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The Loss Of Privileged Information Through Intentional Or Inadvertent Disclosure To A Third Party

In many cases, the right of protecting an attorney-client correspondence can be lost, but probably most frequently by intentionally or unintentionally producing the communication to a third party. When exchanging confidential communications with third parties, both before and during litigation, an attorney and the client should consider Ully’s potential for loss of privilege. In addition, the producing and receiving attorneys must comply with certain procedural and ethical rules if privileged materials are accidentally produced.

 

Federal legislation

Federal legislation regulates the applicability and reach of attorney-client privilege in federal litigation concerning federal issues of law. From the Fed. R. Evid. R. Evid. Huh. 501. The right of the attorney-client extends to correspondence made between protected individuals in trust in order to obtain or provide legal assistance to the client. Comm Teleglobe. Corp. v. BCE Inc, 493 F.3d 345, 359 F.3d 345 (3d Cir.2007).

State law regulates the applicability and extent of the attorney-client privilege in federal cases that are built on diversity jurisdiction. From the Fed. R. Evid. R. Evid. 501; re Ford Motor Co., 110 F.3d 954, 9655 954, 9655 (3d Cir. 1997). Under New Jersey law, there is a right for confidential correspondence made in professional trust between an attorney and a client in the course of their legal relationship. The client has the right of refusing to reveal such communications and prohibiting the disclosure of the communications by the counsel. Yeah. N.J.R. Evid. 504; see also section 2A:84A-20 of N.J.S.A.; Terrell v. Schweitzer-Mauduit Int’l, Inc., 352 N.J. Super. Super. 109 1099 (App. Div. 2002).

Whether a particular correspondence that has been exchanged with a third party is privileged must be addressed preliminarily. Some communications may not seem to be covered by the right of the attorney-client at first glance since they are intended for future disclosure to third parties or even to the general public. However, case law reveals that, under some cases, these messages can be privileged. For example, the court held that a draft press release was covered under the right of attorney-client, in Macario v. Pratt & Whitney Canada, Inc., No. 90-3906, 1991 WL 6117 (E.D. Pa. Jan. 17, 1991), because the parties intended it to remain confidential until the final version was prepared and then released. Similarly, in the United States, a court ruled Am. Global Assoc. v. Realtors, 242 F.R.D. 491 (N.D. Ill. 2007), that the edits of an attorney to an article to be published in a journal constituted solely legal advice and were thus covered by the right of the attorney-client. Furthermore, in Trilogy Comm., Inc. v. Excom Realty, Inc., N.J. 279. Super. Super. 442 (Law Div. 1994), the court ruled that under the attorney-client privilege, a draft letter from the defendant’s attorney to the plaintiff’s attorney, which was supposed to be first investigated by the defendant’s in-house counsel before being submitted, was exempt from disclosure.

Therefore, the mode of communication when judging if it is privileged is not determinative. Instead, to decide whether it is covered by the attorney-client privilege, one must examine the role of the attorney in producing the correspondence.

 

Privilege waiver

A privilege waiver can occur where privileged information is revealed to a third party. A waiver of attorney-client privilege under both federal and New Jersey law must be an informed and deliberate act to be successful. N.J.S.A. § 2A:84A-20. Maldonado v. New Jersey, 225 F.R.D. 120, 128 (D.N.J. 2004); When a party has waived the right, it is always quite simple. The extent of the waiver may, however, be hard to ascertain. One contentious question is whether, when reacting to a government inquiry and entering into a confidentiality arrangement with the government, a party can ‘selectively’ waive the right.

In Elec’s Westinghouse. Corp. v. Republic of the Philippines, 951 F.2d 1414 (3d Cir. 1991), Westinghouse obtained a report on the suspected bribery of Philippine officials from independent counsel who had undertaken an internal investigation. The investigation was in response to an inquiry from the Security and Exchange Commission (‘SEC’). The report to the SEC was created by Westinghouse under a confidentiality agreement. Westinghouse filed a petition to quash the motion in response to a grand jury subpoena, dropped the motion, and then voluntarily created the Department of Justice (‘DOJ’) report under a confidentiality agreement.

The Filipino government subsequently filed a lawsuit against Westinghouse concerning the alleged bribery and demanded the creation of the study. The court dismissed the limited waiver claim made by Westinghouse. The court acknowledged that voluntary disclosure to a third party waives the right and that only Westinghouse’s privilege as to the DOJ and not as to any person in an unrelated civil case is retained in the confidentiality agreement. The court also found that the disclosure of Westinghouse to the DOJ was voluntary since its motion to quash was withdrawn. Today, the Westinghouse opinion remains relevant.

A bank engaged outside counsel in re Initial Public Offering Securities Litigation, No. 2I-MC-92, 2008 WL 400933 (S.D.N.Y. Feb. 14, 2008) to conduct an internal investigation into suspected fraud related to initial public offerings. A memorandum summarizing his interviews with bank employees was prepared by the bank’s outside counsel. The bank produced the memorandum to the U.S. under a confidentiality arrangement. Office of the Solicitor and the SEC. Subsequently, former bank employees sued the bank for wrongful discharge and moved to force the memorandum to be produced, alleging that by producing the document to the state, the bank waived its right. The court ignored the bank’s limited waiver claim and ordered the bank to produce the memorandum.

These cases illustrate the limits of the doctrine of limited waiver. The implications of cooperating with federal inquiries with respect to the discoverability of records in future lawsuits must be understood by lawyers and clients. The attorney can attempt to quash the subpoena to protect the right and then produce the details only after a court requires it to do so. A protection may also be lost by inadvertent disclosure, such as unintentionally creating the document in response to a request for discovery during litigation, for example. The United States District Court for the District of New Jersey uses the “culpability” approach to assess whether an inadvertent production constitutes a waiver, i.e. whether the disclosure meets the rigorous requirement of gross negligence. Maldonado, 225 at 128 F.R.D. This review is based on the following factors: (a) the reasonableness of the steps taken to avoid inadvertent disclosure in the light of the nature of the creation of the document; (b) the amount of inadvertent disclosures; (c) the scope of the disclosure; (d) any pause and action taken to correct the disclosure; and (e) whether or not the overarching interests of justice will be served or not.

When analyzing the reasonableness of the safeguards used to avoid inadvertent disclosure, it is considered fair to perform a one-time analysis of records to determine if any are privileged. Global Assoc., 242, 495 F.R.D. “at least minimally adequate, though we can imagine additional precautions that might have been taken in this document-intensive litigation.”at least minimally adequate, although we can imagine additional precautions that might have been taken in this document-intensive litigation.

When evaluating the promptness of the actions of the party. “the delay should be measured from the time the producing party learns of the disclosure, not from the time of the disclosure itself.”

Indeed, even though several years passed between the creation of the records and the declaration of the right, the courts looked favorably at parties who behaved immediately upon learning of the disclosure. Global Assoc., F.R.D. 242 at 495. In brief, acting promptly and diligently is the key to resolving an inadvertent output.

According to federal law, inadvertent leaks of confidential communications may not waive confidentiality as to the whole topic of such communications, but only under rather restricted circumstances as to the relevant revealed records.

A party manufacturing privileged content accidentally, as well as the receiving party, must also be mindful of its legislative obligations. 26(b)(5)(B) of the Federal Rule of Civil Procedure specifies that: (a) if a party has discovered protected information, that party may notify the receiving party of the privilege claim; (b) after being informed, the receiving party must immediately return, sequestrate or destroy the information specified and any copies it has and may not use or reveal the information until the claim has been resolved;