some courts have held that disclosure to the government constitutes only a "selective" or "limited" waiver as to the government,(1) the majority of federal circuits to address the issue have construed the waiver doctrine strictly, holding that disclosure to the government also waives the attorney-client and work-product protections as to third party litigants.(2) As a consequence, corporations may be more reluctant to conduct internal reviews and police their own operations for fear that disclosing the results to the government will provide civil plaintiffs with a litigation roadmap.
This Note examines this dilemma in light of the rationales for the attorney-client and work-product protections, Supreme Court precedent, and the competing approaches and policy interests involved. Part II briefly describes the internal investigation process and the applicability of the attorney-client and work-product protections to that process. Part III examines the minority approach taken by those courts that have construed the disclosure of an internal investigation report to an agency to be a waiver of the protections only as to that agency. It also reviews a largely academic proposal calling for recognition of a new self-critical analysis privilege to be applied to internal corporate investigations. Part IV discusses the majority view taken by courts that have construed the waiver doctrine strictly. Part V concludes that the Supreme Court would not, and should not, recognize a new self-evaluative privilege for internal corporate investigations or adopt the minority selective waiver approach. As discussed in Part VI, however, clarification regarding the different contexts in which a waiver occurs, as well as the scope of any such waiver, would both encourage corporate self-policing and promote effective enforcement of public and private rights.
II. Internal Investigation and Waiver Issues
As the scope of potential criminal and civil corporate liability has expanded in recent years, government enforcement activities and potential penalties also have increased.(3) As a result, corporations confronted with evidence of misconduct frequently choose to perform an internal investigation, conducted by either outside or in-house counsel.(4) Investigations of this type became more visible during the 1970s when, in the wake of Watergate revelations about illegal corporate political contributions, the Securities and Exchange Commission (SEC) instituted a Voluntary Disclosure Program. Under this program, corporations would receive more lenient treatment if they investigated themselves, took steps to reform, and disclosed their findings.(5) The practice grew through the 1980s, as the Department of Defense instituted a similar voluntary disclosure program and other agencies increasingly emphasized corporate cooperation with investigations.(6) This trend has continued into the 1990s. The Federal Sentencing Guidelines provide incentives for corporate self-policing, and government agencies display an even greater willingness to treat cooperative companies more leniently.(7) Consequently, corporate self-investigation has become the norm, and the failure to perform such an investigation often is perceived by the public and the government as evidence of a cover-up or uncooperative posture.(8)
Counsel conducting an internal investigation chiefly gather information in two ways: (1) document collection and review and (2) employee interviews.(9) This process should be as thorough as possible so that counsel can anticipate the issues that will be raised in a government probe or private lawsuit. Furthermore, lawyers should conduct the investigation so that the company can utilize the attorney-client and work-product protections.(10) If the investigation is performed by other personnel, the company will not be able to claim that the results are so shielded.(11)
The attorney-client privilege protects from disclosure confidential communications between a client and his lawyer.(12) Protecting these communications is said to encourage the client to provide his attorney with the truthful information necessary for him to receive fair and effective representation--information that the client might be reluctant to relate if he were afraid that his communications could be relayed to other parties.(13) Furthermore, this freer consultation leads to more voluntary compliance with and more effective administration of the law.(14) These justifications for the privilege are utilitarian in nature and are thought to outweigh the normal presumption that "the public . . . has the right to every man's evidence."(15)
The work-product doctrine(16) was developed by the Supreme Court in Hickman v. Taylor(17) and protects from disclosure "all written materials obtained or prepared by an adversary's counsel with an eye toward litigation." Nevertheless, the seeking party can overcome this doctrine if she can show that she has a "substantial need" for the information and that she cannot obtain the material without "undue hardship."(18) The seeking party must show that the information is no longer otherwise available, that it would be an undue hardship to obtain the information, or that some other adequate reason justifies obtaining the information from opposing counsel.(19) When the sought materials contain the opinions of the preparing attorney, they are entitled to heightened protection.(20) This so-called "opinion work-product" includes the personal recollections of an attorney, memoranda, handwritten notes, legal opinions, and litigation strategy.(21)
The protections of the work-product doctrine are therefore different than those provided by the attorney-client privilege.(22) In one sense, the work-product doctrine is broader in that it applies to materials that are not based on confidential communications with a client and to materials prepared by nonlawyers acting on behalf of the lawyer or client.(23) In another sense, however, the work-product doctrine is narrower than the attorney-client privilege because it provides only qualified protection. While the attorney-client privilege is absolute, work-product may be obtained upon a showing of "substantial" or "extraordinary" need for the material, depending on whether the work-product contains attorneys' opinions and on whether the information can be obtained from other sources without "undue hardship."(24) Moreover, the work-product doctrine applies only to materials prepared in anticipation of litigation, but the attorney-client privilege applies to confidential communications regarding any legal services.(25)
In Upjohn Co. v. United States,(26) the Supreme Court addressed the applicability of the attorney-client privilege and the work-product doctrine to internal corporate investigations. The Court held that notes and memoranda prepared by the company's counsel after interviewing employees during an internal corporate investigation were protected by both the attorney-client privilege and the work-product doctrine.(27) Inasmuch as the notes reflected communications with the lawyer, they were protected by the attorney-client privilege; to the extent that the notes did not reflect communications, they still "reveal[ed] the attorneys' mental processes in evaluating the communications" and were entitled to heightened protection as opinion work-product.(28) The government had to show more than just "substantial need" and "undue hardship" to compel production of the attorneys' mental impressions, and a "far stronger showing of necessity and unavailability by other means" would have to be demonstrated to compel disclosure.(29)
Because the effect of privileges is to withhold relevant information from an adversary, courts have limited their application through the doctrine of implied waiver.(30) Voluntary disclosure of one part of a communication will waive the attorney-client privilege not just for that matter, but for all related communications on the same subject matter.(31) Like the attorney-client privilege, work-product protection may be waived. Voluntary disclosure of work-product by the client, attorney, or other authorized party will waive the protection if the disclosure "substantially increas[es] the possibility that an opposing party could obtain the information."(32) Most courts hold that disclosure of work-product to an adversary waives the protection as to other adversaries.(33)
This strict approach to waiver can make the cost of disclosing an internal investigation very high. Once an internal investigatory report is disclosed, the attorney-client and work-product protections applicable to the report and the material on which it is based will usually be waived. Most courts do not allow so-called "selective" or "limited" waivers,(34) by which a company, through disclosure to a government agency, may waive protection of the report as to that particular agency, but not as to other parties.
From a corporation's viewpoint, an internal investigation can nevertheless provide many potential benefits and advantages. An investigation helps a company assess its potential criminal or civil liability. Determining the facts helps the company to develop legal defenses and reform internal practices to prevent future misconduct. A thorough self-investigation and disclosure to the government can help avoid indictment, debarment in the case of a federal contractor, a potentially more intrusive probe, and bad publicity that may invite civil suits or hurt business. Investigations can help the corporation negotiate a reasonable settlement or more lenient sentencing if a conviction results. Finally, an internal investigation can help deal with any bad publicity that does occur and help repair public relations by showing the corporation's good faith in responding to the misconduct.(35)
Nevertheless, there also are significant risks associated with an internal investigation. First, there is no guarantee that voluntary disclosure to the government will induce leniency or immunity from an enforcement action.(36) Second, a written report may invite libel claims by those employees whose questionable conduct is described or characterized.(37) Most important, however, is the risk that by disclosing the materials collected and developed during an investigation to a government agency, a company may waive the protections of the attorney-client privilege and work-product doctrine.(38) Such a waiver will invite civil lawsuits in which, ironically, the company's lawyers already will have conducted the plaintiffs' investigation for them.(39)
III. MINORITY APPROACHES: "SELECTIVE WAIVER" AND "SELF-CRITICAL ANALYSIS"
This Part examines the rationale employed by the few courts that have adopted a selective waiver approach to the disclosure of internal investigation reports. Under this theory, disclosure waives the attorney-client privilege and work-product protections only as to the government agency on the receiving end of the report; the company can still assert the defenses to production against third parties. The rationale for this interpretation of the waiver doctrine is that it will encourage disclosure to government agencies, and therefore encourage corporate self-policing and compliance with the law. This Part also examines proposals for a new "self-critical analysis" privilege that would be specifically applicable to internal corporate investigations.
