Federal banking regulations, such as this FDIC regulation, mandate the confidentiality and non-discoverability of suspicious-activity reports (SAR) without mentioning the word “privilege.” As you can read more about in 1-6 Privileges & Protections: TN & Sixth Circuit Law § 6.05 (2024), many courts have nevertheless ruled that these regulations create an evidentiary privilege that prohibits either a bank or a banking regulator from disclosing a SAR or information about the filing or non-filing of a SAR.

So, how do these SAR regulations play out during discovery and trial?  The court’s decisions in Camenisch v. Umpqua Bank, 2025 U.S. Dist. LEXIS 9755, provide an outline. In this case, the court reviewed several banking documents in camera and ruled that some, but not all, fell within the SAR privilege’s scope.  And just before trial, it precluded the parties, including plaintiffs’ expert, from mentioning SAR-related information while permitting them to discuss the bank’s investigative efforts.  And because these restrictions and permissions may result in the jury hearing less than the full story, the court decided to inform the jury, through a special instruction, why federal SAR regulations precluded them from hearing more.  Let’s look at the details.

Increase in SARs

While a relatively obscure evidentiary privilege, the SAR privilege may attract courts’ increased attention in the years ahead.  As reported by FinCEN, and summarized in the chart below, depository institutions more than doubled their SAR filings over the last decade, with significant increases in 2022 and 2023.

From: FinCEN

One can reasonably assume that criminal and civil litigation will erupt from activities underlying these filings and, if so, lawyers and courts will have to maneuver through the SAR privilege with more frequency than ever before.  Perhaps the Camenisch case will offer some guidance.

A Class Action and Banking-Industry Expert

Several investors in a real-estate investment fund filed a class-action lawsuit against Umpqua Bank after sustaining losses.  The investment fund’s founders, as it allegedly turned out, lost money and began a Ponzi scheme through which it used new investor money to pay prior investors.  The scheme unraveled and, with one owner dead, another in prison, and the fund in bankruptcy, the investors turned to Umpqua Bank for relief.

The plaintiffs-investors claim that the bank had knowledge of the Ponzi scheme, due in part to many “red flags” on the investment fund’s account, but failed to do anything about it.  The plaintiffs disclosed a banking-industry expert, a former state banking commissioner, to offer opinions on typical practices in the banking industry, which transactions lack business justification, and the types of customer behavior that banks should consider so-called red flags.

Umpqua denies plaintiffs’ assertions and the case is currently headed to trial as a certified class action for reasons you can read about in this court order.

Discovery of SAR Information

During discovery, plaintiffs requested information related to suspicious-activity alerts arising from the investment fund’s account and the bank withheld over 100 documents on the basis that the SAR privilege precluded production.  The court, citing an OCC regulation (12 C.F.R. § 21.11(k)), stated that “[a] SAR, and any information that would reveal the existence of a SAR, are confidential, and shall not be disclosed.” But how does one apply this privilege in practice?

Citing the First Circuit’s opinion in In re JPMorgan Chase Bank, N.A., 799 F.3d 36, 2015 U.S. App. LEXIS 14721, the court, in an opinion available here, held that “the key query” in assessing the SAR privilege’s scope is whether the document “suggest[s], directly or indirectly, that a SAR was or was not filed.” Despite the bank’s contrary arguments, this standard does not protect all documents underlying a SAR and provided this example—

Some bank prepared documents may simply aggregate relevant account or transactional information, flag potentially suspicious activity that needs to be investigated further, or explain what steps need to be taken as part of that investigation. Documents like these may reflect the bank’s due diligence, but they won’t always shed light on whether or not a SAR was filed.

And using these standards, the court reviewed the bank’s 100+ documents in camera and determined that only 12 fell within the SAR privilege

Expert Opinion Restrictions and an Explanatory Instruction

Having achieved some SAR privilege success in the discovery phase, the bank became concerned that, if plaintiffs’ banking-industry expert testified that the bank performed no investigation in response to anti-money laundering alerts, it could not use the SAR-privileged information to show how it actually investigated those alerts.  The bank therefore moved to exclude the expert’s opinion regarding the bank’s investigation efforts.

The court, in an opinion available here, again noted the SAR privilege’s narrow application, stating that the privilege “only extends to testimony that would reveal the filing or non-filing of an SAR.”  This privilege does not, according to the court, “encompass the details of an investigation leading to the decision whether to file a SAR.”

