Federal District Court in New Jersey Closes Door (Again) on Selective Waiver

by Saul Ewing Arnstein & Lehr LLP

Subjects of government investigations routinely face the question: To be or not to be forthcoming with information otherwise protected by the attorney-client privilege? A recent opinion out of the District of New Jersey has not made the decision any easier, though it does tell counsel and their clients very clearly that the bounds of the attorney-client privilege do not extend to information produced during the course of a government investigation. This guidance allows subjects of government investigations the opportunity to make informed decisions when balancing whether to disclose privileged information to a government agency in the course of an investigation.

In In re Merck & Co., Inc. Securities, Derivative & “ERISA” Litigation, No. 2:05-cv-02367-SRC-CLW (District of New Jersey), Merck had provided certain documents protected by the attorney-client privilege to the Department of Justice (“DOJ”) in the course of a prior criminal investigation. Merck disclosed the otherwise privileged documents pursuant to an agreement with the DOJ under which (1) the DOJ promised to maintain the confidentiality of the documents; and (2) Merck’s purported limited waiver of the attorney-client privilege as to the DOJ would not extend to any other third party. In the subsequent civil litigation, Plaintiffs sought to compel Merck to produce documents, including those that Merck had disclosed in the criminal investigation pursuant to the confidentiality agreement. Merck countered that those documents remained protected by the attorney-client privilege pursuant to the selective waiver doctrine. District Judge Chesler of the District of New Jersey rejected Merck’s argument in its entirety, writing that Third Circuit precedent  based on Westinghouse v. Republic of the Philippines “clearly instructs that applying selective waiver in the context of voluntary disclosure to government agencies would amount to an unjustified expansion of the attorney-client privilege.” 

In Westinghouse, the Third Circuit declined to adopt the “celebrated and controversial selective waiver theory fashioned by the Eighth Circuit in Diversified Industries, Inc. v. Meredith and resoundingly rejected by the D.C. Circuit in Permian Corp. v. United States. The selective waiver doctrine, when applied, allows a party to disclose to a government agency attorney-client privileged materials while maintaining confidentiality of those materials as to all other parties, including those involved in subsequent civil litigation with the disclosing entity. In rejecting the selective waiver theory in 1991, the Third Circuit examined the underpinnings of the attorney-client privilege, holding:

. . . selective waiver does not serve the purpose of encouraging full disclosure to one’s attorney in order to obtain informed legal assistance; it merely encourages voluntary disclosure to government agencies, thereby extending the privilege beyond its intended purpose. . . . [T]o go beyond the policies underlying the attorney-client privilege . . . would be to create an entirely new privilege.

Twenty years later, in Merck, the disclosing party argued that the Westinghouse decision did not apply to the documents Merck had disclosed in the prior government investigation. Merck attempted to distinguish its agreement with the DOJ from the confidentiality agreement in Westinghouse. Merck argued that Westinghouse left open the possibility that an agreement between the disclosing party and government agency purporting to preserve the privilege as to third parties could in fact preserve the attorney-client privilege as to third parties. The District of New Jersey disagreed with this analysis and noted that Merck’s argument was based on an observation made by the Third Circuit in dicta that the agreement in Westinghouse did not attempt to preserve the privilege as to third parties. The District Court noted that the Third Circuit’s observation did not provide a basis for its decision; rather, the Third Circuit rejected the selective waiver theory because it impermissibly expanded the parameters of the attorney-client privilege. 

Although the District of New Jersey’s conclusion is not surprising, it firmly shuts the door once again on the selective waiver doctrine. The opinion reminds litigants that courts in the Third Circuit have emphatically rejected the theory – and do not appear to be reconsidering this position in the short term. This means that subjects of government investigations must continue to weigh the benefits of disclosure to an investigating agency (i.e., cooperation and credibility points) against the potential detriment that may result when third parties in parallel or subsequent action gain access to the otherwise privileged documents. Ultimately, a party which elects to disclose documents to the government may not be able to assert a privilege to later protect disclosed information. With the assistance of counsel, though, the party can prepare a strategy for dealing with the effects, if any, of the disclosure.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Saul Ewing Arnstein & Lehr LLP | Attorney Advertising

Written by:

Saul Ewing Arnstein & Lehr LLP

Saul Ewing Arnstein & Lehr LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.