A. Diversified Industries, Inc. v. Meredith and "Limited Waiver"
The "limited" or "selective" waiver theory was developed by the Eighth Circuit in Diversified Industries, Inc. v. Meredith.(40) Diversified voluntarily had disclosed to the SEC material that had been collected during an internal investigation and was protected under the attorney-client privilege.(41) The court en bane held that the company's waiver of the attorney-client privilege was limited to the SEC.(42) The court explained its holding in one sentence: "To hold otherwise may have the effect of thwarting the developing procedure of corporations to employ independent outside counsel to investigate and advise them in order to protect stockholders, potential stockholders and customers."(43)
The Eighth Circuit continues to follow this rule,(44) but seems to stand alone among the U.S. Courts of Appeals. While several district courts around the country have applied the limited waiver rule,(45) it is a distinctly minority approach.(46)
B. "Self-Critical " Privilege
A few courts have recognized a new "self-critical analysis" or "self-evaluative" privilege under Federal Rule of Evidence 501 (Rule 501),(47) though not in the context of internal corporate investigations. While analogous to the attorney-client privilege, the self-critical privilege is an entirely new creation and is based on a different rationale. The self-evaluative privilege protects the "free flow of information" when this flow of information is thought "essential to promote recognized public interests" and would cease if the privilege did not protect its confidentiality.(48) The privilege has most often been recognized to protect the findings of internal hospital review boards(49) and internal corporate reviews concerning employment discrimination practices.(50) Several commentators have argued that the self-critical analysis privilege should be expanded and applied to the results of internal corporate investigations.(51) These advocates contend that "preserving confidentiality enhances the frequency and quality of institutional self-critical analysis, and that the social utility of such self-evaluation exceeds the social utility of compelled disclosure during discovery."(52)
The privilege was first recognized by a federal district court in the medical malpractice case of Bredice v. Doctors Hospital, Inc.(53) where it protected the records of an internal board that reviewed staff performance and hospital procedures.(54) The court reasoned that there was an "overwhelming public interest" in improving patient care through these internal reviews and that confidentiality was necessary to protect the review process. Therefore, the review committee's meetings, "being retrospective with the purpose of self-improvement, [were] entitled to a qualified privilege on the basis of this overwhelming public interest."(55) The self-critical analysis privilege was applied by another district court one year later in the employment discrimination context in Banks v. Lockheed Georgia Co.(56) The Banks court held that the company's internal reports on compliance with government affirmative action requirements were protected because allowing access would undermine public policy by discouraging "frank self-criticism and evaluation" of company employment practices.(57)
Several commentators have proposed that the self-critical analysis privilege be applied to internal corporate investigations.(58) The privilege would protect the results of these self-audits, but would be qualified and confer varying protection depending on the identity of the party seeking the information and the type of information sought.(59) Most significantly for the subject of this Note, voluntary disclosure to an agency would waive the self-critical analysis privilege, or any other protections, only as to the receiving agency.(60)
IV. THE MAJORITY APPROACH: STRICT APPLICATION OF THE WAIVER DOCTRINE
Most courts to address the issue have held that corporate disclosure to an enforcement agency waives the protections of the attorney-client privilege and work-product doctrine.(61) The District of Columbia,(62) Second,(63) and Third Circuits,(64) as well as several district courts,(65) have expressly rejected the selective waiver rule of Diversified.(66) The Fourth Circuit has adopted a broad view of the waiver doctrine and held that disclosures made during a settlement conference with the government effected a broad waiver of both protections.(67)
A. The District of Columbia Circuit's Strict View of Waiver
Three cases illustrate the District of Columbia Circuit's strict view of waiver when a corporation makes a voluntary disclosure to an agency. In Permian Corp. v. United States,(68) D.C. Circuit held that disclosure of documents to the SEC by Occidental Petroleum Corporation (of which Permian was a subsidiary) waived the attorney-client privilege as to these documents. The documents were thus available to the Department of Energy (DOE) in an unrelated investigation. The court based its holding on the fact that Occidental had breached its confidentiality and that allowing selective disclosure would give Occidental an unfair litigation advantage.
Under a deal negotiated between Occidental and the SEC, the agency had agreed not to release submitted Occidental documents to any other party without first notifying the company.(69) The purpose of this agreement was to allow Occidental to assert claims of privilege before any documents were released to third parties. The DOE subsequently sought thirty-six of the documents from the SEC for an investigation of Permian's compliance with petroleum pricing regulations. Occidental objected to the release and obtained a district court order barring the SEC from releasing the documents to the DOE.(70)
Although the district court had found that seven of the thirty-six documents sought by the DOE were protected by the attorney-client privilege, the D.C. Circuit held that Occidental's disclosure of the documents to the SEC waived the privilege by destroying the confidential status of the documents.(71) In so doing, the court expressly rejected the Eighth Circuit's selective waiver theory. Judge Abner Mikva noted that the privilege rested on the need for secrecy between a lawyer and his client, and turning the documents over to the SEC was inconsistent with this need for confidentiality.(72) He observed that "voluntary cooperation with government investigations may be a laudable activity, but it is hard to understand how such conduct improves the attorney-client relationship."(73) Furthermore, the Diversified rule would result in unfairness by allowing a litigant to convert "the privilege into a tool for selective disclosure. The client cannot be permitted to pick and choose among his opponents, waiving the privilege for some and resurrecting the claim of confidentiality to obstruct others."(74) According to Judge Mikva, "attorney-client privilege [was] not designed for such tactical employment."(75)
One year later, in In re Sealed Case,(76) the D.C. Circuit held that a corporation waived work-product protection of documents underlying a voluntary disclosure report filed with the SEC following an internal investigation.(77) The documents were sought by a grand jury that had already received the disclosure report produced to the SEC.(78) While declining to state whether it "would imply a waiver in other types of litigation for all of [a] Company's privileged files relating to [a] report," a combination of factors in this case demonstrated that protection of these documents was "not required to maintain a healthy adversary system."(79) The court found that the company had waived work-product protection because: (1) under its Voluntary Disclosure Program, the SEC demanded access to underlying documentation in order to evaluate the company's submitted report; (2) the report had specifically stated that one employee had submitted all relevant files, when in fact he had not; and (3) the documents in question were crucial for the SEC to evaluate the accuracy of the report.(80) The company had purported to make a full disclosure and invited the SEC to examine the underlying material, but it actually had withheld relevant material. This "manipulation" constituted a waiver of work-product protections.(81) Furthermore, the court relied on Permian in rejecting the argument that work-product protection should be waived only as to the SEC, observing that " [t]he grand jury ha[d] the same interests as the SEC in this case." (82)
In In re Subpoenas Duces Tecum,(83) another case involving the SEC disclosure program, the D.C. Circuit held that a corporation had waived its attorney-client and work-product protections when it disclosed to the agency its final internal investigation report, the underlying records, and its lawyers' notes. Accordingly, the plaintiff-shareholders in the subsequent civil action were entitled to the report. Following Permian, the court ruled that the disclosure had waived the attorney-client privilege.(84) As for work-product protection, the court addressed the issue specifically left open in In re Sealed Case: whether to imply a waiver in other types of litigation for all privileged files relating to a company's report.(85) Applying a fairness analysis,(86) the court held that work-product protection of the documents handed over to the SEC had been waived. It based this decision on three factors. First, deciding otherwise would allow the company to gain an advantage by disclosing material to one adversary, the SEC, while maintaining "another advantage inherent in protecting that same work product from other adversaries."(87) Second, despite its contrary assertions, the company had no reason to expect that the SEC would keep the disclosed materials confidential.(88) Finally, no policy reasons suggested that the court should create a special exception for waiver under the SEC's Voluntary Disclosure Program.(89) If special treatment was needed to encourage cooperation with voluntary disclosure programs, according to the court, it was a matter for congressional action or agency rulemaking.(90)
B. Westinghouse Electric Corp. v. Republic of the Philippines(91)
In Westinghouse, the Third Circuit specifically addressed the conflict between the D.C. Circuit's strict approach to waiver and the Eighth Circuit's selective waiver theory. The Third Circuit came down decidedly in favor of the strict approach. In Westinghouse, the Philippines government alleged that the company had bribed former President Ferdinand Marcos in order to procure a contract to build the nation's first nuclear power plant.(92) The Philippines contended that Westinghouse had tortiously interfered with Marcos's fiduciary duties to his country's people and that the company had conspired to hinder Marcos from performing those duties.(93) Westinghouse had disclosed an internal investigation report to the SEC and the Department of Justice (DOJ) during investigations of the alleged bribe. The Philippines sought discovery of this report and the underlying documents. The company refused, citing the attorney-client privilege and work-product doctrine.(94)
The Third Circuit agreed with the D.C. Circuit's Permian analysis that selective waiver had little to do with the underlying purpose of the attorney-client privilege to encourage clients to seek legal advice. The court concluded that encouraging voluntary disclosure, while worthy, was a goal outside the "intended purposes of the attorney-client privilege."(95) Moreover, the court said that creating a new privilege was not warranted in light of: (1) the caution courts should assume in recognizing new privileges; (2) the fact that Congress had considered and rejected a selective waiver rule for documents voluntarily disclosed to the SEC; and (3) its judgment that the benefits of any resulting increase in voluntary cooperation were outweighed by the public's "right to every man's evidence."(96) The Third Circuit, however, rejected the D.C. Circuit's reliance on the "unfairness" that would result if third parties were denied access to attorney-client communications voluntarily disclosed to an agency. The Third Circuit thought this rationale unnecessary, because "the attorney-client privilege protects only those disclosures necessary to encourage clients to seek informed legal advice and . . . Westinghouse's disclosures were not made for this purpose."(97) Finally, the fact that the DOJ had agreed not to disclose the information to other parties made no difference. In the court's view, voluntary disclosure to another party waived attorney-client privilege regardless of whether the party agreed not to disclose the communications.(98)
The Third Circuit also held that disclosure to the SEC and DOJ had waived work-product protection as to all other adversaries because disclosure to forestall prosecution or obtain more lenient treatment from a government agency was not consistent with the work-product doctrine's purpose: protecting the adversary process.(99) Again, the court held that the existence of a confidentiality agreement would have made no difference.(100)
C. In re Steinhardt Partners, L.P. (101)
In In re Steinhardt Partners, L.P., the Second Circuit joined the D.C. and Third Circuits in their strict waiver approach and found that Steinhardt, the subject of an SEC probe, had waived work-product protection of a legal memorandum by submitting it to the agency in an attempt to forestall enforcement proceedings. Plaintiffs in a subsequent civil suit alleging fraud and manipulation of the bond markets were thus entitled to production of the memo.(102) Because Steinhardt had voluntarily disclosed the memo to an adversary, the SEC, work-product protection was waived as to other parties.(103)
The Second Circuit addressed the split between the selective waiver doctrine of Diversified and the strict waiver rule of the D.C. and Third Circuits. Fears that corporations would not cooperate with the government and would be reluctant to investigate internal wrongdoing were outweighed, in the eyes of the court, by the "substantial incentives" for cooperation with the SEC.(104) Furthermore, the SEC, in an amicus brief, had argued that special protection of disclosed documents was not necessary. The agency stated that it had "continued to receive voluntary cooperation from subjects of investigations" even though two circuits had already rejected the selective waiver doctrine and that the SEC considered "voluntary disclosures to be discoverable and admissible."(105) The fact that the defendant faced with a federal probe and a civil lawsuit was forced to "make difficult choices is insufficient justification for carving a substantial exception to the waiver doctrine."(106)
The Second Circuit, however, did not adopt a per se rule that all voluntary disclosures to the government waived work-product protection. The court was concerned that such a rule would "fail to anticipate situations in which the disclosing party and the government may share a common interest in developing legal theories and analyzing information" or those in which the parties had "entered into an explicit agreement" that the agency would maintain the confidentiality of disclosed materials.(107) These questions, according to the Second Circuit, were better addressed on a case-by-case basis.(108)
D. In re Martin Marietta Corporation(109)
The Fourth Circuit also has strictly construed the implied waiver doctrine in the internal investigation context, and, in the eyes of one commentator, "significantly rewritten the law of attorney-client privilege and work-product protection" by expanding the doctrine of implied waiver to disclosures made to the government at a settlement conference.(110) Faced with an investigation of charges that the company had defrauded the Department of Defense, Martin Marietta submitted a document to the U.S. Attorney detailing why the company should not be prosecuted. The position paper had been submitted at the invitation of the U.S. Attorney, and it was agreed at the time that disclosure would not waive attorney client or work-product protection. The position paper relied on information gathered during Martin Marietta's internal investigation of the activities in question and included quotes from employee interviews.(111)
Martin Marietta eventually settled with the government, but the document was later sought by an indicted employee for use in his defense against charges arising out of the same activities.(112) The Fourth Circuit rejected Martin Marietta's argument for limited waiver and found that, because the sought materials either already had been revealed to the government or were "details underlying the data that was published" during the negotiations, the attorney-client privilege had been waived.(113)
The court distinguished between nonopinion and opinion work-product,(114) and found that the company's "testimonial use" of nonopinion work-product had impliedly waived protection "as to all non-opinion work-product on the same subject matter as that disclosed."(115) The broad scope of the waiver was due to three factors: (1) the fact that the interests of the government and Martin Marietta were adverse during the settlement negotiations; (2) during the settlement negotiations, Martin Marietta's had made "an express assurance" to the government that its disclosures were complete; and (3) the disclosures were made in an attempt to induce the government to settle.(116)
This broad subject matter waiver, however, did not extend to opinion work product. Heightened protection of this material was justified because, unlike "selective disclosure of evidence," there was "little danger that a litigant [would] attempt to use a pure mental impression or legal theory as a sword and a shield in the trial of a case so as to distort the factfinding process."(117)
V. THE SUPREME COURT S LIKELY TREATMENT
Part V concludes that, for three reasons, the Supreme Court would neither recognize a new self-evaluative privilege nor sanction the selective waiver approach of the Eighth Circuit. First, although Rule 501 allows the Court to grant new privileges, it does not lightly do so, nor does it broadly construe existing ones. Second, the benefits of a new privilege or a selective waiver doctrine do not clearly outweigh the cost to society of preventing the disclosure of such information. Finally, Congress seems to have considered and rejected establishing more lenient waiver rules in this area.
