*1 CASE. SEALED No. 81-1717. Appeals,
United Court of States
District of Columbia Circuit. Argument. Without
Submitted April
Decided
795 *5 WRIGHT, WALD,
Before TAMM and Judges. Circuit Opinion for the court filed Circuit Judge J. SKELLY WRIGHT. Judge Circuit TAMM concurs in the re- sult. Judge opinion
Circuit WALD filed an I, II, concurring in Parts IV and V of Judge opin- Circuit J. SKELLY WRIGHT’s ion and in the result. WRIGHT,
J. Judge: SKELLY Circuit requires This case us to consider how far product” the “work doctrine shields the corporation’s lawyer files of a in-house from scrutiny by grand jury investigat- a federal ing corporate Appellant (“Compa- abuses. 1 multinational, ny”) is a “Fortune 500” cor- appellant government preserve 1. Both and the have motion to seal. order to the confi- dentiality ongoing grand jury investiga- moved that the record in this case remain un- of an tion, identifying appellant simply “Compa- der seal and have asked tous avoid we refer parties opinion. granted ny” provide in our We do not the names of the we * * The Date the pay for off was *. poration whose activities have come under set grand jury for investigation by possible foreign official and a ar- [The woman] conspiracy government to defraud the rived my house about 9:30 AM. I left justice. shortly pick up The District Court [Company’s obstruction after chair- agent contempt airport. picked up [Compa- has at the I held man] refusing produce ny’s before the court for about 10:30 AM and as chairman] driving grand jury eight my items from the files of we were House he said general counsel, stop pick Company’s former we had to first at & [Bank] up money. grand jury subpoe- which the had He said that he had a issued principles excep- [my company] check made out to na. We conclude I waiver, all had to do was endorse it tion and fundamental to the work because context, arrangements already had been made strip doctrine in this two agreed, eight reluctantly with the Bank. I protection items might misgivings with considerable about enter- otherwise deserve.
ing the transaction. I We every at the Bank arrived where following account is taken from the thing ready, money was was counted X-, out, affidavit one an American citi- and we left. associate of the [An zen specific with business interests waiting his car in front chairman] foreign country. proper We have excised my of the Bank and followed us to House identifying names and other information where he his remained in car. [The preserve order confidentiality I and entered House where chairman] grand jury proceedings, but substance woman and the were wait [the official] X_tells story presumably ing. placed — and I containing Briefcase grand jury told to the stage money greet floor. After the —sets the case before us: ings and Handshakes [the chairman] picked up opened the Briefcase and Shortly signing after the con- X_does said, your “Here’s 200 thousand. We country tract in where [the *6 counted it at the Bank but we can eount during part the first of Oct. business] again you if want.” phone 1974 I received [The call from sen- Chairman] [a proceeded to the money. then count ior Company]. they officer at He [The said no, it’s necessary. said having difficulty arranging official] were in [The then closed Briefcase and pay compa- off to senior of a chairman] official [the handed it to the ny by foreign government] owned official].[2] get and asked me I if could an them is, X-’s of account this transaction of invoice to company cover it from a I was course, just emerged of many one that have foreign country]. associated with [in Compa- in investigations three successive * * * He pay said that once the off was ny’s practices business and candor. The they taken care of arrange would then grand jury investigation current follows for the I financing my needed for [busi- separate investigations by the Internal Rev- ness]. (IRS) enue Service and the Securities and arranged
I to Exchange (SEC), during Commission which [the officer] get the invoice he needed on the oppor- station- Company many and its had officers ery company I story. [the tunities to tell their version this owned]. individuals in Investigation involved this case. We en- have in Issued Grand Subpoena Jury deavored to as little provide description as pos- Possible Violations of 18 § U.S.C. sible and the in- corporation countries § 1001, U.S.C. U.S.C. §§ obligation volved consistent with our to explain et No. D. D.C. Mise. 80- 31 U.S.C. seq., our of this case. disposition important (filed original March The Dis- proceeding trict Court in will be cited this case X_ 3-5, Affidavit Statement hereinafter as In re Subpoena. simply Points and Authorities to Motion Response at Attachment, Quash Subpoena, D, In The documents at issue in this case ments bribes, come referred to above were not Company’s from the files of former senior payments kickbacks or other such to ob president general counsel, vice and tain favorable securing treatment busi Y-, they concern both the matters ness or special otherwise to obtain conces under and the investigations sions, pay or to for favorable treatment themselves. for business special secured or for conces obtained.[5] Investigation already A. The sions IRS April On IRS announced a appended The chairman a list of “finders” broad effort to uncover tax evasion employed had between 1971 large corporations had failed to paid and 1976 and the fees them. Most of bribes, account adequately “slush the finders’ paid fees had been in connec- funds,” practices might other have acquisition tion with the relatively small computation led to inaccurate of their tax operating companies properties, or almost liabilities.3 The IRS instructed the examin- exclusively However, in the United States. Large ers in its Program Case Audit to ask the chairman’s list of finders’ fees also in- top large corpo- executives in a number of payments cluded two substantial compa- questions rations a relating series of to such nies associated with X__According practices. questions All were to be answer- list, paid chairman’s this fee was affidavits, oath, ed in signed by under acquisition connection with of certain con- officers to whom were directed.4 foreign country tracts in the where one of Shortly thereafter IRS examiners in the companies incorporated, X-’s city Company’s where headquarters are lo- the fee separate had involved two transac- propounded cated questions a list of 19 to tions, $200,000 payment by check to the officers, several of Company’s including foreign $200,000 company guar- loan Company’s (who chairman is also its chief antee in favor of a company second owned officer) executive responsi- and