Attorneys – Company’s agreement with feds preserved privilege

A written agreement between a corporation and the government preserved the company’s attorney-client privilege and work-product protection for information that the general counsel of a subsidiary entity disclosed to the government.

Background

Several years ago, federal prosecutors opened a grand jury investigation into whether X Corp. (the company name is under seal) and its subsidiaries violated certain federal laws. X Corp. entered into a series of written agreements permitting employees of X Corp. and its subsidiaries to share with the government information protected by attorney-client privilege and work-product protection. The Department of Justice drafted the agreements.

One Agreement specifically allowed the government to interview the former general counsel (“Doe”) of an X Corp. subsidiary. Attached to the Agreement was a list of topics of “Protected Information” that Doe might disclose. The government interviewed Doe pursuant to this Agreement, and Doe indeed disclosed privileged and protected information.

Years later, the government subpoenaed Doe to testify before a grand jury about the same statements Doe made during the interview. X Corp. intervened and moved to quash. Finding that the Agreement waived attorney-client privilege and work-product protection for Doe’s interview statements, the district court denied X Corp.’s motion. X Corp. timely appealed.

Scope of privilege

The Agreement preserves X Corp.’s privileges as to the government. Holding otherwise would require us to discount the plain language of the Agreement’s first clause, which expressly reserves those privileges.

The first relevant clause states: “To the extent any Protected Information is provided to the [Department of Justice] Fraud Section or EDVa pursuant to this agreement, [X Corp. and its directors] do not intend to waive the protection of the attorney work product doctrine, attorney-client privilege, or any other privilege.” Nothing in the Agreement or the law supports the government’s construction of the first clause to provide a basis for X Corp. to assert privilege only against third parties.  While the Agreement permits the government to use the information it obtained from Doe in its investigation of X Corp., it precludes the government from compelling Doe to testify to that information in a judicial proceeding.

The first clause plainly conveys X Corp.’s intent not to waive any privileges. Contemplating that Doe would disclose privileged information in the interview and provides that X Corp. retains its privileges notwithstanding that initial disclosure. Nothing in the Agreement qualifies this reservation of privilege. By agreeing that X Corp. retained its privileges, the parties agreed that the government could not compel disclosure of the Protected Information in judicial proceedings.

The exception in the second clause qualifies only the government’s promise to keep the information confidential. It does not modify the first clause and thus does not negate X Corp.’s reservation of privilege.

Saying that the first clause does not bind the parties that signed the Agreement, but instead potentially addresses X Corp.’s rights against third parties that did not sign it, effectively renders that clause meaningless. And, generally, waiver of privilege as to the Government results in waiver as to all other parties. The first clause means what it says: X Corp. retains its privileges as to the government.

While the third clause presumes a disclosure, which would cause a waiver absent an agreement, nothing therein requires finding that the other provisions create a waiver. The first and third Clauses serve distinct purposes: the first clause preserves X Corp.’s privileges for the disclosed information, and the third Clause preserves X Corp.’s privileges for other related information.

In essence, the Agreement maintains the status quo regarding X Corp.’s privileges.

Construing the Agreement to preserve X Corp.’s privileges also serves important policy considerations. Cooperation between private entities and the Government furthers the truth-finding process. Declining to hold the government to the terms of an agreement it struck would discourage private entities from future cooperation.

Vacated and remanded.

In re Grand Jury 16-3817 (Lawyers Weekly No. 006-014-18, 13 pp.) (Gregory, J.) No. 17-4183; June 27, 2018; from EDVA at Alexandria (O’Grady, J.) Peter John Romatowski for Appellant; John Alexander Romano for Appellee. 4th Cir. Unpub.