While Rule 501 allows the Court to create new privileges, there is an of repeated maxim that this authority is not wielded expansively. The Court does not create a new evidentiary protection unless it "promotes sufficiently important interests to outweigh the need for probative evidence."(118) Recognizing a new self-evaluative privilege for corporations would require the Court to go against this maxim and a great deal of its own precedent. Nonetheless, the argument in favor of the self-evaluative privilege may be strengthened by the Court's recent decision in Jaffee v. Redmond.(119) The Jaffee Court recognized for the first time a new privilege under Rule 501 protecting confidential communications between a psychotherapist and patient.(120) Some commentators read Jaffee as signaling a greater openness on the part of the Court to recognize new privileges.(121) Nevertheless, several factors distinguish the psychotherapist-patient privilege from other proposed privileges. First, a psychotherapist-patient privilege had been recommended by the Advisory Committee when the Federal Rules of Evidence were adopted,(122) and the Report of the Senate Judiciary Committee had specifically noted that, in opting for the fluid approach of Rule 501, Congress was not rejecting the recognition of this privilege.(123) Furthermore, all fifty states and the District of Columbia had recognized some form of the psychotherapist-patient privilege prior to the Jaffee decision.(124) Thus, the psychotherapist-patient privilege enjoyed a tradition of support as well as widespread acceptance such that Jaffee may be limited to its particular circumstances.
Advocates for selective waiver of corporations' attorney-client and work product protections of their internal investigation materials also are arguing against the weight of Supreme Court precedent. Validating selective waivers would significantly broaden the existing privileges. Aside from its reluctance to create new privileges, the Court traditionally has held that because existing privileges restrict the public's "`right to every man's evidence' . . . any such privilege must `be strictly construed.'"(125) Again, Jaffee at first glance seems to provide grounds for such a broad reading of Rule 501; after recognizing a psychotherapist-patient privilege, the Jaffee Court held that the privilege also applied to communications with social workers providing mental health treatment.(126) Nevertheless, Jaffee's unique circumstances and the fact that social workers provide the only affordable mental health counseling for many people seem to make Jaffee more narrow.
The most important analysis in the area of privileges is the balancing between the benefits the privilege provides to the confidential relationship and the cost to society of preventing the disclosure of such information. The rationale for any privilege is that the "injury that would inure to the relation by the disclosure of the communications must be greater than the benefit thereby gained for the correct disposal of litigation."(127)
In Upjohn, the Supreme Court decided that the benefits of a broader attorney-client privilege outweighed the burden it might impose on the correct disposal of litigation. Because of "the vast and complicated array of regulatory legislation confronting the modern corporation, corporations, unlike most individuals, 'constantly go to lawyers to find out how to obey the law.'"(128) The Court felt that its view of which employee-attorney communications were privileged would make the scope of the privilege more predictable and thereby promote compliance with the law.(129) In response to the government's argument that potential civil or criminal liability would force corporations to seek legal advice irrespective of the protection of the privilege, the Court noted that, without the privilege, the quality of these investigations would suffer, even if they were still undertaken.'30
In University of Pennsylvania,(131) the Court rejected a privilege to protect faculty peer review materials from disclosure to the Equal Employment Opportunity Commission (EEOC) in a discrimination investigation.(132) The Court determined that the costs associated with discrimination and the impact on the EEOC's investigative processes outweighed the benefit schools derived from a confidential peer review process.(133) Evidence of discrimination in the tenure process often would be hidden in the peer review process, and requiring the EEOC to demonstrate a specific reason supporting disclosure "would place a substantial litigation-producing obstacle in the way of the Commission's efforts to investigate and remedy alleged discrimination."(134)
In Jaffee, the Court found that the benefits of a psychotherapist-patient privilege outweighed the burdens it would place on truth-finding. According to Justice Stevens' opinion for the Court, confidential communications between a psychotherapist and patient are necessary for the relationship to be effective, and protection of these communications encourages patients to seek help, just as the attorney-client privilege encourages effective advocacy for the client.(135) In addition, as the attorney-client privilege promotes compliance with the law, a psychotherapist-patient privilege would serve the public interest by improving "[t]he mental health of our citizenry . . . a public good of transcendent importance."(136) On the other side of the balance, denying the privilege would provide relatively little "evidentiary benefit" because, without the privilege, many conversations between a patient and psychotherapist would simply never occur, "particularly when it is obvious that the circumstances that give rise to the need for treatment will probably result in litigation."(137)
Advocates of a self-critical analysis privilege for corporate self-investigation, as well as advocates of the selective waiver rule for disclosures made to enforcement agencies, principally argue that such steps are necessary to encourage corporate self-policing and cooperation with government investigations.(138) Without a new privilege or a more generous construction of the waiver doctrine, outside counsel will have less incentive to fully investigate unfavorable information, employees may fear disclosing information that could ultimately hurt their employer, and companies may decide not to conduct an investigation or to so limit its scope as to render it inconsequential.(139) Underlying these arguments is the idea that the social benefits resulting from increased voluntary corporate self-regulation would outweigh the costs to society.
These benefits are not assured, however, and do not clearly outweigh the potential costs of a new self-critical privilege or selective waiver rule. First, even without the privilege, incentives already prompt internal corporate investigations, and it is not clear that any dramatic increase in compliance and self-policing would result from a broader privilege. As noted by the Second Circuit, these incentives include the chance to avoid extensive formal investigation by the government itself, the possibility of leniency from the government, and the opportunity to narrow the factual and legal issues involved. These incentives exist regardless of whether private third party litigants are able to gain access to materials that a corporation has decided to disclose to the government in a bid for more lenient treatment.(140) The SEC itself stated in an amicus brief submitted in Steinhardt that adoption of a selective waiver rule (and presumably a self-critical analysis privilege) was not needed to encourage voluntary disclosures.(141) Consequently, it is at least unclear that the social utility of any increased voluntary compliance would outweigh the increased discovery burden that a new self-critical analysis privilege or selective waiver rule would place on private litigants or other government agencies seeking material previously disclosed to another agency.
Second, a new privilege or a selective waiver rule could make it more difficult for private litigants, through either Freedom of Information Act requests or discovery, to access the information disclosed by corporations to agencies. This would, in turn, make it more difficult for the public to gauge the effectiveness of enforcement agencies such as the SEC and would shield the agencies' processes from the public eye. Less scrutiny by the public could lead to a closer relationship between the watcher and the watched, and ultimately, to less zealous enforcement.(142)
Finally, Congress has considered and rejected the self-evaluative privilege and selective waiver rule in particular situations. When Congress has done so, the Court is very reluctant to override this judgment by recognizing the privilege under Rule 501. The University of Pennsylvania Court placed particular emphasis on the fact that Congress had specifically considered and rejected the idea of an academic peer review privilege. Congress amended Title VII eight years after its enactment by eliminating an exception for educational institutions in light of evidence of widespread discrimination against women and minorities in the granting of tenured teaching positions.(143) Tenure decisions, therefore, were specifically made subject to the same EEOC enforcement procedures as employment decisions in other covered fields.(144) As noted in Westinghouse, Congress in 1984 rejected an amendment to the Securities and Exchange Act of 1934 that would have established a selective waiver rule for voluntary disclosures to the SEC.(145) This rejection reflects a legislative judgment that the social benefits of selective waiver would not outweigh the costs to the judicial process--a judgment the Court is unlikely to usurp under the auspices of Rule 501.