the officers by X — --6 ble for foreign operations. its Compa- presidents, One of vice who ny officers each submitted their affidavits responsibility operations had for its to the July IRS June or of 1976. X_ country business, where did also response to one of questions the IRS responded question concerning IRS concerning paid bribes “kickbacks” bribes and kickbacks. This man —the same officials of foreign governments, Company’s person according X_arranged who chairman stated: X_’s “pay off” at house —sub- The Company, directly through an answer mitted and a list of finders sub- affiliates, subsidiaries or retained various stantially identical to those submitted persons finders, to act as consultants or *7 Company’s chairman. He also submitted a agents sales respect possible with ac * * * quisitions fees, list of doing and “consultants” and their business which in * * * Z_ and foreign with various countries. showed that one paid had been To the my best of knowledge, pay $120,000 regard in 1974 with to unspecified Herlihy Levine, Corporate Dunn, 1310-1311; See & The Crisis: 4. See at note Her- Payment Problem, Levine, Policy lihy Overseas 8 Law & in & at 597-598. (1976). Int’l Bus. The IRS’s activities area, however, in this date back to its investi- Company 5. Affidavit of chairman and chief ex- gation consequences illegal of the tax of cam- officer, ecutive Statement of Points and paign contributions uncovered the Water- Response in Authorities to Motion to Quash gate Special Prosecutor in 1973. In 1975 the Subpoena, B, Subpoena, at Attachment In re Supple- IRS issued an Internal Revenue Manual (filed 1980) (footnote March “Corporate ment entitled Slush Funds.” omitted). Dunn, Payments: Questionable A Considera- Specific tion of Certain Issues and a Current Id. at Attachment FINDERS. Evaluation, Overall 36th Annual N.Y.U. Insti- (1978). tute of Federal Taxation ment Opportunities” particular expense in a re- considerable of a full- “Business gion.7 investigation prosecution. scale and Be- program significantly cause the SEC’s af- concerned questions of the IRS Several privi- our fects view of figures payments political govern- lege, background we relate its in some de- With ment officials the United States. tail. these, Company’s stat- respect to chairman ed: early engaged as 1974 the As SEC was officers re Company were Several investigating political “slush fund” quested to made cam make and election corporations. practices Initially of some paign contributions to various candidates investiga- staff out SEC carried its own In connection with United States. tions, scope payments but as the approximately aggregating contributions extending problem apparent, became to for- from, $5,000, officers received advances eign well payments, as domestic the SEC by, I Company. were reimbursed realized it did not have the resources to have been advised that all of such ad investigate each carefully.10 case several to the repaid Company.[8] been vances have actions, 1974 enforcement the SEC thus sought and obtained decrees consent however, gave president, vice the IRS a corporate ap- agreed which defendants substantially different statement under point special committees of their boards of oath. he had politi He admitted that made composed entirely of directors directors — $1,400 totalling cal contributions and re management carry unaffiliated —to Company ceived an advance from cover independent investigations out of the de- them. he repaid He confirmed that had payments practices. fendants’ These inves- repaid But advance. after he the advance tigations performed by were to be outside he was reimbursed a second time for purpose responsi- counsel hired for that contributions, by expense means account only to special ble committee. The re- manipulation. of the investigation sults would be embod- special committee, ied in Investigation B. The SEC would which also be shared with the SEC later, Several months while the IRS in- staff.11 vestigation pending, still began an investigation SEC informal the benefits of this As method investi- Company’s activities gation began later escalated apparent, became SEC into a investigation encourage formal corporations enforcement to come forward portion action. informal voluntarily perform type its inves- the same tigation the SEC tech- used an innovative independent the consent nique “voluntary known as the required.12 disclosure decrees had This to in- effort program” investigate corporate to induce self-investigation duce became itself, saving govern- program. reform thus known as the disclosure W_ Committee, Cong., Affidavit and Attachment 94th 1st & 2d Sess. 23 Hills, Chairman, (1976) (testimony SEC) SCHEDULE OF FINDERS AND CONSULT- R. ANTS, (hereinafter Hearings). Statement of Points and Authorities cited as JEC Response Subpoena, to Motion to Quash C, Subpoena, supra Attachment (filed In re generally Report 11. See of the Securities and 21, 1980). March Exchange and Il- Commission Questionable *8 Corporate legal Payments and Practices Sub- Company 8. Affidavit of ex- chairman and chief Banking, mitted to the Senate Committee on Housing officer, 5, supra ecutive at 3. note Affairs, Cong., and Urban 94th 2d Report); (1976) (hereinafter cited as Sess. Herlihy W_, 7, supra 9. Affidavit note at 4-5. Levine, supra & note 581-582. at Herlihy Levine, supra 10. See & note at 577- 579; Corporate Hearings Abuses of Power: 11, 6-7; Report, Herlihy supra 12. note at & See Before the on Subcommittee Priorities and Levine, supra at note 581-582. Economy in Government of Joint Economic
801 investiga- chance to avoid extended formal in a num- program publicized The SEC forums,13 and Chairman Roder- litigation. report SEC A filed with tion and ber description of gave Hills an extended Banking May ick Senate Committee Economic Commit- program to the Joint roughly corporations’ provided details of 1976.14 As de- Congress in March tee of voluntary with the compliance disclosure Hills, pro- participation scribed program.16 First, major steps. a gram entailed four program voluntary disclosure should de- corporation’s board of directors by early developed well when the payments of doubtful clare an end to all of the contacted staff SEC involving mainte- legality practices suggested that it make use of the books and records. nance of inaccurate any payments air about method to clear the special Second, should authorize a the board legality in the questionable United indepen- primarily of composed committee Accordingly, Company’s or abroad. States thorough inves- perform dent directors large retained a law firm board of directors practices, using tigation corporation’s of the special investigative