May you disclose a privileged document to a government-enforcement agency and, later, successfully claim that the privilege precludes disclosure to an adversary in a civil proceeding? Generally, there is no common-law selective-waiver doctrine, but the SDNY, in In re: Ex Parte Application of financialright GmbH, 2017 WL 2879696 (SDNY June 23, 2017), found no privilege waiver when Volkswagen’s lawyers disclosed privileged information to the Justice Department under a Non-Disclosure Agreement. You may read the opinion here.
Internal Investigation into Emissions Scandal
Volkswagen’s 2015 emissions scandal—where it inserted software to circumvent U.S. emissions tests—is well known. VW retained Jones Day, which conducted an extensive factual investigation as part of its representation. Jones Day analyzed millions of documents and interviewed hundreds of VW employees.
As part of its VW engagement, Jones Day agreed to represent VW “vis-à-vis U.S. authorities.” In this regard, Jones Day cooperated with the Justice Department’s criminal investigation and entered into a privilege non-waiver agreement with DOJ.
The DOJ agreement stated that VW, through counsel, would provide oral briefings regarding its investigation and may furnish documents related to these briefings. The agreement also provided that, even though disclosing privileged materials, VW “does not intend to waive the protection of the attorney work product doctrine, attorney–client privilege, or any other privilege.”
For its part, the DOJ agreed to keep VW’s privileged materials confidential, except to the extent that it determined in its sole discretion that disclosure would further DOJ’s duties and responsibilities. You may read the entire VW/DOJ agreement here.
A group of plaintiffs wanting to sue VW in Germany over the emissions scandal sought the Jones Day documents through an application under 28 U.S.C. § 1782. The applicants argued, in part, that VW waived the privilege over Jones Day’s investigative documents by disclosing privileged material to the DOJ.
The Rigid Rule of Privilege Waiver?
The court recognized that, normally, voluntary disclosure of privileged material to an adversary waives the privilege. The Second Circuit, however, “has declined to adopt a ‘rigid rule’ in situations where a government agency and the disclosing party have entered into an explicit agreement that the agency will maintain the confidentiality of the records.”
Although noting that courts must make privilege-waiver decisions on a case-by-case basis, the court refused to apply the “rigid” waiver doctrine because VW and DOJ had entered into a non-waiver agreement. The court issued the non-waiver ruling because of the “strong public interest in encouraging disclosure and cooperation with law enforcement agencies.” The court effectively reasoned that applying the waiver doctrine would reduce companies’ desire to cooperate, which is contrary to the public interest.
So, the DOJ Can Disclose to Others?
It is true that the VW/DOJ agreement provided DOJ with unilateral discretion to further disclose VW’s privileged material. The applicants argued that this fact made the non-disclosure agreement illusory. The court was not persuaded, noting that the DOJ’s disclosure discretion is “cabined” by a requirement that DOJ can only disclose “in furtherance of its duties.”