Taken together, these factors suggest that it is unlikely that the Court would recognize a new self-critical analysis privilege or selective waiver rule for the results of voluntarily disclosed internal corporate investigations. While corporations would face fewer reasons not to disclose the results of internal investigations, it is not clear that any additional significant social utility would result given the incentives that already exist for such self-investigation and cooperation. Ultimately, waiver seems to be the price required to avoid the costly and intrusive burdens of litigating against a government agency.(146)
VI. CLARIFICATION OF INSTANCES AND SCOPE OF WAIVER
Predictability is a key element in the application of any privilege. In Upjohn, Justice Rehnquist wrote, "[a]n uncertain privilege, or one which purports to be certain but results in widely varying applications by the courts, is little better than no privilege at all."(147) The fact that neither a new corporate self-critical analysis privilege nor a selective waiver rule seems necessary or likely to be adopted does not negate the fact that issues in this area require clarification. First, partial disclosures in settlement negotiations should not trigger broad subject matter waivers. The chilling effect on settlement discussions far outweighs the utility of broad waivers. A waiver should be the product of a corporation's informed decision to disclose an investigation report and underlying data to the government. Second, the scope of a waiver should be clarified and a distinction drawn between the waiver of opinion and nonopinion work-product protection.
In order to encourage settlement discussions between the government and an investigated party, courts should be more solicitous of disclosures made in this context. In Martin Marietta, the company submitted a letter, at the invitation of the U.S. Attorney, in an effort to convince the government not to pursue charges.(148) The Fourth Circuit held that, because this proffer made reference to materials collected during an internal investigation, its disclosure to the government acted as a broad subject matter waiver of attorney-client privilege and nonopinion work product protection.(149) Attorney-client privilege was deemed waived because all the information sought had either been revealed through Martin Marietta's "testimonial use" of the materials, or because it was data underlying the communications revealed.(150) The court found waiver of nonopinion work-product because Martin Marietta's interests were adverse to those of the government, because the company had assured that its disclosures were complete, and because the disclosures were made in an attempt to settle.(151)
The Martin Marietta decision sacrifices the utility of settlements for a simplistic application of the waiver doctrine and seems misguided in several respects. Because other incentives compel companies to perform investigations and disclose them to the government, it is not clear that a self-critical analysis privilege or selective waiver rule would result in more corporate self-investigation and cooperation. Without discussions between government and corporate attorneys, however, it would be extremely difficult to reach settlement that includes voluntary disclosure. If any reference to protected materials effects a broad subject matter waiver of that protection, defense counsel will be likely to either avoid settlement discussions altogether, or be so guarded as to render them worthless.(152) Such a scenario will only postpone unnecessarily an eventual deal and disclosure by the company of its internal investigation.(153)
The Fourth Circuit's decision gives too much weight in the balance inherent in all privileges to the "public's right to every man's evidence." The excessively strict construction of the waiver rule in Martin Marietta tilts the balance so far that the loss of socially useful settlement negotiations (that often ultimately lead to voluntary disclosure) will outweigh the gain to the truth-finding process. Rather than finding that disclosures in settlement negotiations act as broad subject matter waivers, courts should construe the scope of a waiver in this context narrowly in order to balance the need to prevent parties from using protections as both "a sword and a shield" on the one hand, and to encourage socially useful settlement negotiations on the other.(154)
Disclosure in settlement conferences of material covered by the attorney-client privilege negates the confidentiality of these communications, but waiver in this context should be limited to the material actually disclosed unless a showing can be made that the partial disclosure was misleading or manipulative. While also encouraging settlements, such a result is consistent with the traditional rationale for the privileges: promoting confidential attorney-client communications. Waiver of nonopinion work-product should similarly be limited to that disclosed during settlement, absent a showing of unfairness or manipulation.(155) The government can refuse or decline to be persuaded by a limited disclosure, but a partial disclosure of protected information in settlement negotiations should not act as a broad subject matter waiver.(156)
What should trigger a broader subject matter waiver is the submission of a final internal investigation report to an agency, or the assurance of the completeness of any disclosures. In such an instance, the company has weighed the advantages and disadvantages of disclosure, including the resulting waiver of protections as to third parties, and it has made an informed choice that the benefits of its decision will outweigh the drawbacks.(157)
The traditional rationale for the attorney-client privilege-confidentiality of communications--is negated by the disclosure of an internal report. Furthermore, any communications related to the subject, but not explicitly disclosed, would be important for the government to evaluate the completeness of the company's disclosure.(158) Implicit in the decision to make a voluntary disclosure is recognition that all related communications are fair game for the agency's inspection. Similar reasoning applies to nonopinion work-product. Once disclosed to an adversary, the traditional rationale for the doctrine is lost. As with communications covered by the attorney-client privilege, a full disclosure implies that the government will have access to all materials needed to evaluate the completeness and accuracy of the company's representations.
Several courts that have rejected a selective waiver rule have nonetheless excluded opinion work-product from the scope of a broad waiver of nonopinion work-product.(159) These courts hold that an attorney's mental impressions, conclusions, opinions, and legal theories that have not already been disclosed are not subject to subject matter waiver.(160) The rationale for such a result is two-fold. First, Hickman v. Taylor itself granted greater protection to opinion work-product.(161) Second, "[t]here is relatively little danger that a litigant will attempt to use a pure mental impression or legal theory as a sword and as a shield in the trial of a case so as to distort the factfinding process."(162) The government does not need access to the opinions of company's counsel in order to evaluate the disclosed factual evidence; nor does a private third party litigant, who presumably is capable of developing theories and drawing conclusions on her own. Shielding nondisclosed opinion work-product allows lawyers more freely to evaluate evidence and develop legal theories and conclusions (the essence of opinion work-product) without fear of waiver. Therefore, it is consistent with both the rationale of the work-product protection and the waiver doctrine to exclude opinion work-product from the scope of a broad waiver pursuant to a voluntary disclosure to the government.
The voluntary disclosure of internal corporate investigations to the government can provide many advantages to a company faced with evidence of its own wrongdoing. One serious drawback, however, is that many courts have found that this action waives attorney-client privilege and work-product protection of the report and its underlying data. In response to this dilemma, some courts and commentators have argued that a new qualified self-critical analysis privilege or a rule of selective waiver be applied to these cases of voluntary disclosure. Adoption of these doctrines, they contend, would lead to increased corporate self-monitoring and compliance with the law and allow government agencies to reduce their monitoring and enforcement costs.
Adoption of these rules by the Supreme Court seems neither likely nor warranted. The Court traditionally has been loath to create new privileges, and it has narrowly construed existing protections. Because of the incentives that exist for voluntary disclosure of internal investigations even without the proposed rules, the benefits of these rules would not outweigh the costs to the truth-finding process and the presumption of the "public's right to every man's evidence."
Nevertheless, a narrow view of the scope of any waivers in the settlement context, as well as heightened protection for opinion work-product when a waiver has occurred, would clarify existing law and make the consequences of disclosures more certain. Such a rule would promote more voluntary corporate self-policing, and at the same time allow for effective enforcement of public and private rights. (1.) See, e.g., Diversified Indus., Inc. v. Meredith, 572 F.2d 596, 611 (8th Cir. 1978) (en banc) (finding that limited waiver of attorney-client privilege occurred with respect to document disclosed to Securities and Exchange Commission (SEC)).
(2.) See, e.g., Westinghouse Elec. Corp. v. Republic of the Philippines, 951 F.2d 1414 (3d Cir. 1991) (holding that disclosure of documents to the SEC and Department of Justice (DOJ) constitutes waiver of both the attorney-client privilege and work-product doctrine); In re Martin Marietta Corp., 856 F.2d 619 (4th Cir. 1988) (applying subject matter waiver to disclosed documents containing attorney-client privilege and nonopinion work-product content, but limiting waiver to documents containing opinion work-product); In re Subpoenas Duces Tecum, 738 F.2d 1367 (D.C. Cir. 1984) (holding that disclosure to the government waives attorney-client privilege and extending the waiver to the work-product doctrine); Permian Corp. v. United States, 665 F.2d 1214 (D,C. Cir. 1981) (holding that disclosure of documents to the SEC waives attorney-client privilege).
(3.) See Michael P. Kenny & William R. Mitchelson, Jr., Corporate Benefits of Properly Conducted Internal Investigations, 11 Ga. St. U. L. Rev. 657, 657-59 (1995) (discussing the increase in corporate internal investigations due to federal and state prosecutions).
(4.) Two authors have defined an internal corporate investigation as "a factual and legal inquiry into possible illegal conduct by a corporation and its employees, performed by investigators authorized by the corporation itself. It is generally conducted by counsel hired by an independent committee composed of outside directors." Anton R. Valukas & Robert R. Stauffer, Internal Corporate Investigations: The Law, Practice and Strategies of Corporate Self-Policing, The Lawyer's Brief, Apr. 30, 1992, at 2.
(5.) Id.; see also Beth S. Dorris, Note, The Limited Waiver Rule: Creation of an SEC-Corporation Privilege, 36 Stan. L. Rev. 789, 793-95 (1984) (describing the SEC program).
(6.) Valukas & Stauffer, supra note 4, at 2-3.
(7.) Id.; Kenny & Mitchelson, supra note 3, at 659-60; Gary G. Lynch & Douglas M. Fuchs, Conducting Internal Investigations of Possible Corporate Wrongdoing, in Corporate Compliance 615, 619 (Corp. Law & Practice Course Handbook Series No. B-943, 1996); see also Joseph C. Mrazek, Jr., Project, Eleventh Survey of White Collar Crime: Organizational Sentencing, 33 Am. Crim. L. Rev. 1065 (1996) (describing the Federal Sentencing Guidelines' treatment of corporations).