counsel and to act as prepare independent counsel and auditors independent up special committee of set Third, informa- report the full board. for investigation. to oversee the Dur- directors progress tion on the commencement lawyers from the ing the summer of 1977 lodged with the should be documents in firm examined hundreds of 8-K, copy Form and a of the SEC on its persons, interviewed 52 Company’s files and report be filed with the SEC. final should directors, officers, employees, all or consult- Fourth, be understood that must “[i]t by Company. ants hired will have access to staff of the Commission investigative May In 1978 the counsel any information that is discovered or devel- report special its final submitted investigation.” return oped during the Although the identities committee.17 corporate cooperation, the SEC for such past persons and a and the names of leniency offered abuses outside Note, Acts, (1976); pro- 89 Harv.L.Rev. 1848 13. Loomis described rities Discovery Commissioner gram congressional hearings Corporate Investigations, in 1975. See of Internal Hearings (1980). on the Activities of American Multi- 32 Stan.L.Rev. 1163 Corporations national Before the Subcommit- Policy tee on International Economic of the Hearings, supra note 10. Chairman 14. JEC Relations, House on International Committee before a Senate committee in Hills also testified May (1975) (testimony Cong., 94th 1st Sess. 180-187 Foreign Prohibiting 1976. Bribes to Offi- Loomis, Commissioner, SEC). of P. Commis- Hearing the Senate cials: Before Committee spoke sioner Sommer before a conference of Affairs, Banking, Housing and Urban 94th July state securities commissioners in (hereinafter Cong., (1976) cited as Sen- 2d Sess. Levine, Herlihy supra & at 585 & Hearing). ate topic n.210. The ly was also discussed extensive- Practising at the Law Institute’s annual insti- 9-10; (testimony at see id. at 23 of S. Id. law, Stanley Sporkin, tutes on securities Director, Sporkin, Division): Enforcement SEC Division, director of the SEC’s Enforcement providing program key part thing has as a that the “[T]he position of the See Hender- SEC. * * * in, report the final comes we is that when Sommer, Corporate Payments: son & Sensitive will to both the and the have access Voluntary Program, The SEC’s Disclosure underlying Hearing, Eighth Regula- Senate data.” See also Annual Institute on Securities Barton, (PLI 1976). (testimony Hills); tion 423 See also Block & of R. Corporate Investigations: Maintaining accompanying Internal notes 108-112 infra and text. Confidentiality Corporate of a Client’s Counsel, Investigative Communications With summary Report, note 11. A (1979); Brodsky, 35 Bus.Law. 5 The “Zone of report appears at Transfer [1975-1976 Binder] Special Investigations Darkness": Counsel 80,600. Fed.Sec.L.Rep. (CCH) (| . Attorney-Client Privilege, Sec.Reg.L.J. (1980); Coffee, Shut-Eyed Beyond Sen- 9; appellants Report 17. See brief try: Corporate Toward a Theoretical View of B_] Special [A_ Committee & Legal Response, Misconduct and an Effective Directors, 8, 1978, May the Board of Levine, (1977); Herlihy 63 Va.L.Rev. 1099 & 4, 1981) (filed Subpoena, supra note 2 Dec. 3; Note, Payments Disclosure of (hereinafter Report). cited as Final Foreign Government Officials Under Secu- *9 code, any in disguised by way were a used foreign personally any nations benefit * in report questionable disclosed detail public foreign officials of the country *. Nevertheless, practices business six countries. we believe that the manner payment circumstances of and the particular relevance here the re- Of is participation of Chairman of therein port’s Company’s dealings of discussion * * * questions irregu the Board raise X__The quite full discussion which we larity have not been able to points: summarize lengthy, high but we its satisfactorily, particularly light resolve report, According the finder’s fee to the inability [X_][21] of our to interview X_ arrangement with was never re- Nevertheless, report explain does writing. Compa- In duced to October 1974 why lawyers performing investiga- ny $200,000 for issued a check to X-’s X__ tion not able were to interview company. Company’s chairman flew then explain does it X-might Neither what halfway the continent across to hand-deliv- $400,000, except have done to earn X_, note er the check when day a he Company that some officers were intro- foreign jurisdic- knew the official —whose to a number duced of officials of the for- tion property by included valuable owned X__The eign government (including involved its Company be visiting —would President) through person a whom the chairman X- met at a office bank X_ woman “claimed as a distant relative.” where the was by check cashed “with the assistance” of chair- investigative report The counsel’s also man. The two men then drove to political a contains section on con- domestic home, they X-’s where met with the It tributions. states: * * official friendly and a woman with both Chairman the Board X_and * * * official.18 the President asked communi a few request cate to other officers
Approximately Compa- one month later other campaign such officers make con ny’s $200,- board of directors authorized tributions various candidates for feder guarantee company loan to another offices, al and to them by they inform report owned X--The also dis- recover could the total amount of closed that there had been little their or no inves- tigation by company requests of the contributions means of favor which fact, guarantee monthly Compa was executed. reimbursement on their had been suspended corporation good ny expense as a accounts. aAs result of such * * * standing by state incorporation. request, seven The officers made contri * * guaranteed However, was repaid.19 loan never Com- only butions. two officers pany paid also small consulting fees to the have stated that were reimbursed * * * * * woman from involved time to over the time such contributions *. next years.20 few appear disbursements would [T]hese provisions applicable have violated the investigative report counsel’s con- laws.[22] federal election X_episode cludes its discussion with a disclaimer: complete, copy When the was directors,
No given pro- officers also employees SEC. interviewed staff to a number expressed us vided the SEC access $200,000 three-ring containing knowledge either the black binders all of payment extensive, proceeds uncoded notes taken [X-] guaranteed by during the loan [Company] lawyers were their interviews as well as Report, Report, supra 18. Final at 24-25. 21. Final at 26. 19. Id. at 25. Id. at W_, Id. at also 26. See Affidavit of at Attachment SCHEDULE OF FINDERS AND CONSULTANTS.
