The Ninth Circuit rejects the theory of “selective waiver” of the attorney-client privilege. Thus, a party’s compliance with a governmental subpoena without asserting the privilege is a waiver.
In 1938 Jerome Siegel and Joe Shuster ceded their intellectual property rights in their character, Superman, to D.C. Comics (D.C.). Almost sixty years later attorney and producer Marc Toberoff approached Siegel’s and Shuster’s heirs (Heirs) with an offer to manage pre-existing litigation with D.C. and to produce a new Superman film. He created a joint venture between the Heirs and his business entity, serving as both its attorney and business advisor. Toberoff hired attorney David Michaels who absconded with documents from the Siegel and Shuster files. He passed documents to D.C. under an anonymous cover letter detailing Toberoff’s efforts to acquire the rights to Superman.
D.C. sought to obtain the stolen documents through discovery in the ongoing lawsuits. Toberoff resisted claiming attorney-client privilege. After a magistrate judge ordered certain documents turned over to D.C., Toberoff reported Michaels’s theft to the FBI and produced a portion of the documents.
This led to another lawsuit where D.C. claimed that Toberoff and his business entities interfered with D.C.’s contractual relationships with the Heirs. Michaels’s anonymous cover letter formed the basis of the lawsuit and was incorporated into the complaint. Toberoff resisted the use of documents taken from his office.
At Toberoff’s request, the U.S. Attorney issued a grand jury subpoena with a letter promising Toberoff that it would not disseminate the documents to non-governmental third parties without a court order. Toberoff voluntarily complied with the subpoena. D.C. immediately requested all documents disclosed to the U.S. Attorney, claiming the disclosure was a waiver of the attorney-client privilege. The District Court agreed with D.C. that the voluntary disclosure was a waiver.
On appeal the Court noted that the attorney-client privilege protects communications from compelled disclosure. Although the privilege can impede fact finding, it encourages full and frank communication between attorneys and clients and promotes broader public interests in the observance of law and administration of justice The privilege is narrowly construed and can be waived by voluntary disclosures to third parties.
Toberoff argued that disclosure to the government did not waive the privilege. The court rejected this theory of “selective waiver.” The Eighth Circuit adopted the selective waiver theory to preserve the practice of corporate employment of outside counsel for investigations and advice to protect stockholders. However, the rule has proven to be unnecessary; corporate officers continue to employ outside consultants and cooperate with the government without such protection.
Selective waiver does not encourage acquisition of informed legal assistance; it merely encourages voluntary disclosure to government agencies, extending the privilege beyond its intended purposes. While cooperation with the government is a worthy goal, any exemption to the third party waiver rule should be moored to the underlying justification for the privilege consistent with narrow interpretation principles.
A new privilege requires balancing competing societal interests in access to evidence and protection of certain types of communication. The Supreme Court warns courts not to exercise this authority expansively because it is a legislative function. Thus far, legislative attempts to adopt a selective waiver rule have failed.
The Court declined to enforce the confidentiality agreement with the U.S. Attorney’s Office. The agreement did not encourage frank attorney-client communication at the time of the advice.
Toberoff’s crime victim status did not change the analysis. It is unnecessary to adopt a theory of selective waiver to encourage victims to report crimes to the government.
The “common interest” or “joint defense” rule did not apply. The “joint defense” rule is an exception to ordinary waiver rules designed to allow attorneys for different clients pursuing a common legal strategy to communicate with each other. A shared desire to see the same outcome in a legal matter is insufficient to bring a communication between two parties within this exception. The parties must make the communication in pursuit of a joint strategy in accordance with some form of oral or written agreement. There was no evidence of a prior agreement between Toberoff and the U.S. Attorney to jointly pursue sanctions against Michaels. Toberoff was merely a citizen seeking to uphold the law.
The subpoena did not protect the disclosure. Involuntary disclosures do not automatically waive the attorney-client privilege. However, a subpoena without the threat of contempt is not an involuntary disclosure. A subpoenaed party may assert the privilege when it is appropriate to do so. Toberoff solicited the subpoena and did not assert the privilege. He also failed to redact privileged materials.
Although the Heirs did not affirmatively disclose the documents, an attorney’s actions can waive the privilege without an explicit act by the client. The Heirs were bound by their apparent acceptance of Toberoff’s authority to waive the privilege.
Comment: The attorney-client privilege must be carefully guarded. Even cooperation with law enforcement can constitute a waiver to the detriment of the client’s interests.