(8.) Valukas & Stauffer, supra note 4, at 3.
(9.) A full discussion of the mechanics of an internal investigation and related issues is beyond the scope of this Note, so this Part provides only a summary of the process.
(10.) For a discussion of the mechanics of conducting an internal investigation, see generally Larry A. Gayados, Gathering and Organizing Relevant Documents: An Essential Task in any Investigation, in Internal Corporate Investigations: Conducting Them, Protecting Them 98 (Brad D. Brian & Barry E McNeil eds., 1992) [hereinafter Internal Corporate Investigations]; Jamie S. Gorelick, The Interview Process, in Internal Corporate Investigations, supra at 57; Kenny & Mitchelson, supra note 3, at 664-69; Lynch & Fuchs, supra note 7, at 623-31; Valukas & Stauffer, supra note 4, at 8-13.
Though this Note concentrates on the consequences and scope of a voluntary disclosure of the results of an internal investigation, there are several steps that counsel should take to ensure that any such disclosure is voluntary and not the result of a mistake or oversight. Outside counsel should ensure that their authorization makes clear that the investigation is a legal examination, rather than just a probe for the facts, and that it is being undertaken in anticipation of litigation. The confidentiality of documents and results should be maintained within the company as much as possible. Created documents should be marked as privileged. Interview notes should contain the mental impressions of the lawyer to bring them under the greater protection of opinion work-product protection, and reports should include legal conclusions, rather than simple factual data. Lynch & Fuchs, supra note 7, at 634-36.
Dual representation of employees also can become an issue, as it may later prevent the company from disclosing communications with an employee who is discovered to have violated the law. If dual representation is not to be undertaken, it must be made clear before interviewing the employee so that he does not believe that corporate counsel also is acting as his lawyer. Kenny & Mitchelson, supra note 3, at 666-67.
(11.) Kenny & Mitchelson, supra note 3, at 664-65.
(12.) Upjohn Co. v. United States, 449 U.S. 383, 389 (1981) (citing 8 J. Wigmore, Evidence [sections] 2290 (J. McNaughton rev. ed. 1961)). The Upjohn Court described the purpose of the attorney-client privilege as follows:
[T]o encourage full and frank communication between attorneys and their
clients and thereby promote broader public interests in the observance of
law and administration of justice. The privilege recognizes that sound legal
advice or advocacy serves public ends and that such advice or advocacy
depends upon the lawyer's being fully informed by the client.
To establish the existence of the attorney-client privilege, there must first must be a communication. Second, this communication must be between the client and her attorney or the attorney's subordinates. Third, the communication must be made in confidence. Finally, the communication must be made for the "purpose of seeking, obtaining, or providing legal assistance for the client." Edna S. Epstein & Michael M. Martin, The Attorney-Client Privilege and the Work-Product Doctrine 14 (2d ed. 1989) (citing Restatement, The Law Governing Lawyers [sections] 118 (Tentative Draft No. 1 (1988))). If the elements of the attorney-client privilege are satisfied, the privilege is absolute, and, unlike the protection of the work-product doctrine, the attorney-client privilege cannot be overcome by an adversary's showing of need. Id. at 99.
(13.) Upjohn, 449 U.S. at 389; Epstein & Martin, supra note 12, at 2-3; see also Developments in the Law--Privileged Communications, 98 Harv. L. Rev. 1450, 1506 (1985) [hereinafter Developments in the Law] (noting that in this way, the privilege allows "laymen to defend themselves vigorously and thereby assures them that the law will be applied justly").
(14.) Epstein & Martin, supra note 12, at 3; see also Developments in the Law, supra note 13, at 1529 (stating that the privilege encourages consultation that leads to two social benefits: conformance with the law and effective advocacy).
(15.) United States v. Nixon, 418 U.S. 683, 709 (1974) (citing, Branzburg v. Hayes, 408 U.S. 665, 688 (1972)); see also 2 Christopher B. Mueller & Laird C. Kirkpatrick, Federal Evidence [sections] 170 (2d ed. 1994) (emphasizing that nonutilitarian values, such as "privacy, freedom, trust and honor in important personal and professional relationships," also justify the existence of privileges).
(16.) The term "privilege" is not applied to the work-product doctrine because work-product protections are qualified rather than absolute. Epstein & Martin, supra note 12, at 99-100.
(17.) 329 U.S. 495 (1947). Hickman involved claims brought by the representatives of five crew members who died when a tugboat sank. Shortly after the accident, a lawyer employed by the tug owners interviewed the four survivors and others whom he believed to have relevant information. A representative of one of the deceased later sought discovery of these interviews, and the tug owners refused to comply with this request. Id. at 498.
The Supreme Court upheld the refusal. While noting that the requested material was not covered by the attorney-client privilege, the Court observed that the plaintiff was attempting to secure the "written statements and mental impressions contained in the files and the mind of [the tug owner's attorney]" without any showing that denial of the request would "unduly prejudice" the plaintiff's preparation or that the plaintiff's attorney could not obtain the information by interviewing the witnesses himself. Id at 508-13. The Court stated that allowing discovery of such material would interfere with the adversary system:
Were such materials open to opposing counsel on mere demand, much of what is
now put down in writing would remain unwritten. An attorney's thoughts,
heretofore inviolate, would not be his own. Inefficiency, unfairness and
sharp practices would inevitably develop in the giving of legal advice and
in the preparation of cases for trial. The effect on the legal profession
would be demoralizing. And the interests of the clients and the cause of
justice would be poorly served.
Id. at 511.
(18.) Id. at 511. The work-product doctrine has been incorporated into Fed. R. Civ. P.26(b)(3), which states, in relevant part:
Subject to the provisions of subdivision (b)(4) of this rule [relating to
expert testimony], a party may obtain discovery of documents and tangible
things otherwise discoverable under subdivision (b)(1) [allowing discovery
of relevant, nonprivileged matter] of this rule and prepared in the
anticipation of litigation or for trial by or for another party or by or for
that other party's representative (including the other party's attorney,
consultant, surety, indemnitor, insurer, or agent) only upon a showing that
the party seeking discovery has substantial need of the materials in the
preparation of the party's case and that the party is unable without undue
hardship to obtain the substantial equivalent of the materials by other
Despite this partial codification, Hickman continues to be the "standard by which courts interpret those provisions and protect work product when those provisions do not apply." Epstein & Martin, supra note 12, at 100.
(19.) Hickman, 329 U.S. at 511; Sherman L. Cohn, The Work-Product Doctrine: Protection, Not Privilege, 71 Geo. L.J. 917, 920 (1983).
(20.) See Upjohn, 449 U.S. at 401-02 (stating that a "far stronger showing of necessity and unavailability by other means [than the "substantial need" and "without undue hardship" standard] ... would be necessary to compel disclosure"); Cohn, supra note 19, at 932-35.
(21.) Cohn, supra note 19, at 923-24.
(22.) One court distinguished the two protections in the following way:
The purpose of the attorney-client privilege is to encourage full disclosure
of information between a lawyer and his client by guarantying the
inviolability of their confidential communications. The "work
product of the attorney," on the other hand, is accorded protection
for the purpose of preserving our adversary system of litigation by
assuring a lawyer that his private files shall, except in unusual
circumstances, remain free from the encroachments of opposing counsel.
Dennis J. Block & Nancy E. Barton, Internal Corporate Investigations: Implications of the Attorney-Client Privilege and Work Product Doctrine, in Internal Corporate Investigations, supra note 10, at 13, 15 (quoting Scourtes v. Fred W. Albrecht Grocery Co., 15 F.R.D. 55,58 (N.D. Ohio 1953)).
(23.) Mueller & Kirkpatrick, supra note 15, at [sections] 204.
(24.) Id. at [sections] [sections] 204-05.
(25.) Id. at [sections] 204.
(26.) 449 U.S.383 (1981). In response to evidence that a subsidiary had bribed foreign officials, Upjohn initiated an internal review to determine the scope of these payments. As part of this review, questionnaires were sent to all foreign managers with instructions directing them to provide information about any similar activity, to keep the information confidential, and to send their responses to the company's general counsel. Company counsel also interviewed the recipients of the questionnaire and other employees. Id at 386-87.
The company voluntarily submitted a report of the investigation to the SEC and Internal Revenue Service (IRS) disclosing that payments had been made to foreign officials. The IRS began an investigation to determine the tax consequences of these payments, and its agents were provided with a list of all Upjohn employees who had been interviewed or had responded to the company's internal questionnaire. The IRS subsequently sought the production of the questionnaires, as well as the memoranda and notes of the interviews conducted by Upjohn's counsel. The company refused to produce these materials, claiming that they were protected by the attorney-client privilege and the work-product doctrine. Id at 387-89.
(27.) Id. at 401 -02. The Supreme Court reversed the Sixth Circuit and rejected the view that the privilege should extend only to communications between a corporation's lawyers and those company officials "responsible for directing Upjohn's actions in response to legal advice." According to the Court, this "control group" test would restrict the ability of counsel to obtain all the information necessary to "give sound and informed advice," because often only employees outside the "control group" possess that information. Id. at 389-92. Lower level employees often effect the advice of counsel, and the control group test would make implementing such advice more difficult. According to the Court, the control group test would "limit the valuable efforts of corporate counsel to ensure their client's compliance with the law." Id. at 392. Furthermore, the vagueness of the Sixth Circuit's "control group" standard would make it difficult for the corporation and its counsel to predict with much certainty when particular communications would be protected by the privilege, and "[a]n uncertain privilege, or one which purports to be certain but results in widely varying applications by the courts, is little better than no privilege at all." Id. at 393.