803 Jury Investigation C. The Grand selected and corporate records and documents Subpoena particularly relevant lawyers as by the Eventually subpoe- the SEC report.23 the grand jury 1978 a was con- In October notebooks, Company fur- and naed these vened in the District of Columbia to con- Company of and those con- objection. sider indictment copies to the without nished SEC nected with it. The record this case Company’s files staff also examined SEC type discloses the of criminal violation un- Company’s at not included in the notebooks investigation by grand jury:25 the con- der un- headquarters. process In this the staff government,26 pro- the spiracy to defraud possible bribery in a covered evidence viding government to a false information country, report, not discussed in the seventh types agency,27 and various of obstruction through Company’s “consult- carried out justice.28 Z__24 ant” grand jury sub- Within a few weeks notes, report, the basis of On received, objection by poenaed and without gathered investigation, other material in its Company, copies of the material that had complaint against filed a civil SEC previously received The been SEC. complaint alleged violations Company. grand jury testimony also heard from a in connection with of the securities laws present and former number of X_and dealings foreign coun- Company’s in three employees, well as from X_ tries, including dealings foreign government official to whom the Z__Without admitting guilt, payment may 1974 have been October made.29 Company entered into a consent decree day complaint
with the on the was SEC grand jury 1979 the In December directed reported filed. The also the case to SEC Y_, subpoena duces tecum who Department of Justice for Company’s general had in-house coun- been possible August (approximate- criminal violations. sel from 1971 to 1978 at 9-10; 23. See brief for Grand manner or for appellants Jury thereof[,] any any purpose, Adams, of Robert SEC at Testimony Attorney, one or more of such do act persons any object Statement of Points and Authorities 12-14, to effect each conspiracy, to Motion to at Response Quash Subpoena, shall be fined not than or im- $10,000 more Attachment 2 H, Subpoena, not more or both. than five prisoned years, (filed March 21, See note 92 infra. 24. See Adams, Grand of Robert Jury Testimony (1976); 18 1001 § U.S.C. civil filed 13. The complaint jurisdic- Whoever, matter within the any against SEC reveals agency tion of or of the Unit- any department SEC had found some reason to suspect knowingly falsifies, ed and willfully States!,] Z_ involved in questionable pay- trick, scheme, conceals or covers up by any ments, since one count complaint or makes fact, false, or device a material any charged concerning specific improprieties or fictitious or fraudulent statements repre- investigative Z--Yet counsel’s final false writ- sentations, or makes or uses any does not information about any provide ing knowing same to con- or document Z__Adams involvement with Company’s false, tain fictitious or fraudulent state- grand jury stated before the that SEC investi- ment or shall be fined not more than entry, gators had discovered a memorandum concern- $10,000 or not more than five imprisoned. ing Z_ in which in a country operated years, both. file made available to the but not SEC part the notebooks turned over to the SEC. (1976) (influencing or in- § 18 U.S.C. witness); juring juror, § id. officer, grand jury 25. All of the on official captions (obstruction proceedings before depart- including documents, issued to subpoenas committees); agencies, id. ments, § Y- attorneys, identify (obstruction investigations). grand jury criminal which crimes the has under investi- gation. also note 92 infra. (1976): § U.S.C. X_, 29. See Affidavit * * * If two or more persons conspire 2-3. agency defraud States, the United or any grand jury investiga- in connection with investigative after
ly three months *11 jury issued).30 Shortly grand the thereafter tion.32 report final counsel’s subpoena lawyer to for the that jury on issued grand before the Y_appeared Y__ from material he had received 15, a number January He answered 1980. which he questions concerning matters of lawyer to Company both moved and with had discussed in a formal interview ground subpoena on the quash the investigating lawyers during Company’s attorney- protected by documents 38 were investigation, the contents of After product privilege. client and work in great were in detail which summarized in inspecting camera provided that had to the notes been granted quash to District Court the motion respect jury.31 grand With to the grand eight specific portions of the for all but documents, request jury’s he stated that documents, Compa- held that as to which it pos- in he had discovered 38 documents his attorney-client both and ny had waived responsive subpoena. He ex- session to the Company sought product privileges.33 work to plained really belonged these files in this review of District Court’s order that, with Company and after consultation court, appeal we dismissed the because but attorneys Company, representing quash then to mere denial of a motion was not person possession he had turned over the documents to one in of appealable 38 until the lawyers produce representing Company of the then the documents refused them had 30. 31. See Grand Jury gative and 15. Two of the meetings I, In Support Motion to infra. The formal ment of Points and 1977, with brief 1980). The ing to: sations, by 2. The termination possession uments, all records, randa, correspondence, notes, BRING WITH YOU See Statement d. Your own formed the present. c. entities b. Commission]; re formed a. or for formed Subpoena [Company], counsel Subpoena, lawyers Y- [*] telexes, of [An [An [An * * * described book or meetings Quash Subpoena, Motion subpoena you for the or by by files, investigation investigation investigation [*] took subject the Internal from , or follow-up the Securities testified directly large of Testimony interviews between log agreements, other Authorities place period January [*] or conferences Points and Authorities subsidiaries lawyers present the firm Quash Subpoena, of your employment stated: entries, Document law note 2 communications, or tapes, your originals on [*] sessions firm]; of Company of Company of Company Revenue Service]; indirectly at Attachment length July acting notes of conver- (filed control reports, (filed Y_, and transcriptions, [*] of [Company] and Response of see 1, 1973 March as investi- about generated Exchange 6, and March took ex- any pertain- Y_ July [*] Exhibit related memo- p. State- your with doc- per- per- per- and E, 7, 32. See brief for the within privileges. panying in the first version of the facts that that all went on to is precisely as an sI[e]ight-of-hand and notes did not contain the relevant detail as the documents under subpoe- Court also na in this case. The court characterized client the work closely ments, and the court concluded that torney-client notes. Therefore, Second, will poses certain investigative The basic rationale that two general, that Company’s substance tensive notes atively, District Court’s waiver analysis proceeded work to the as to for its order was that Company had waived its In re be cited hereinafter lines why product “enchanted eight questionable related the District Court found that rejecting text. Subpoena, the court’s final the court of of attorney-client rejected state, “This kind See notes 79-81 infra and accom- “crime-fraud” items identified place.” privilege reasoning. the kind of documents under counsel’s and of should also prior all * * * attorney-client product should payments privilege. United States led to the waiver doctrine of Company’s waiver Id. principal with disclosures government’s the District Court appeared tale,” report as “Interview Notes.” holding note 2 First, constitute waiver exception respect manipulation by had waived its at- confidences id. at selective waiver discussed in same wealth find waiver. subpoena the court. The (July the court held sessions; and interview Id. was based the attorney- The District privileges revealed the at arguments at the report argument the pur- were so 12-13. and n.l.& about 1980). came both gave pay- neg- on two, jury a cita- grand produced before the and received numbered be contempt tion and sentence for of court.34 grand jury. before the Document No. 2 is a transcript Y_ tape of a casette dictated original grand jury’s By point this preserve his recollection of a expired, term had had re- meetings May early series of in late represent a new law firm to it in tained June, chairman, presi- at which investiga- grand jury connection with the dent, and several officers discussed both its passed The 38 documents had into the tion. X_ dealings campaign and the firm, partner of a in the new law hands issue, contribution reimbursement as well and, course, grand jury in due a new issued *12 as how the affidavits to be submitted to the subpoena a for the documents addressed to subjects. IRS should deal with these Docu- possessor. their current The District Court typed ment No. 3 is a memorandum record- Company’s quash in denied motion to a ing telephone the substance of a conversa- prior opin- brief order that referred to its Y_ ion; tion holding Compa- when the between and two of lawyer docu- conversation, unwillingness pro- ny’s' ments outside indicated his counsel. this Y_ grand jury, place days duce them before the the Dis- which two took after contempt above, trict held him in and sen- tape Court recorded the described the three X_ produc- tenced him to confinement until he lawyers discussed and the cam- eight unprivileged ed the items.35 paign contribution issue. remaining gener- 32 documents were D. The Documents during ated Y-- in- All the 38 that come within documents vestigation preparation of the investi- subpoenas the terms of the in this case gative report, counsel’s final in 1977 and Y_’s years come from files for the early 1978. Twelve of these are in fact through 1978. All but two of the pages personal from Y.-’s desk calen- documents were dictated or handwritten Y__ dar, upon which scribbled brief _, exceptions being very Y a brief notes; (with exception the remainder Y_ message telex sent from an telex) are all handwritten notes on le-
officer in
Company’s foreign
one of
subsidi-
Y_had
gal-size paper.