The court therefore allowed both parties to introduce testimony about the bank’s investigations but stated that it would—before any such testimony—provide the jury with an instruction that the SAR privilege prevents the bank from revealing whether it filed a SAR in connection with any investigation and that it withheld certain documents from plaintiffs due to the SAR privilege.  The parties then worked together and proposed this joint jury instruction:

In the short term, we will see how this jury deals with explanations of the SAR privilege and in the long term, we may see how other lawyers and courts handle what could be an increase in SAR privilege claims.

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It’s a conundrum, for sure.  A company receives notice of potential wrongdoing, directs its in-house counsel to investigate the issue, and then must decide how, if at all, to affirmatively use the investigation to defend its conduct.  A significant consideration in determining whether to use investigation results is waiver of privilege and work-product protections.

The court’s decision in a trade-secrets case against Nvidia illustrates the potential waiver perils when faced with this issue.  Following assertions that a recent hire brought a competitor’s trade secrets to Nvidia, the company’s in-house counsel, and others, investigated the veracity of those allegations.  The company then used an in-house lawyer’s affidavit to convince a German court of the non-existence of the competitor’s trade secrets within it system.  Let’s see how this decision affected waiver arguments in a U.S. federal court. Valeo Schalter Und Sensoren GmbH v. NVIDIA Corp., No. 23-cv-05721-EKL (VKD), 2025 U.S. Dist. LEXIS 2221 (N.D. Cal. Jan. 6, 2025) (opinion also available here).

Employee Download, Criminal Investigation, and a German Civil Proceeding

Valeo, a German-based company, created source codes and other proprietary information related to its parking-assistance technology.  One of its employees allegedly downloaded over 27,000 files and later joined Nvidia, which was also developing parking-assistance technology, and six months later, German officials began a criminal investigation.  Two other things occurred: Nvidia began an internal investigation and Valeo initiated civil proceedings against Nvidia in Germany.

As part of the civil proceedings, the German court ordered Nvidia “to perform comprehensive searches for Valeo code files.”  What was Nvidia to do?

Nvidia Investigation, Affidavits, and a Disclosure

Nvidia’s head of IT Security, with the assistance of an in-house lawyer, oversaw a detailed search for Valeo source codes across Nvidia’s computers and source code repositories.  Another in-house lawyer participated as well by interviewing numerous Nvidia employees and specifically emailing those who worked with the former Valeo employee to ascertain whether they received any of Valeo’s proprietary information.

To show that it complied with the German court’s investigation order, Nvidia filed affidavits from its in-house lawyers, available for review here and here, describing their investigation-related work and their findings that Nvidia systems were free of Valeo’s source codes.  These lawyer affidavits included verbatim quotes from their employee communications.

It worked.  The German court found Nvidia in compliance with the investigation order and declined to impose any penalties.  Valeo withdrew its civil action.

U.S. Trade Secrets Case

That détente didn’t last long as Valeo filed a trade-secrets case against Nvidia in a U.S. federal court and sought production of Nvidia’s investigation materials. Nvidia refused, claiming that the attorney–client privilege and work-product doctrine protected those materials from production.

But did Nvidia waive these protections by filing its in-house lawyers’ affidavits in the German action?

Waiver Law

Let’s quickly review waiver principles for the attorney–client privilege and work-product doctrine—because they are different.  As the Valeo court recognized, a privilege holder may waive the attorney–client privilege expressly by disclosing protected information to a third party or otherwise making it public.  And the privilege holder need not have intended to waive the privilege—the disclosure alone is usually enough.  The privilege holder may also waive the privilege by implication, such as asserting a defense that relies on privileged information.

By contrast, one may expressly waive the work-product doctrine by disclosing protected materials to an adversary in litigation or in a manner that, as the court correctly put it, “substantially increases the opportunities for potential adversaries to obtain the work product.”

Ruling—Work Product Waiver

Applying these legal standards, the court “easily concluded” that Nvidia’s voluntary decision to rely on its in-house lawyers’ affidavits in the German proceeding waived the work-product protection in the U.S. proceeding.  Nvidia argued that its in-house counsel disclosure was involuntary because the German tribunal ordered an investigation and wanted to know the results. But the U.S. court noted that the German court did not require Nvidia to “submit affidavits from its attorneys” to show compliance with its investigation order.

And these affidavits disclosed the investigation’s details, identity of employee-witnesses, and content of employee interviews, resulting in the U.S. court concluding this—

In short, Nvidia has made its in-house counsel fact witnesses.