Even though it rejected the "control group" test, the Court did not lay out a standard of its own. Instead, it listed several factors that it found important in Upjohn in holding that the communications between the employees and corporate counsel were privileged. First, the communications in Upjohn were made by employees to counsel so that counsel could provide legal advice to the corporation, and the employees were told this was the reason for the questioning; second, the communications were made at the request of superiors, to whom the relevant information was not available; third, the communications were on matters within the employees' scope of employment; and fourth, the communications were at all times treated as confidential. Id. at 394-95.
(28.) Id. at 401.
(29.) Id. at 401 -02. Although the Sixth Circuit had held that the work-product doctrine did not apply to the IRS summons, the government conceded this point before the Supreme Court. Rather, the government argued unsuccessfully that it had made a sufficient showing of necessity to overcome the protections of the work-product rule because Upjohn's employees were scattered around the world and had been forbidden from discussing questions the company considered "irrelevant." Id at 396-99.
(30.) Two rationales explain why the disclosure of otherwise-privileged communications to someone outside the relationship waives the privilege: (1) unfairness to another party; and (2) the disclosure nullifies the confidentiality of the communication. Developments in the Law, supra note 13, at 1630. A proposed Federal Rule of Evidence concerned voluntary waiver:
Waiver of Privilege by Voluntary Disclosure--A person upon whom these rules
confer a privilege against disclosure of the confidential matter or
communication waives the privilege if he or his predecessor while holder of
the privilege voluntarily discloses or consents to disclosure of any
significant part of the matter or communication. This rule does not
apply if the disclosure is itself a privileged communication.
Fed. R. Evid. 511 (proposed).
(31.) Mueller & Kirkpatrick, supra note 15, at [sections] 201.
(32.) Id. at [sections] 205.
(33.) See, e.g., In re Steinhardt Partners, L.P., 9 F.3d 230, 235 (2d Cir. 1993) ("The waiver doctrine provides that voluntary disclosure of work product to an adversary waives the privilege as to other parties.").
(34.) See infra Part IV (discussing various approaches by federal courts to the selective waiver question). While "limited waiver" is a commonly-used term in this context, it encompasses two distinct types of waiver: "selective" and "partial." A "selective" waiver would enable a client to disclose privileged communications to one party while continuing to assert the privilege as to those same communications against other parties. This argument is the most frequently advanced by companies wishing to make a voluntary disclosure to the government, while at the same time wishing to maintain privileges and protections against private litigants. A "partial" waiver would allow a client to disclose a portion of a privileged communication while continuing to assert the privilege as to other portions of the same communication. Westinghouse Elec. Co. v. Republic of the Philippines, 951 F.2d 1414, 1423 n.7 (3d Cir. 1991).
(35.) Valukas & Stauffer, supra note 4, at 3-8. The Antitrust Division of DOJ has adopted formal guidelines for the granting of leniency to a corporation being criminally investigated. The corporation must satisfy the following seven conditions:
1. The corporation is the first one to come forward and qualify for leniency
with respect to the illegal activity being reported;
2. The Division, at the time the corporation comes in, does not yet have the
evidence against the company that is likely to result in a sustainable
3. The corporation, upon its discovery of the illegal activity being
reported, took prompt and effective action to terminate its part in
4. The corporation reports the wrongdoing with candor and completeness and
provides full, continuing and complete cooperation that advances the Division
in its investigation;
5. The confession of wrongdoing is truly a corporate act, as opposed to
isolated confessions of individual executives or officials;
6. Where possible, the corporation makes restitution to injured parties; and
7. The Division determines that granting leniency would not be unfair to
others, considering the nature of the illegal activity, the confessing
corporation's role in it, and when the corporation comes forward. Kenny & Mitchelson, supra note 3, at 662 n.16 (citing Antitrust Div., U.S. Dep't of Justice, Corporate Leniency Policy, Part B, at 2-3 (Aug. 10, 1993)).
Deputy Attorney General Jamie Gorelick has called for "an age of new partnership between corporate citizenship and government," based on voluntary corporate self-investigation and disclosure. Stanley S. Arkin, Internal Corporate Investigations, N.Y. L.J., Aug. 8, 1996, at 3 (quoting Deputy Attorney General Jamie S. Gorelick, Remarks to the Conference Board's 1996 Business Ethics Conference (May 22, 1996)). As evidence of this "new partnership," Gorelick noted that the Potomac Electric Power Company had avoided prosecution by disclosing the results of its internal probe of environmental violations, and Dial, a maker of steel wool, had avoided antitrust prosecution by disclosing its involvement in a price-fixing scheme. Id.
Aside from timely disclosure and the extent of a corporation's cooperation, the government also will consider corrective actions taken by a company in deciding whether to seek an indictment. Examples of these corrective actions include firing high-ranking executives, reimbursing victims, paying fines to federal regulators, adopting practices to prevent a recurrence of the wrongdoing, and waiving the attorney-client and work-product protections. Dominic Bencivenga, Taking Time to Investigate is Considered "Delay", N.Y. L.J., Mar. 7, 1996, at 5.
(36.) Valukas & Stauffer, supra note 4, at 9.
(37.) Lynch & Fuchs, supra note 7, at 647.
(38.) Increasingly, federal prosecutors are demanding that corporations waive attorney-client and work-product protections if the companies want to avoid prosecution. Failure to make such a waiver is treated as a sign of noncooperation that would expose a corporation to dramatically greater penalties under the Federal Corporate Sentencing Guidelines. Jed S. Rakoff, Coerced Waiver of Corporate Privilege, N.Y. L.J., July 13, 1995, at 3.
(39.) Lynch & Fuchs, supra note 7, at 647. Private citizens can attempt to obtain documents that have been disclosed to an agency through a Freedom of Information Act (FOIA) request. 5 U.S.C. [sections] 552 (1994). Disclosing companies can ask that materials not be disclosed pursuant to a FOIA request, but such a request does not bind the agency. 17 C.F.R.[sections] 200.83. Alternatively, a private party can file suit against the company and seek the information through discovery, arguing that disclosure to the agency has waived any applicable attorney-client or work-product protections.
(40.) 572 F.2d 596 (8th Cir. 1978) (en banc) Though many other courts and commentators have referred to the "limited" waiver theory of Diversified, this Note will use the term "selective" waiver because it more precisely describes the theory. See supra note 34 (discussing "selective" and "partial" waiver as types of "limited" waiver).
(41.) The court held that the materials were not covered by the work-product rule because they were not prepared in anticipation of litigation. Diversified, 572 F.2d at 603-04.
(42.) Id. at 611.
(44.) See, e.g., United States v. Shyres, 898 F.2d 647, 657 (8th Cir. 1990) (holding that the attorney-client privilege is not waived as to private defendants by company's disclosure of internal investigation report to government during grand jury investigation).
(45.) See, e.g., Byrnes v. IDS Realty, 85 F.R.D. 679 (S.D.N.Y. 1980) (applying the limited waiver rule); In re Grand Jury Subpoena Dated July 13, 1979, 478 F. Supp. 368 (E.D. Wis. 1979) (same).
(46.) See infra Part IV.
(47.) In federal courts, claims of privilege are analyzed under Fed. R. Evid. 501 (Rule 501):
Except as otherwise required by the Constitution of the United States or
provided by Act of Congress or in the rules prescribed by the Supreme Court
pursuant to statutory authority, the privilege of a witness, person,
government, State, or political subdivision thereof shall be governed by
the principles of the common law as they may be interpreted in the light
of reason and experience. However, in civil actions and proceedings, with
respect to an element of a claim or defense as to which State law supplies
the rule of decision, the privilege of a witness, person, government,
State, or political subdivision thereof shall be determined in accordance
with State law.
In enacting Rule 501 as the sole rule governing all privileges, Congress rejected the proposal of the Advisory Committee, which consisted of 13 specific rules covering various privileges and their application. Instead of freezing the law of privileges, as the Advisory Committee's proposed rules would have done, Congress mandated that the law of privileges be developed by federal courts, on a case-by-case basis, applying the "principles of the common law as they may be interpreted in the light of reason and experience." Fed. R. Evid. 501. This more flexible standard allows new privileges to be recognized and allows existing privileges to be modified in response to changing conditions in society. Trammel v. United States, 445 U.S. 40, 47 (1980). For a discussion of the Advisory Committee's proposed rules and Congress's rejection of them, see Mueller & Kirkpatrick, supra note 15,at [sections] 169.
(48.) Harding v. Dana Transp., Inc., 914 F. Supp. 1084, 1100 (D.N.J. 1996) (quoting Note, The Privilege of Self-Critical Analysis, 96 Harv. L. Rev. 1083, 1087 (1983)); Kenny & Mitchelson, supra note 3, at 676-77.
(49.) See, e.g., Bredice v. Doctors Hosp., Inc., 50 F.R.D. 249 (D.D.C. 1970) (articulating for the first time the self-critical analysis privilege), aff'd, 479 F.2d 920 (D.C. Cir. 1973).
(50.) See, e.g., Tharp v. Sivyer Steel Corp., 149 F.R.D. 177 (S.D. Iowa 1993) (discussing at length the background and acceptance of the self-evaluative privilege, but ultimately rejecting application of the privilege in employment discrimination context); Banks v. Lockheed Co., 53 F.R.D. 283 (N.D. Ga. 1971) (first applying the privilege in employment discrimination context). Compare United States v. Dexter Corp., 132 F.R.D. 8 (D. Conn. 1990) (declining to recognize self-critical analysis privilege for corporation's self-evaluative documents in prosecution under Clean Water Act) with Reichhold Chemicals, Inc. v. Textron, Inc., 157 F.R.D. 522 (N.D. Fla. 1994) (recognizing self-critical analysis privilege in Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) action).