designat-
been
aries and
prepared
a handwritten list
for
special
ed as liaison between the
committee
Y_by
employed by Compa-
an auditor
Company’s
board
of directors
ny.
performing
investigation,
law firm
of the 38
Six
documents date from June most of the notes reflect conversations be-
Y_
Y_
1976, while
lawyers
was involved in accu-
tween
and various
in-
mulating
investigation.
information relevant
to the
IRS volved
The District
questions
in counseling Company’s
portions
offi- Court held that
of six of these
they
some,
cers on
respond
single
how
should
to the
documents —on
a
line of notes
questions.
documents,
Of these six
or
produced
grand
Dis-
less—must be
before the
trict
portions
jury.36
Court ordered that substantial
Case,
(D.C.
specify why
In re Sealed
The merits
Court’s
respect
eight
for
or
items
ordered
refuse to enforce the sub-
poena
grand
contempt power
produce
jury
before the
with its
unless the
subpoena
documents under
within
are now before us.37
come
recognized privilege.40
II
recognized privileges
Each of the
the public’s
Nowhere is
claim to
protects a substantial
individual
interest or
person’s
stronger
each
than in
evidence
relationship
society
in which
has an inter
grand
jury subpoena.38
est,
context
a valid
expense
the public
interest
may
testify
pro
Therefore,
refuse to
Witnesses
search
truth.41
not all
grand jury simply
duce documents before a
socially worthy
relationships
interests
re
jury’s
the grand
because
think
de
privilege.42 Compe
ceive the benefits of
Only
very
mands
authority
unreasonable.
limited
tent
privi
must determine that a
recognized
provide
number of
privileges
lege
necessary
particular
le
in a
context
gitimate grounds
refusing
comply
protect
society
protect,
that which
seeks to
grand jury subpoena,
with a
priv
and each of
and that
of protecting
the benefits
*13
firmly
specific
these
is
a
ileged
outweigh
get
anchored
of
interest
benefits
Constitution,
statute,
ting
source —the
a
recognition
at the truth. Because
of a
power to
common law.39 A court’s
privilege generally precludes striking
control a
grand jury’s investigation
strictly
basis,43
is
circum-
a case-by-case
balance on
courts are
summarizing
Branzburg
of
ently
a
one
the inves-
38.
by
Hayes,
665,
See
v.
408 U.S.
688 &
tigating
what
lawyers about
one of the persons
n.26, 92
&
2646,
n.26,
S.Ct.
2660
Therefore,
provides specific
the law
solutions
reflecting
should be understood as
the view
only
periphery,
at the
where some abuse of the
recognition
privilege
that the
of a
based on a
privilege
privileged relationship
or the
is rea-
relationship
privileges
confidential
and other
clear,
sonably
denying
privilege
case-by-case
should be determined on a
basis.”
fact-specific grounds
engender
will not
a loss of
S.Rep.
1277,
(1974),
Cong.,
No.
93d
2d Sess.
dealings
confidence in those whose
are honest
reprinted
app.
(1976).
in 28 U.S.C.
at 557-558
and aboveboard.
See, e.g.,
Jury Investigation
In re Grand
(Sun. Co.),
1224,
(3d
1979)
599
1,
465,
F.2d
1235
(1933).
Cir.
46. 289 U.S.
53
77
S.Ct.
L.Ed. 993
(attorney-client privilege
“strictly
must be
con-
possible
fined within the narrowest
limits con-
16,
(with regard
Id. at
809
only
adversary system
covers
confidential communications be-
rather
simply
than
seek-
client,
attorney
tween
and it focuses on
ing
preserve
confidentiality,
the work
Thus,
attorney-client
relationship.
in- product privilege
is not
automatically
“communications,”
formation other than
57
by any
waived
disclosure to
party
a third
communications that do not
involve both
client,
attorney
unprotected.53
are
The seminal case for the modern
Furthermore,
any voluntary
disclosure
work product privilege is
Tay
Hickman v.
party
the client
to a third
breaches the
lor,
495,
385,
329 U.S.
67 S.Ct.
810 text Hickman left elabo- discovery, of civil protection, party and a higher
some level discovery extraordinary product must work seeking show ration of its doctrine in other justification.60 contexts to later cases.63 however, Court,
The Hickman
scrupulous-
years
In
the Supreme
recent
Court has
ly
recognizing
general privilege
recognized
privilege
product
a
a
for work
avoided
in
specific
discovery
the
product.61
for work
balance
criminal
and in
context of
And,
Hickman
depends largely
tax-investigation
subpoenas.64
struck
on the
in
IRS
Jury Proceedings
(Duffy),
In re
litigation
Grand
discovery
function of
in civil
473
supervising
(8th
1973),65
Eighth
the
judge
role of the trial
in
F.2d 840
Cir.
the
Circuit
Thus,
discovery.62
recognized
privilege
while
protect attorney
Hickman’s balanc-
a
ing approach
product
subpoena by
grand
statement
fundamental
work
from
a
judicial
beyond
Hickman
policy clearly apply
jury.
the
extending
con-
The cases
thing)
Upjohn
interrogatories
513,
60.