The U.S. court noted, however, that this express waiver extended only to fact work product and did not “automatically extend to opinion work product, which typically includes counsel’s mental impressions, conclusions, opinions, and legal theories.” While a party may certainly waive opinion work product, such as where it affirmatively places its attorneys’ opinions at issue, Nvidia limited its lawyers’ affidavits to the factual part of the investigation without diving into their opinions.   

Ruling—Attorney–Client Privilege

As to Nvidia’s privilege objection, the U.S. court, again easily, found that Nvidia waived the privilege over its in-house lawyer’s communications with employees during the investigation because he disclosed those communications in his German affidavit.  The court seemed skeptical, too, of Nvidia’s claim that the privilege covered its IT employee’s investigation materials, providing this warning:

The Court reminds Nvidia that a communication is not privileged merely because an attorney is copied on it; nor does the privilege encompass a record that is attached to, linked with, or pasted into a communication seeking advice of counsel, where the record itself is not privileged.

But the court stopped its admonitions and waiver findings there after finding that Nvidia had not, to date, relied on privileged information to defend the U.S. action which would have otherwise warranted an implied-waiver finding.

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Many in the corporate world provide internal training or communicate ideas, plans, guidelines, and the like through PowerPoint presentations.  This includes in-house lawyers, who often use PowerPoint or some other presentation aid to advise employees on various legal-related issues.  And, of course, lawyers and non-lawyer employees circulate those slide decks to seek feedback and revisions, some legal and some perhaps not so legal.

The question arises whether the corporate attorney–client privilege protects PowerPoint presentations either prepared by in-house counsel or on which an in-house lawyer provided input.  One court, in a rather routine situation, said no—the privilege did not protect from discovery an in-house lawyer’s PowerPoint used to train employees on antitrust compliance because the slide deck pertained more to business than legal issues.  In re Diisocyanates Antitrust Litig., 2024 U.S. Dist. LEXIS 126413 (W.D. Pa. Mar. 28, 2024) (opinion available here).  Let’s discuss the reasons and look for clues for how to increase the chances of protecting those legal PowerPoints.

Antitrust Training Session

In February 2018, a major U.S.-based chemical company tasked its in-house antitrust counsel with providing antitrust compliance training to certain non-lawyer employees, including account managers, sales directors, and production managers.  The training specifically focused on antitrust-compliance issues that may arise from the company’s internal pricing program known as Credit Upon Proof of Sale, or “CUPS.”

The antitrust counsel created a PowerPoint to aid in delivering the CUPS training.  The PowerPoint, in part, instructed the attendees to “consult counsel” or to engage their supervisor, the company’s legal representatives, or the Office of Ethics and Compliance if they had questions or needed additional guidance.  In the PowerPoint’s notes section, typically used to prompt the presenter during the presentation, the antitrust lawyer recorded this—

This training is to raise awareness of the principles and framework in which business decisions will be evaluated by antitrust regulators.  It is not a substitute for specific legal guidance in any particular situation or geography.

Motion to Compel

In a later MDL proceeding wherein several plaintiffs alleged that the company, among others, conspired to fix certain prices in violation of antitrust laws, the plaintiffs moved to compel production of the company’s PowerPoint presentation used to conduct the February 2018 training.  Relying in part on the company’s privilege-log description of the slide deck as a “general guideline,” the plaintiffs argued that the PowerPoint, while perhaps based on legal advice, was nothing more than general instructional guidelines that were nothing more than business policies.

The company maintained its privilege objection and refuted the plaintiffs’ “general guideline” argument.  In support, the company submitted the sworn declaration, available here, of its Associate General Counsel for Corporate Transactions (the antitrust in-house lawyer was no longer with the company).  This AGC said the PowerPoint was a “training presentation” that contained the antitrust lawyer’s “legal advice as to how to adhere to” the CUPS program.

In Camera Review and a Ruling

The court could not make a privilege call based on the privilege log, the lawyers’ conferral efforts, and the AGC’s declaration, and therefore reviewed the slide deck in camera. The court noted the attorney–client privilege’s “laudable purposes” but construed the privilege narrowly because it “obstructs the truth-finding process.”  In reviewing the PowerPoint presentation, the court looked for a (1) communication (2) made between privileged persons (3) in confidence (4) for the purposes of obtaining or providing legal advice.

And upon review, the court found that the PowerPoint presentation was primarily a “generalized reference or instructional guide akin to a business policy covering its policies and practices such as its Code of Business Conduct.”  The court could not determine, either from the slide deck or the company’s supporting evidence, whether the attendees could “pose questions and receive particularized legal advice in return,” but said this—

What is clear is that the PowerPoint slide deck itself, which is the sole subject of this discovery dispute, does not communicate particularized legal inquiries or legal advice.

