In re Pacific Pictures: New Ninth Circuit Decision May Be Kryptonite To Claims Of Privilege Under The Selective Waiver Doctrine

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Corporations subject to criminal and civil regulatory investigations have long grappled with the highly charged decision over whether to provide the government with privileged communications and attorney work product or whether to maintain those materials as privileged despite a governmental inquiry. On the one hand, a corporation may hope to avoid criminal prosecution or civil regulatory action, as well as potential downstream effects of such actions on insurance rights and indemnification, by forthright disclosure of “relevant facts” to the government, including information that may be protected by attorney-client privilege or the attorney work product doctrine. See Principles of Federal Prosecution of Business Organizations, reprinted in United States Attorneys’ Manual, tit. 9 ch. 9-28.710, 9-28.720(a). On the other hand, in disclosing privileged materials and work product to the government, the corporation risks having waived the privilege over those very same materials as to third parties, including civil litigants seeking to recover monetary damages from the corporation.

The Eighth Circuit and several district courts have responded to this apparent no-win dilemma by adopting a theory of selective waiver – holding that documents may be selectively disclosed to the government, but still retain their privileged nature as to third party civil litigants.1 Earlier this week, however, the Ninth Circuit weighed in and joined the First, Second, Third, Fourth, Sixth, Seventh, Tenth, D.C. and Federal Circuits in rejecting the doctrine of selective waiver. See In re Pacific Pictures Corp., --- F.3d ---, 2012 WL 1293534 (9th Cir. Apr. 17, 2012). An offshoot in the long-running legal battle between D.C. Comics and the heirs of the creators of Superman over royalties, petitioners in Pacific Pictures sought to shield privileged materials produced to the government (pursuant to a grand jury subpoena in an ancillary matter) from discovery by D.C. Comics in the instant action. The Ninth Circuit held that the voluntary production of privileged information by petitioners had waived the privilege, not just as to the government, but as to all third parties.

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