811 acting at eye was all an privilege have times “with doctrine into the realm toward qual- Furthermore, adopted litigation.” its two-tiered we each note that the structure — protection product work and any eyes ified for “fact” documents were not meant for but Y_’s “opinion” Despite protection willing- more absolute their author’s. product.66 They applied have also the admit Company’s ownership ness to work exception documents, concepts of and waiver to the no listening basic surrender one adaptation This privilege.67 new the tape to the casette No. 2— —Document Y_ privileges Hickman the law of is imagine doctrine to could that ever intended logic work required, not the inner into corporate it fall the hands his alone, product primarily doctrine but superiors. logic should
structural
not frustrate
—courts
short,
eight
appeal
In
items
are all
pur-
grand jury
the efforts of a
unless
opinion
product.
work
govern
Since
pose
as well as
letter of the
yet
attempted
ment has
to make the
requires it.
extraordinary
showing
necessity
required
prod
would be
to remove the work
Applying
foregoing principles
Upjohn
uct
under Hickman and
us,
grand
case
we
before
find that a
States,
383, 101
Co. v. United
449 U.S.
S.Ct.
subpoena
has
valid
38
jury
issued a
677,
(1981),70
eight
66 L.Ed.2d
584
docu
documents, and the District Court has held
produced
ments need not be
unless the ex
eight portions
must
documents
ception
implied
apply.
waiver doctrines
carefully
be disclosed.68 We have
examined
case,
eight
the entire record in this
have
The status of the
items
and we
under the
no
that all
precisely attorney-client privilege
slightly
doubt
38 documents are
more
* * *
“memoranda,
sort of
problematic.
im
all
mental
Most but not
reflect attor-
pressions,”
“thoughts,
ney-client
heretofore invio
communication. But
late” for which
already
the Hickman doctrine was has
disclosed
fact
these
Y_
Although
fashioned.69
Com-
was
place,
communications took
as well as their
counsel,
pany’s
substance,
in-house
his
affidavit
grand
both the
and the
SEC
themselves establish that he jury by releasing the extensive notes of a
Y_and
acting
attor-
primarily
role of an
formal interview between
advising
ney
clients in connection
lawyers performing
investi-
investigations,
gation.
SEC
IRS
and that he
The District Court therefore held
See, e.g.,
’may
product privilege
66.
States v.
Hess
United
Amerada
work
be waived. See
Corp.,
980,
(3d
1980);
Nobles, supra
49,
619 F.2d
987-988
Cir.
In
United States
note
422
v.
Jury Investigation (Sun Co.), supra
239,
2170;
re Grand
Appeal
95
U.S. at
Hughes,
S.Ct. at
44,
1228-1231;
Upjohn
599
282,
(3d
note
F.2d at
cf.
Co.
1980);
633 F.2d
288
Cir.
cf.
States,
49,
supra
v. United
note
at
449 U.S.
Co., supra
54,
United States v. AT&T
note
642
-401,
(relying
399
spect eight appeal, essential items ly already because disclosed much it had A. contained,
the information
and the un
question
respect
implied
exposed
disclosed information
“the enchant
Wigmore’s
waiver
“objective
is whether
report provid
ed nature of
tale”
[the]
grand
negates
consideration”
jury.94
Compa-
ed
and the
of fairness
SEC
ny’s
privilege.96 Existing
assertion of
case
While we
with some
differ
of the
guidance
law
little
“objec-
offers
as to what
reasoning
applica
District Court’s
and its
tive
application
considerations” make
documents,95
tion
several of the
we be
product
privilege unfair. We have
lieve the District
was correct
Court
in its
party
held that a
waives its work
basic determination.
entered into
protection
litigation
in civil
if it discloses
arrangement
which,
an
with the SEC under
privileged
to anyone
material
without
aas matter of
common
both
sense and
“common
developing legal
interests in
theo-
knowledge, Company relinquished
common
* *
ries and analyses of documents
*.”97
right
prevent
government
from
hand,
party’s prior
On the other
if
dis-
examining whatever documents were neces
closure,
adversary,
even to an
resulted from
sary for a
fair
of the final
evaluation
judicial compulsion,
imply
will not
courts
offered to its shareholders and the SEC.
*23
waiver.98 And in United States v. Nobles
Just because
was successful
in
the Supreme
that the
hiding
prod-
Court held
work
SEC,
crucial documents from the
we
privilege
uct
when
need not allow
was waived
Company to withhold
holder
them
grand jury investigating
privileged
from a
made “testimonial
possible
use”
mate-
during
crimes uncovered
rial
adducing testimony
SEC’s investi
as to some of
gation. We do not consider whether we
privileged
contents of a
document.99
Subpoena, supra
(July
accompanying
at 10
See also notes 52-57
text.
characterization,
95. The District Court’s
stand-
(cid:127)
accompanying
96. See note 48
text.
alone,
ing
would not suffice to create an im-
plied
product privilege.
waiver of the work
In-
Co., supra
97. United States v. AT&T
recognition
privilege
attorney
herent
of a
for
seek
of confidences in order to surrounding Company’s
claim of
foster candor.
requires
understanding
some
of the basic
purposes
of the work
features of the
disclosure
SEC’s
complex,
are more
program.
concerning
are
many
As the
cases
*24
not inconsistent with selective disclosure— companies
participated
program
attest,103
even in some
adversary.
program
circumstances to an
the
unique
involved a
use
examining
and often relies on them in
wit-
disclosure,
waived by voluntary
nesses. When so used,
secrets,
there
is no
which
normally
military
protects
specific
waiver.
But where,
at-
of information as well as
here,
types
counsel
relationships,
to make a testimonial
not
waived
disclosure.
See
tempts
use of these
necessarily
by
Sterling
materials
the normal
Firth
Co.,
rules of evidence come
Steel Co. v. Bethlehem Steel
(E.D.
into
199 F.
with
play
to cross-examination
Pa.
See also United
respect
of
production
documents.
States v.
note
339 U.S. at
Bryan,
supra
(challenge
332-333,
S.Ct. at 731
to the ade-
100. United States v. AT&T Co.,
note
supra
congressional
aof
must be
quacy
subpoena
820
is
by
There
no
arranged
collected and
information in the record as
or it had been
attorneys,
or it had been drafted
to whether
ever reached an ex-
attorneys
agents
or their
in the course of
plicit
SEC,
agreement with the
it
but
is
Accordingly,
investigation.
as soon as
clear that the SEC availed itself of access to
questions
as to the
program began
arose
documents,
investigators’
*26
forum,
the same
SEC Enforcement Division Di-
a thorough
its
of
were based on
relinquishing
right
access materials
review of those
files,
budget
necessary for a fair
of the re-
made without
evaluation
or time con-
port.
straints.119
Company provided
report
both the
and
Express
concerning
representations
2.
investigators’
containing
notes
Y_’s
files.