(51.) See, e.g., Ronald J. Allen & Cynthia M. Hazelwood, Preserving the Confidentiality of Internal Corporate Investigations, 12 J. Corp. L.355 (1987) (arguing for the adoption of some form of a self-evaluative privilege to encourage corporate self-policing); Robert J. Bush, Comment, Stimulating Corporate Self-Regulation-The Corporate Self-Evaluative Privilege: Paradigmatic Preferentialism or Pragmatic Panacea, 87 Nw. U. L. Rev. 597 (1993) (same); Nancy C. Crisman & Arthur F. Matthews, Limited Waiver of Attorney-Client Privilege and Work-Product Doctrine in Internal Corporate Investigations: An Emerging Corporate "Self-Evaluative" Privilege, 21 Am. Crim. L. Rev. 123 (1983) (same); David P. Leonard, Codifying a Privilege for Self-Critical Analysis, 25 Harv. J. on Legis. 113 (1988) (same).
(52.) Bush, supra note 51, at 603.
(53.) 50 F.R.D. 249 (D.D.C. 1970), aff'd, 479 F.2d 920 (D.C. Cir. 1973).
(54.) Id. at 250.
(55.) Id. at251.
(56.) 53 F.R.D. (N.D. Ga. 1971
(57.) Id. at 285.
(58.) See, e.g., Bush, supra note 51, at 641-48
(59.) Id. at 641-43. The greatest level of protection would be given to subjective information sought by a private party. In such an instance, courts would treat the privilege as absolute in the same way as the attorney-client privilege. private litigants seeking factual information and regulatory agencies seeking subjective information would face a qualified protection analogous to current work-product precedent. Finally, agencies seeking factual information would be entitled to it upon a showing that the information is clearly relevant to their claims. Id at 642-43.
(60.) Id. at 646.
(61.) For background and analysis on this subject, see generally Kenny & Mitchelson, supra note 3; Richard H. Porter, Voluntary Disclosures to Federal Agencies-heir Impact on the Ability of Corporations to Protect from Discovery Materials Developed During the Course of internal Investigations, 39 Cath. U. L. Rev. 1007 (1990).
(62.) In re Subpoenas Duces Tecum, 738 F.2d 1367 (D.C. Cir. 1984); In re Sealed Case, 676 F.2d 793 (D.C. Cir. 1982); Permian Corp. v. United States, 665 F.2d 1214 (D.C. Cir. 1981).
(63.) In re Steinhardt Partners, L.P., 9 F.3d 230 (2d Cir. 1993).
(64.) Westinghouse Elec. Corp. v. Republic of the Philippines, 951 F.2d 1414 (3d Cir. 1991).
(65.) See, e.g., McMorgan & CO. v. First California Mortgage CO., 931 F. Supp. 703 (N.D. Cal. 1996) (rejecting Diversified and finding that disclosure of documents to Department of Labor investigators waived the attorney-client end work-product protections); Neal v. Honeywell, Inc.,No. 93 C 1143, 1995 WL 591461 (N.D. III. Oct. 4, 1995) (holding that voluntary disclosure of internal investigation report and underlying privileged materials to Department of Defense constituted waiver of attorney-client privilege as to all materials on same subject matter protected by privilege, as well as nonopinion work-product, but protection of opinion work-product on same subject that had not been disclosed still applied).
(66.) Cf. United States v. Billmyer, 57 F.3d 31, 37 (1st Cir. 1995) (rejecting selective waiver when it would deprive criminal defendant of formerly privileged materials that had been disclosed by another party to the government, but leaving open argument for limited waiver in other circumstances), cert. denied, 65 U.S.L.W 3568 (Feb. 18,1997).
(67.) In re Martin Marietta Corp., 856 F.2d 619 (4th Cir. 1988).
(68.) 665 F.2d 1214 (D.C. Cir. 1981).
(69.) Id. at 1216-17.
(70.) Id. at 1217.
(71.) Id. at 1219.
(72.) Id. at 1220.
(73.) Id. at 1221.
(74.) Id. (citations omitted).
(75.) Id. Judge Mikva finished his criticism of the limited waiver rule by stating that
[i]t is apparent that such a doctrine would enable litigants to pick and
choose among regulatory agencies in disclosing and withholding
communications of tarnished confidentiality for their own purposes. We
believe that the attorney-client privilege should be available only at the
traditional price: a litigant who wishes to assert confidentiality must
maintain genuine confidentiality.
Id. at 1221-22.
The district court had found that the 29 other documents sought by the DOE fell under work-product protection. The Court of Appeals noted that the standards for waiver of work-product protection were not the same as those for attorney-client privilege, and a waiver of work-product protection would only be found when disclosure of materials prepared in anticipation of trial would be inconsistent with maintaining secrecy against opponents. In this case, the DOE had not claimed that such a waiver should have been found, but only that the lower court's findings of fact had been clearly erroneous. Finding that they were not, the Court of Appeals held that the documents remained protected by the work-product doctrine. Id. at 1219-22.
(76.) 676 F.2d 793 (D.C. Cir. 1982).
(77.) Id. at 817.
(78.) Id. at 803.
(79.) Id. at 817-18.
(80.) Id. at 818-22.
(81.) Id. at 822-23.
(82.) Id. at 823-24. The court also stated that applying the limited waiver rule would force the SEC to seek all documents relating to any criminal charge before handing the matter over to the DOJ. Such a rule would "encourage corporations to do what Company has done in this case--either hide documents from the SEC or hope that the SEC staff does not stumble upon them, and then claim privilege against other arms of government as soon as the SEC inquiry has ended." Id. at 824.
(83.) 738 F.2d 1367 (D.C. Cir. 1984).
(84.) Id. at 1369-70. The court rejected the corporation's limited waiver argument, reasoning that no basis existed for distinguishing an agency from a private litigant as the corporation had sought to do. Id
(85.) Id. at 1371 n.8.
(86.) "`The question with respect to implied waiver is whether Wigmore's 'objective consideration' of fairness negates [the] assertion of privilege.'" Id. at 1371 (quoting In re Sealed Case, 672 F.2d at 817).
(87.) Id. at 1372.
(88.) Id. at 1372-74. The SEC had agreed to notify the company of a third party request for the information, but this concession was "hardly an agreement to maintain complete confidentiality. " Id at 1373.
(89.) Id. at 1375.
(91.) 951 F.2d 1414 (3d Cir. 1991).
(92.) Id at 1417-20; see also Republic of the Philippines v. Westinghouse Elec. Corp.,714 F. Supp. 1362 (D.N.J. 1989) (providing a detailed background of the case); Thomas E. Smallman, Note, A Corporation's Waiver of the Attorney-Client Privilege and Work-Product Doctrine: Westinghouse Electric Corp. v. Republic of the Philippines, 37 Vill. L. Rev.917 (1992) (reviewing the Third Circuit's decision and the state of the law on the subject).
(93.) Westinghouse, 951 F.2d at 1420.
(94.) Id. at 1418-20.
(95.) Id. at 1425.
(96.) Id. at 1425-26.
(97.) Id. at 1426. The court explained its hesitance in relying on the fairness rationale in both the attorney-client and work-product contexts by noting that a private litigant deprived of privileged disclosures made to the government was in no worse a position than if the disclosure had never been made. Id. at 1426 n.13. The court distinguished between selective and partial waivers, finding fairness analysis applicable only to instances of partial waivers of the protections. Id. at 1426, 1430.
(98.) Id. at 1427.
(99.) Id. at 1429-30.
(100.) Id. The Third Circuit noted the Fourth Circuit's distinction between opinion and nonopinion work-product in In re Martin Marietta Corp., 856 F.2d 619 (4th Cir. 1988), but whether this distinction made a difference as to waiver was not argued by the parties. Westinghouse, 951 F.2d at 1431 n. 17.
(101.) 9 F.2d 230 (2d Cir. 1993).
(102.) Id. at 232-36.
(103.) Id. at 234-35 (citing United States v. Nobles, 422 U.S. 225, 239 (1975)).
(104.) Steinhardt, 9 F.3d at 235-36. These incentives include the chance to avoid extensive formal investigation by the SEC itself, the possibility of leniency, and the opportunity to narrow the issues. Id at 236. "These incentives exist regardless of whether private third party litigants have access to attorney work product disclosed to the SEC." Id
(105.) Id. at 236 (citing Amicus Brief of the SEC at 20-25, SEC Form 1662).
(106.) Id. at 236.
(108.) Id.; see also In re M&L Business Mach. Co., Inc., 161 B.R. 689 (D. Colo. 1993) (allowing selective waiver because disclosing party had obtained confidentiality agreement from the government and had not sought any benefit from the disclosure).
(109.) 856 F.2d 619 (4th Cir. 1988).
(110.) Breckinridge L. Willcox, Martin Marietta and the Erosion of the Attorney-Client Privilege and Work-Product Protection, 49 MD. L. Rev. 917 (1990).
(111.) Martin Marietta, 856 F.2d at 623-24.
(112.) Id. at 620-22.
(113.) Id. at 623-24.
(114.) Id. at 625-26. (115.) Id. at 625.
(117.) Id. at 626. In a footnote, the court downplayed the difficulties in drawing a distinction between opinion and nonopinion work-product. An attorney's notes and memoranda from employee interviews were nonopinion work-product, but a note in the margin about the witness's credibility, for example, would be a legal opinion deserving heightened protection. Id. at 626 n.2. On remand, the burden fell to the company to show that the materials it sought to protect were opinion work-product. Id. at 626. But see Willcox, supra note 110 (criticizing the decision for finding that disclosure of some facts in settlement negotiations had waived protection as to undisclosed facts and for holding that attorney notes and memoranda regarding interviews could constitute nonopinion work-product).
(118.) University of Pennsylvania v. EEOC, 493 U.S. 182, 189 (1990) (quoting Trammel v. United States, 445 U.S. 40, 51 (1980)).
(119.) 116 S. Ct 1923 (1996) (decided June 13, 1996).
(120.) Jaffee involved an action against former police officer Mary Lu Redmond and the Illinois town that employed her, brought by the estate of a man shot by Officer Redmond in the line of duty. The action sought damages under 42 U.S.C. [sections] 1983 and a state wrongful death statute. After the shooting, Redmond had participated in approximately 50 counseling sessions with Karen Beyer, a state clinical social worker. During discovery, the plaintiff sought access to Beyer's notes of these sessions. The defendants objected to the request on the grounds that the notes were protected from disclosure by a psychotherapist-patient privilege.