The nail in the coffin, though, came from the antitrust lawyer’s own presenter notes that the training’s purpose was to raise awareness about making business decisions with government regulators in mind and was not a substitute for “specific legal guidance.”

The court essentially found the privilege’s legal-advice component missing—based on the PowerPoint’s own language—and ordered the company to produce the entire PowerPoint presentation.

POP Analysis

The training session’s subject appears focused on regulatory compliance, which some courts, as described in this post, consider business-related rather than legal-related. Perhaps the court had this question in mind when reviewing the PowerPoint and finding little “legal advice” language.

When creating what should be a privileged communication, let’s “write for tomorrow,” meaning to consider the words you compose today as a judge will view them in camera tomorrow or, more accurately, months or years down the road. If conveying legal advice, say so explicitly within the PowerPoint, and instruct, within the deck, that the audience may not disseminate it without lawyer approval. While labels, such as “privilege and confidential,” certainly help, courts reviewing slide decks in camera search for the request for or delivery of specific legal advice. In short, make the legal advice explicit.

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Employers routinely investigate employee harassment or hostile-work-environment complaints yet inconsistently achieve privilege protection for those investigations.  For instance, a Florida employer failed to achieve privilege protection for notes of its investigator—who doubled as an attorney and HR Director—regarding an employee’s FMLA claim.  And a North Carolina law firm lost privilege protection for its outside counsel’s investigation of a harassment complaint because, the court found, the investigation was conducted for business reasons rather than legal.

By contrast, a Utah employer, Midwest Commercial Interiors, secured privilege protection for its outside counsel’s investigation of an employee’s harassment complaint.  Tingey v. Midwest Office, Inc., No. 1:22-cv-00145-TC-JCB, 2024 U.S. Dist. LEXIS 22445 (D. Utah Feb. 7, 2024).  And the judge’s opinion, available here, offers practical and persuasive lessons for the privilege victory and, when contrasted to the North Carolina situation, provides strategic lessons for those seeking access to the investigations.  Let’s discuss it.

Other Similar Incidents and a Mulligan

A former account manager at MWCI sued the company and several “Supervisor Defendants” after a co-employee allegedly “drugged and raped” her on a business trip to Georgia.  During discovery, the plaintiff requested information related to MWCI’s investigation into harassment claims of another employee, E.S.  MWCI sought a protective order, available here, but argued only that the investigation-related documents, prepared by outside counsel, were nondiscoverable because they were disproportionate to the case.  MWCI did not assert a privilege objection.

But at the end of oral argument, MWCI mentioned that the attorney–client privilege also sheltered outside counsel’s E.S. investigation from disclosure.  The judge, apparently in a gracious mood, gave MWCI a mulligan, which sometimes happens, to submit supplemental briefing on the privilege issue.

Declarations and a Response

And submit it did.  MWCI, clearly recognizing that it had the burden of proving that its lawyer conducted the investigation for legal-advice purposes, submitted the declaration of its partial owner.  The declaration, available here, stated succinctly that, when the E.S. allegations arose, the company turned to outside counsel “to investigate the allegations and to give us legal advice about what steps we should take to protect our employee and also the company.”

That’s pretty strong, but the outside lawyer’s declaration, available here, surpassed it.  As to the purpose of his retention, the lawyer said this—

The company “asked me to conduct an investigation in order to provide legal advice regarding the merits of the complaint, the company’s potential liability, and the corrective action that should be taken.”

In an area where declarations are often conclusory, this one was deliberately specific.  The lawyer generally explained his investigation, which included interviewing the complainant, the alleged perpetrator, an HR representative, and other employees.  He advised these interviewees that he was “conducting the investigation for the purpose of providing legal advice to the company.”

The plaintiff’s response, available here, unfortunately contained little evidentiary rebuttal.  The brief mentioned that MWCI maintained a policy mandating investigations of sexual-harassment complaints, an argument that won the day in the North Carolina decision but did not expound on that aspect.  There was no deposition testimony of MWCI employees discussing its traditional implementation of this policy; no evidence of the engagement letter between MWCI and its outside counsel, and no evidence that may have countered MWCI declaration testimony.