_’sY
assurances to the SEC and the
by Company
When
lawyers
retained
grand jury. Under the basic conditions of
perform voluntary investigation
its
inter-
program, anyone
disclosure
employees,
viewed
officers and
report
expect
reading the
could thus
it to
they
followed standard interview format.
reflect
relevant material in files that
_should
developed
That format had been
in ad-
provided
Y
have
to the inves-
vance,
reprinted
and it was
as Exhibit 1
expect
tigators.
they
And
could also
that
investigative
report.
counsel’s final
report
against
be
could
checked
the files
Question 10 on the standard format asked:
themselves.
your
relating
Have all
files
to matters
Y_’s
Importance
3.
of
files for a
which have been discussed or which are
fair evaluation.
subject
investigation
of
matter
this
through
[115]
been
made available
us
then,
appears,
It
there
a catego-
was
Company’s General Counsel?
ry
report
final
investigators’
Company’s investigative
The
notes confirm that
counsel should
reflected,
all
question
clearly
asked this
but one or two of
have
came within
Y_’s
during
persons
scope
express assurances,
the 52
interviewed
the in-
Y_
vestigation.
among
was
could
be
himself
not withheld from the SEC on
privilege. Technically,
those who had formal interviews with the
claim of
all of
_’s
subject
investigators.
relating
At
on
Y
files
to the
July
his interview
mat-
Y_
investigation
ter
come
responded
within that
asked
Question
category.
for purposes
But
lawyers present
10. Two of
fairness
Y_’s
notes,
implied
element of the
took
waiver doctrine
both recorded
among
are
response:
there
relevant differences
“Yes—made
files available
116;
appeal
eight items on
in this
case.
(including personal
this time”
“Yes
files).”
Thus Y-
assured the law-
appeal
Some of the items on
are notes of
yers that he
all
given
had
them
his files
_’s
investiga-
Y
conversations
relating
subject
to the
matter of the inves-
regarding
tors
their interviews with third
tigation,
ator
least those
in existence
files
parties. The information in
*27
6,
July
in
on
C.
2 and 3—were
existence
merits
Y_expressly
1977 when
stated that he
Company
promulgated
carefully
has
turning
investiga-
files to
was
over his
story in the
worded
form of a full disclo-
tors.
sure,
apparent
letting
and its
consent to
directly
But
two documents bear
those
disclosure, by
SEC staff evaluate its
exam-
subject
investigation,
the core
matter of the
material,
ining
underlying
the relevant
has
quan-
and
contain information in such
representation
lent credence to its
of full
tity
investigative
and detail that
record
candor. Yet at the same time it has with-
complete
could not be
without
them. More-
held crucial documents that reveal a differ-
over,
and
fully
notes do not
ent, highly embarrassing, version of events.
reflect what
the documents
reveal about
corporations
If we were to allow
to use the
Company’s highest
the attitude of
officers
product privilege
accomplish
to
such a
investigating
toward
the truth about Com-
sleight-of-hand,
severely
it would
limit
practices.
pany’s
Nothing
business
could be
voluntary
pro-
effectiveness
disclosure
purpose
more relevant
to the main
of the
grams.
voluntary investigation
providing Compa-
—
ny’s board and stockholders with informa-
purposes
of the work
management’s
tion about
policies
prac-
privilege
require
acquiesce
do not
us to
regarding
bribery
tices
corruption.122
Company’s manipulation.
corpora
When a
documents,
especially
tape,
These
tion elects
participate
in a
impeach the
provided
“official version”
SEC’s,
program
disclosure
like the
it neces
report by
the final
placing
only
in doubt not
sarily
participa
decides that the benefits of
officers,
the stories told
but
outweigh
tion
the benefits of confidentiali
willingness
also their
to tell
the truth.
ty
necessary
Therefore
for all files
to a
Documents
and 3 were neces-
full evaluation
sary
report.123
fair evaluation
forgoes
of the
of its disclosures.124 It
some of the
Report, supra
11,
31; Herlihy
product privilege
122. See
note
waived its work
&
as to the
Levine,
3,
575;
supra
Note, supra
portion
note
note
marked
of Document 29.
13, 89 Harv.L.Rev. at 1855-1856.
Note,
13,
supra
124. See
note
32 Stan.L.Rev. at
portion
123. The
of Document 29 that the Dis-
1176-1181. The
situation
this case is analo-
Company
produce poses
gous
Cote,
trict Court ordered
to that in United States v.
456 F.2d
special problem.
(8th
1972),
It reflects a conversation
144-145
in which the court
between Y-
taxpayer
and other
officers
held that when a
files an amended
during
stages
attorney-client
occurred
privilege
the later
return it waives its
Y_’s
voluntary investigation,
workpapers
months after
that would otherwise come within
express representation
provided
privilege,
that he had
all
because submission of an amend-
investigative
of his files to
lawyers performing
necessarily implies
counsel. The
ed return
consent for the
underlying
would not
IRS to examine the details
the infor-
mation,
have known of
Corp.,
the substance of
supra
the conversa-
and in In re John Doe
note
participants
tion unless one of the
called
toit
Some 55 aptly regard what we as the stated funda- WALD, Judge, concurring: Circuit in this mental issue case: *30 than question The is no less whether I, II, I Judge concur in Parts IV V of put up shifts courts must with and sub Wright’s opinion to relate docu- terfuges place truth and are ments 2 and 3. Within the context powerless put to trifling. They an end to program, SEC’s disclosure prove incapable would themselves inequitable corporation would be allow so,
dealing with it were actualities if appearance disclosure, foster the of full no surer sign there is of a feeble and properly later withhold records that are timidity penetrat law fumbling than underlying characterized as documents of * * * [129] ing the form to the substance. its to the SEC. Documents and 3 adversary system vitality clearly category underly- fall within this great us, courts, ing concern as it is to all ground documents. Under the rules set regard importance and we due up have for the by appellant (“Company”), outside coun- privilege maintaining vitality. It sel was authorized interview in-house adversary system, would ill interview, serve how- counsel. In this counsel in-house ever, privi- if we were to exalt the form of top Company recounted discussions of- lege Through over its substance. the doc- ficials that are described in implied exception, trines of waiver and expressly agreed (in accordance law duty entrusts courts with a to with procedures) standard over hand files guard lawyers, offices of and the Having relating to these discussions. relied respect bar, which we have for the are not appearance that all relevant docu- used for or corrupt purposes. unfair ments were available to both outside coun- investigators, sel and SEC cannot duty, the exercise of that we have now privilege. hide behind a cloak of that there determined is a substantial likeli- corporation hood that the multinational be-
fore attempted manipulate us has its
privilege, withholding vital documents making great pretense
while of full dis-
closure their contents. It does not de- protections enjoyed by
serve the those who adversary
use system legitimate Therefore,
ends. we have held that ordering
District Court did not err in Com-
pany’s attorney portions two disclose general files,
its former counsel’s because States, (2d
129. Loubriel v. United
9 F.2d
such as the
notes
privileged
In the ear-
status of
documents.