The trial court refused to recognize such a privilege, and the jury found for the plaintiff after being instructed that it could infer from the refusal to hand over the notes that the contents would have been damaging. The Seventh Circuit reversed, finding that Rule 501 compelled the recognition of the psychotherapist-patient privilege, but only if the interests of justice did not demand disclosure under the circumstances of a particular case. The Supreme Court granted certiorari because of a conflict among the circuits over the recognition of the privilege, and eventually found that such a privilege did exist under Rule 501. Id. at 1925-27.
(121.) One critic of the Jaffee decision concluded that
[w]hatever the precise ramifications of Jaffee for the future, the tone of
the Jaffee opinion is notable for its willingness to embrace a privilege
that did not exist under common law, even at the expense of the search for
truth. Indeed, Jaffee is the first opinion in which the Supreme Court
recognized a "new" privilege. This does not necessarily mean that other
new privileges--such as a privilege for scholarly research, or a
parent-child privilege, or a privilege for "self-evaluation"--will
be adopted in the future, especially since no "new" privilege other
than the psychotherapist-patient privilege was proposed by the Advisory
However, the receptiveness of the Jaffee court to a privilege without
a common law basis--and its general lack of rigorous analysis despite
the cost to the search for truth--at least makes it easier
to argue that other such privileges are worthy of recognition.
Daniel J. Capra, Communications with PsychotheraPists and Social Workers, N.Y.L.J., July 12, 1996, at 3.
Justice Scalia, joined in part by Chief Justice Rehnquist, dissented in Jaffee. Disagreeing with virtually every element of the majority's reasoning, Justice Scalia placed particular emphasis on what he saw as the inconsistency between the majority's opinion and the Court's duty not to lightly create new privileges that inhibit the truth-finding process and to construe narrowly any privileges that are created. Jaffee, 116 S. Ct. at 1932-41.
(122.) Fed. R. Evid. 504 (proposed).
(123.) Jaffee, 116 S. Ct. at 1930-31 (citing S. Rep. No. 1277, 93rd Cong, 2d Sess. 13 (1974), reprinted in 1974 U.S.C.C.A.N. 7051, 7059).
(124.) Id. at 1930.
(125.) University of Pennsylvania, 493 U.S. at 189 (quoting United States v. Bryan, 339 U.S. 323, 331 (1950), and Trammel, 445 U.S. at 50).
(126.) Jaffee, 116 S. Ct. at 1931-32.
(127.) 8 J. Wigmore, supra note 12, at [sections] 2285. This balancing test was the fourth prong of the criteria that Wigmore thought any privilege should satisfy in order to be recognized. The whole test is as follows:
(1) The communications must originate in a confidence that they will not
(2) This element of confidentiality must be essential to the full and
satisfactory maintenance of the relation between the parties.
(3) The relation must be one which in the opinion of the community ought
to be sedulously fostered.
(4) The injury that would inure to the relation by the disclosure of the
communications must be greater than the benefit thereby gained for the
correct disposal of litigation.
Id. Wigmore's test has been extremely influential on modern courts, which have adopted his approach of considering only "systemic harms" under the fourth prong of the test. Thus, the injury to the parties in court does not matter; the benefit of encouraging the communications is weighed in the abstract against the costs imposed on the truth-seeking process. Developments in the Law, supra note 13, at 1473.
(128.) Id. at 392 (quoting Burnham, The Attorney-Client Privilege in the Corporate Arena, 24 Bus. L. 901, 913 (1969)).
(129.) Id. at 392-93.
(130.) Id. at 393 n.2.
(131.) 493 U.S. 182 (1990).
(132.) Id. at 188. After being denied tenure, Rosalie Tung, a professor at the Wharton School of Business, filed a complaint with the Equal Employment Opportunity Commission (EEOC) alleging that she had been discriminated against on the basis of her race, sex, and national origin. Ms. Tung claimed that five male faculty members who had received tenure possessed equal or lesser qualifications than herself As part of its investigation, the EEOC sought and eventually subpoenaed the school's tenure-review files relating to Ms. Tung and the five men. The school refused to produce the documents, instead urging the EEOC to adopt a balancing approach that would consider the school's interest in keeping the peer review process confidential and minimizing the "intrusive effects" of investigations. The EEOC rejected the school's defense, because such an approach would inhibit its ability adequately to investigate discrimination charges. The school continued to withhold the materials, but lost in district court, in the Third Circuit, and eventually in the Supreme Court. Id. at 185-87.
(133.) Id. at 193.
(134.) Id. at 193-94.
(135.) Jaffee, 116 S. Ct. at 1928-29.
(136.) Id. at 1929.
(137.) Id. Justice Stevens continued:
Without a privilege, much of the desirable evidence to which litigants
such as petitioner seek access--for example, admissions
against interest by a party--is unlikely to
come into being. This unspoken "evidence" will therefore serve no greater
truth-seeking function than if it had been spoken and privileged.
Id. This passage is similar to the reasoning of Justice Rehnquist in Upjohn:
Application of the attorney-client privilege to communications such as
those involved here, however, puts the adversary in no worse position than
if the communications had never taken place. The privilege only protects
disclosure of communications; it does not protect disclosure of
the underlying facts by those who communicated with the attorney. . . .
Upjohn, 449 U.S. at 395.
(138.) See, e.g., In re Steinhardt Partners, L.P. 9 F.3d 230, 235 (2d Cir. 1993) (construing Diversified Indus., Inc. v. Meredith, 572 F.2d 596, 611 (8th Cir. 1978)); Bush, supra note 51, at 599-602; Developments in the Law, supra note 13, at 1630.
(139.) Bush, supra note 51, at 618 n.141 (citing Vincent C. Alexander, The Corporate-Attorney-Client Privilege: A Study of the Participants, 63 ST. John's L. Rev. 191, 271-72 (1989)).
(140.) Steinhardt, 9 F.3d at 236.
(142.) Dorris, Note, supra note 5, at 817-20.
(143.) University of Pennsylvania, 493 U.S. at 189-90.
(144.) Id. at 190.
(145.) Westinghouse Elec. Corp. v. Republic of the Philippines, 951 F.2d 1414, 1425 (3d Cir. 1991).
(146.) As stated by the D.C. Circuit in In re Sealed Case:
When a corporation elects to participate in voluntary disclosure
program like the SEC's, it necessarily decides that the benefits
of participation outweigh the benefits of confidentiality for all
files necessary to a full evaluation of its disclosures. It forgoes some
of the traditional protections of the adversary system in order to avoid
some of the traditional burdens that accompany adversary
resolutions of disputes, especially disputes with such formidable
adversaries as the SEC.
676 F.2d 793, 822-23 (D.C. Cir. 1982) (citations omitted).
(147.) Upjohn Co. v. United States, 449 U.S. 383, 393 (1981).
(148.) In re Martin Marietta Corp., 856 F.2d 619, 620-21 (4th Cir.1988).
(149.) Id. at 623-26; see also United States ex. ref. Mayman v. Martin Marietta Corp., 886 F. Supp. 1243 (D. Md. 1995) (holding that voluntary disclosure to government during settlement negotiations effected broad subject matter waiver of communications covered by attorney-client privilege).
(150.) Martin Marietta, 856 F.2d at 624.
(151.) Id. at 625. But see Willcox, supra note 110, at 924-25 (noting that settlement negotiations are not testimonial in an evidentiary sense and the proffer would have been inadmissible as hearsay).
(152.) See Developments in the Law, supra note 13, at 1635-37 (noting the concern of some courts that broad waivers in settlement negotiations will make attorneys reluctant to take positions or make assertions).
(153.) Richard L. Marcus, The Perils of Privilege: Waiver and the Litigator, 84 Mich. L. Rev. 1605, 1609 (1986) (noting the enormous amounts of energy and money expended in litigation to avoid waiver).
(154.) Rule 501 gives courts the ability to interpret privileges "in the light of reason and experience." See, e.g., In re United Mine Workers of America Employee Benefit Plans Litigation, 159 F.R.D. 307, 309 (D.D.C. 1994) (holding that trial courts retain broad discretion in deciding the appropriate scope of a waiver) (citing In re Sealed Case, 877 F.2d 976, 981 (D.C. Cir. 1989)).
(155.) See Westinghouse Elec. Corp. v. Republic of the Philippines, 951 F.2d 1414, 1426 n.12 (3d Cir. 1991) (holding that in case of partial waiver, privilege is waived only as to information actually disclosed, unless it would be unfair to the party's adversary); Marcus, supra note 154, at 1627-37 (advocating fairness analysis to limit waivers to extent needed to prevent "truth-garbling").
(156.) See Willcox, supra note 110, at 925 (explaining that the government can reject the company's offer, demand complete disclosure, or prosecute for obstruction of justice in the case of manipulation).
(157.) See supra note 151 (D.C. Circuit's view that participation in voluntary disclosure programs involves a decision that the benefits of settlement outweigh the risks).
(158.) Sealed Case, 676 F.2d at 818-22.
(159.) See, e.g., Martin Marietta, 856 F.2d at 626; Neal v. Honeywell, Inc., No. 93 C 1143, 1995 WL 591461, at *7 (N.D. Ill. Oct. 4, 1995).
(160.) Neal, 1995 WL 591461, at *7 (stating that when a document contains both types of work-product, it should be redacted to reflect only that not subject to protection).
(161.) 329 U.S. 495, 509-11 (1947)
(162.) Martin Marietta, 856 F.2d at 626.
Alec Koch, J.D., 1997, Georgetown University Law Center; B.A., 1991, University of Virginia. I would like to thank Professor Vicki Jackson, Professor Julie O'Sullivan, Mr. Wick Sollers, Esq., and my editors for their advice during the development of this Note. In addition, I would like to thank my parents and especially my wife, Lee, for their support.…