Waiting for Superman: The Ninth Circuit Finally Weighs in on the Selective Waiver Doctrine


On April 17, 2012, the U.S. Court of Appeals for the Ninth Circuit held in In re Pacific Pictures Corporation, that “a party waives attorney-client privilege forever by voluntarily producing privileged documents to the federal government.” 2012 WL 1293534 at *1 (9th Cir. 2012). In doing so, the Ninth Circuit joined the majority of other circuits in rejecting the selective waiver of attorney-client privilege.

History of Selective Waiver
The theory of selective waiver provides that a party’s voluntary disclosure of privileged materials to the government does not necessarily waive the privilege in civil litigation. The purpose of the rule is to encourage voluntary cooperation with government investigations.

The theory was first adopted by the Eighth Circuit in Diversified Industries Inc. v. Meredith, 572 F.2d 596 (8th Cir. 1978) (en banc). Since then, however, every other circuit to consider the theory has rejected it. See In re Qwest Commc’ns Int’l, 450 F.3d 1179, 1197 (10th Cir.2006); Burden–Meeks v. Welch, 319 F.3d 897, 899 (7th Cir. 2003); In re Columbia/HCA Healthcare Corp. Billing Practices Litig., 293 F.3d 289, 295 (6th Cir. 2002); United States v. Mass. Inst. of Tech., 129 F.3d 681, 686 (1st Cir. 1997); Genentech, Inc. v. United States Int’l Trade Comm’n, 122 F.3d 1409, 1416–18 (Fed.Cir. 1997); In re Steinhardt Partners, L.P., 9 F.3d 230, 236 (2d Cir. 1993); Westinghouse Elec. Corp. v. Republic of Philippines, 951 F.2d 1414, 1425 (3d Cir. 1991); In re Martin Marietta Corp., 856 F.2d 619, 623–24 (4th Cir.1988); Permian Corp. v. United States, 665 F.2d 1214, 1221 (D.C.Cir. 1981). Before In re Pacific, the Ninth Circuit twice deferred judgment on the issue, leaving it an open question as to whether the court would accept a theory of selective waiver. See United States v. Bergonzi, 403 F.3d 1048, 1050 (9th Cir. 2005) (per curiam); Bittaker v. Woodford, 331 F.3d 715, 720 n. 5 (9th Cir. 2003) (en banc).

Truth, Justice, and the American Way
In the 1930s, Jerome Siegel and Joe Shuster created Superman and ceded the intellectual property rights to D.C. Comics. Since Superman’s first appearance in 1938, the creators and their heirs have been fighting with D.C. Comics over royalties. Around 2000, attorney and Hollywood producer Marc Toberoff approached the heirs with an offer to manage the preexisting litigation and to arrange for a new Superman film to be produced. Toberoff hired lawyer David Michaels to assist with the business, but Michaels worked for only three months before absconding with copies of documents from the creators’ files. After a failed attempt to extort business from the heirs with the documents, he sent them anonymously to executives at D.C. Comics along with a timeline outlining in detail Toberoff’s alleged plan to capture Superman for himself. Since then, the parties have been battling over what to do with those documents. D.C. Comics entrusted the documents to an outside attorney and sought to obtain them through discovery in the ongoing lawsuits over Superman. Toberoff resisted those efforts. In 2007, a magistrate judge ordered some of the documents, including the timeline, turned over to D.C. Comics. A few months later, Toberoff finally reported the incident to the FBI, and in December 2008 he produced some of the documents.

In 2010, D.C. Comics filed this lawsuit claiming that Toberoff interfered with D.C. Comics’ contractual relationships with the heirs. Michaels’ timeline was incorporated into the complaint. Toberoff asked the U.S. Attorney’s Office to investigate Michaels, and it issued a grand jury subpoena for the documents, promising that if Toberoff voluntarily complied with the subpoena the government would “not provide the . . . documents . . . to non-governmental third parties except as may be required by law or court order.” Toberoff voluntarily complied with the subpoena and turned the documents over without redaction or objection.

D.C. Comics immediately requested all of the documents disclosed to the U.S. Attorney, claiming that the disclosure waived all privilege. The magistrate agreed, reasoning that voluntary disclosure of privileged materials breaches confidentiality and is inconsistent with the theory behind privilege. The district court denied review and petitioners sought Ninth Circuit review through a writ of mandamus.

The Ninth Circuit Rejects Selective Waiver
In rejecting the theory of selective waiver, the Ninth Circuit held that producing documents to the government constituted a voluntary waiver of attorney-client privilege for all purposes -- even though the documents had been subpoenaed -- because the heirs produced them without redaction or objection. It reasoned that voluntary disclosure of the documents was inconsistent with promoting full and frank attorney-client communications, regardless of whether the disclosure was to the government or a private party. The court stated that “to unmoor a privilege from its underlying justification . . . would at least be failing to construe the privilege narrowly, . . . [a]nd more likely, would be creating an entirely new privilege.” In re Pacific Pictures Corp., 2012 WL 1293534 at *4. The court also noted that, since Diversified, there have been multiple legislative attempts to adopt the doctrine of selective waiver, yet most have failed: “Congress has declined broadly to adopt a new privilege to protect disclosures of attorney-client privileged materials to the government, we will not do so here.” Id.

The fact that the heirs were victims (of having their documents stolen) did not warrant different treatment because “if it is unnecessary to adopt a theory of selective waiver to encourage potential defendants to cooperate with the government. It is even less necessary to do so to encourage victims to report crimes to the government,” Id. at *5. It was similarly unpersuaded that, because Toberoff was a victim of the crime, petitioners were entitled to the common interest exception to waiver because “a shared desire to see the same outcome . . . is insufficient to bring a communication . . . within this exception.” Id. at *6. Further, voluntary disclosure could not be cured by a post hoc confidentiality agreement such as the letter obtained in this case from the U.S. Attorney’s Office. Thus, the Court found that the interest in encouraging cooperation with the government is outweighed by the interest in upholding the purpose of the attorney-client privilege.