interviews,
of their
that would have been
program
ly
shaped
consent decrees that
product privilege
within the work
under
preserve
to
its access
SEC made certain
Furthermore,
other
circumstances.
material,110
privileged
lawyers
to
soon
files,
through Company’s
SEC searched
at
every
learned that
in
case the
would
SEC
thoroughly
enough
least
to uncover evi-
privileged
access to
demand
material.111
dence of abuses that had been omitted from
after,
By
time or soon
report.113
Many companies were
able to reach
Y_had
however,
SEC,
the 38
agreements with the
removed
docu-
informally
either
decrees,
files,
through
pre-
ments in this case from
formal consent
to
disclosing
undisputed
vent
from
and it
never
privileged
SEC
SEC
Nevertheless,
parties.112
pre-
documents to third
But the
examined them.114
we
SEC
compromise
did not
on its own access to
sume that
in this case the
not take
SEC did
privileged
unprecedented
documents.
step
and unwarranted
required
Stanley Sporkin
110. The earliest consent decrees
rector
had stated that he did
protective
to obtain a
privilege applicable
SEC
order from the court
not think
to the
forbidding
par
it to
Sommer,
release documents to third
disclosure context. Henderson’
su-
&
privileged
ties
13,
before
could take access to
pra
Dunn, supra
note
at 430. See also
See, e.g.,
documents.
ing
3,
Consent
Undertak
(IRS normally requests
at 1317-1318
26,
Corp.
of Lockheed Aircraft
SEC v.
questionable payments
¶
in
materials
tax
Corp.,
Lockheed Aircraft
[1975-1976 Transfer
investigations).
95,509,
(CCH)
99,-
Fed.Sec.L.Rep.
Binder]
at
¶
(D.D.C.1975);
Oil,
Undertaking
of Ashland
Coffee,
13,
n.584;
112. See
at 1265 &
Inc.,
Oil, Inc.,
SEC v. Ashland
D.D.C.No.75-
supra.
note 110
See also SEC Rel. No. 5571
16,
(May
incorporat
Later decrees
21,
(Feb.
1975) (SEC Freedom of Information
prohibition against
par
aed
disclosure to third
policy). Corporations mainly sought
Act
prevent
See, e.g.,
ties into the consent itself.
Undertak
releasing
the SEC from
their docu-
ing
Ray
4-5,
of J.
McDermott & Co. at
SEC v.
ments under the Freedom of Information Act.
Ray
Co.,
J.
McDermott &
D.D.C.No.76-1854
At the time the
SEC had liberal FOIA disclo-
(Oct. 6, 1976);
Judgment
Final
of Permanent
policy,
Supreme
yet
sure
and the
Court had not
Injunction
5,
Telephone
at
SEC v. General
&
right
corporations
object
ruled on the
27,
Corp.,
(Jan.
Electronics
D.D.C.No.77-0157
agency
documents,
corporate
disclosures of
see
1977) Significantly,
.
when the SEC returned to
Chrysler
Brown,
281,
Corp. v.
441 U.S.
99 S.Ct.
case,
the District Court
in the Lockheed
in
1705,
(1979),
applicability
Notes
notes these July 1977. fully investigators’ reflected in the exten- investigative The report counsel’s final sive notes of the interviews themselves.120 cooperation made much of the merely of the inter- items list summarize sub- Other respect viewees with jects investigation, any par- their files. under without “[W]e persons system were advised all interviewed or extraordinary complete- ticular relating -that all their files to matters which ness. limited information these were might nothing report notes, discussed or which be relevant items adds to the subject necessary matter this no one would consider them been had made available us.”118 Fur- report.121 to a fair evaluation of the Fur- thermore, thermore, findings only stated that two items—Docu- Report, 8; 115. Final Exhibit 1 at 119. Id. at id. at see 3. 1 supra. 120. Documents 14 and 16. See note 36 Notes, Interview at F00933. 35, 38, portion 121. Documents Docu- Id. at F00953. ment 21 marked the District Court. See supra. note 36 Report, 118. Final at 4.
notes referred to if the ex- testifying them while for the In defense. ists as Professor Freedman it. views Assert- investigative instant case the counsel’s final ed as a standard which to measure the report refers to files that were to lawyer’s situations, furnished all conduct absolute lawyers preparing report, purports and it confidentiality system is inimical to a which reflect the relevant material in those files. See decision-making. has as its end rational accompanying notes 115-119 text. government Just as in a criminal trial the rejected 126. The Fourth has Circuit the Diversi jury right a have to evaluate a theory jury witness’ grand fied limited waiver in a con shortly text, account of his notes he taken Weiss, had after for this reason. notes, by evaluating a crime those the SEC and Corp., 596 F.2d at Cf. In re John Doe grand jury right Compa- have a to evaluate (following F.2d Per ny’s report by examining pur- it documents mian). Recognition special strength ports to reflect. grand jury’s underlying claim to voluntary investigation implicit is also Noonan, Purposes Advocacy case, judgment entered in the Lockheed see Confidentiality, and the Limits of 64 Calif.L. supra, note 110 which forbade SEC (1966): Rev. anyone disclose the documents it examined to Thus, appears confidentiality that neither grand jury. F.Supp. other than See 404 adversary system absolute; nor is an Jury Subpoena 653. See also In re Grand justified pragmatically by ability each is its (General Dynamics Corp.), Fed.Sec.L.
[1980] serve certain social needs. Professor Freed-
97,562
Rep. (CCH)
(D.Conn.1980). Further
¶
repeatedly
privileged
man
treats a
communi-
more, the SEC is
not entitled more solicitude
precedence
cation as an absolute which takes
jury.
grand
Corp.
than a
Permian
v.
Cf.
United
justifies
over all other values. He
this
States,
supra note