On March 12, 2012, the Consumer Financial Protection Bureau (“CFPB” or the “Bureau”) issued a proposed rule that would codify (by regulation) the doctrine of “selective waiver” as applied to information provided by supervised entities to the CFPB (the “Proposal”). Under the selective waiver doctrine, the disclosure of otherwise privileged materials to a party outside the attorney-client relationship (in this case the government) would not act as a waiver of applicable privileges to other third parties. Under the Proposal, the provision of documents to the CFPB that are otherwise subject to the attorney-client privilege or work product doctrine, would retain their privileged nature. In other words, the Proposal would provide that the act of producing such materials to the CFPB would not prevent the disclosing party from asserting the privilege as to other potential adversaries, including other governmental agencies. As discussed below, the Proposal raises several important concerns.

Existing Law

The vast majority of courts have rejected selective waiver. See In re Steinhardt Partners, L.P., 9 F.3d 230 (2d Cir. 1993); In re Qwest Communications Intern. Inc. Sec. Litig., No. 06-1070, 2006 WL 1668246 (10th Cir. 2006); In re Columbia/HCA Healthcare Corp., 293 F.3d 289 (6th Cir. 2002); United States v. Massachusetts Institute of Technology, 129 F.3d 681 (1st Cir. 1997); Westinghouse Elec. Corp. v. Republic of the Philippines, 951 F.2d 1414 (3d Cir. 1991); In re Martin Marietta Corp., 856 F.2d 619 (4th Cir. 1988); Permian Corp. v. United States, 665 F.2d 1214 (D.C. Cir. 1981). Other courts, however, have taken a practical, fact-based approach and have permitted companies to disclose a privileged document; for example, the results of an internal investigation, to the government without causing a waiver of privilege. See, e.g., Police & Fire Ret. Sys. of the City of Detroit v. SafeNet, Inc., No. 06 Civ. 5797, 2010 WL 935317 (S.D.N.Y. Mar. 12, 2010).

Please see full Alert below for further information.