Ruling

The court appropriately applied federal privilege law in this federal-question case and held that the attorney–client privilege protects client-to-lawyer communications (and vice-versa) “made in order to obtain legal advice.”  And in the employee-investigation context, it relied upon this statement from a Seventh Circuit opinion—

When an attorney conducts a factual investigation in connection with the provision of legal services, any notes or memoranda documenting client interviews or other client communications in the course of the investigation are fully protected by the attorney–client privilege.

And relying upon MWCI’s sworn declarations—for there was no countering evidence—and an in camera review, the court easily found that MWCI proved that its investigation into E.S.’s allegations were legal-advice related.  To be sure, the court found that the privilege did not protect “purely logistical” communications, such as emails scheduling meetings to discuss the investigation; but it held that the investigation’s core—the interviews and substantive client–lawyer communications—were nondiscoverable.

Take-Aways

For employers, MWCI’s supplemental handling of its privilege objections offers a good model to follow.  It supplied testimony from an executive and the lawyer to describe the investigation’s purpose. And the declarations were specific, not conclusory.  For employees seeking OSI investigations, the North Carolina case supplies the better model.  While an insurance-coverage case, the opinion shows that evidence of a mandatory-investigation policy coupled with employee testimony about that policy may overcome even the declaration of outside counsel.

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The broad concept of at-issue privilege waiver is best illustrated by the advice-of-counsel waiver doctrine which, as its moniker signals, arises when a party claims that he relied on his lawyer’s advice before engaging in certain conduct.  The doctrine invokes the sword-and-shield imagery by precluding a party from using privileged legal advice as a sword to defend his adversary’s claim and simultaneously as a shield to prevent that adversary from assessing the legal advice’s validity.

Legal Advice of CounselCourts call this waiver, recognizing that the lawyer’s legal advice is privileged in the first instance, but the client chose to waive that privilege by raising the legal advice as a defense.  The question arises, however, which lawyers’ advice comes under the waiver’s scope. The court’s decision in Symbria, Inc. v. Callen, No. 20 C 4084, 2023 U.S. Dist. LEXIS 203978 (N.D. Ill. Oct. 11, 2023), available here, shows how courts differ on the scope and reveals that lawyers should be cautious before asserting an advice-of-counsel defense.  Let’s discuss it.

A Sale and Competition

United Methodist Homes and Services (UMHS) and other owners sold their interest in several healthcare entities associated with Illinois-based Symbria, Inc. through a Stock Purchase Agreement (SPA).  The SPA contained non-competition and non-solicitation provisions preventing UMHS from engaging in competing healthcare activities, taking Symbria clients, and soliciting Symbria employees.  John Callen, a former president of a Symbria entity, had an employment agreement with the entity that contained similar anti-competition and anti-solicitation clauses.

A few years after the sale, UMHS and Callen established healthcare entities, generally known as MedRehab, that Symbria claims violates their respective restrictive covenants.  The parties argued over the scope of those restrictive covenants, with UMHS filing a declaratory-judgment action in an Illinois state court and Symbria bringing a host of breach-of-contract, trade-secrets, and business-tort claims in an Illinois federal court.

Advice of Counsel and Discovery Dispute

UMHS and Callen received legal advice regarding the scope of the restrictive covenants at various stages of the sale and post-sale litigation.  First, they received legal advice from Deal Counsel during the SPA negotiations.  Second, they received legal advice on the covenants’ scope from Startup Counsel when UMHS and Callen formed the MedRehab entities.  And third, they received legal advice from their post-sale Litigation Counsel.

In their answer to the claims presented in the federal-court lawsuit, UMHS and Callen expressly invoked the legal advice of their Deal Counsel as an affirmative defense, stating in part as follows:

UMHS counsel provided a legal opinion regarding the obligations under the SPA agreement, and concluded that it could take equity positions in joint ventures doing business in states outside of Illinois, and that such action would not violate or breach the SPA.

The court recognized that “the issue defendants’ affirmative defense has injected into this case is whether they acted in good faith reliance on advice of counsel when they took equity positions in the MedRehab entities.”

UMHS knew that its advice-of-counsel defense waived the privilege over its communications with Deal Counsel and produced “hundreds of pages of communications and documents relating to opinions provided to UMHS” by Deal Counsel.  But Symbria wanted more—it claimed that UMHS’s “at issue waiver of the attorney–client privilege extends beyond their communications” with Deal Counsel “to their communications any lawyers about the restrictive covenants in the SPA.”

The issue before the court, then, was the scope of the advice-of-counsel waiver.  Did it extend to advice received from UMHS’s Startup Counsel? To its Litigation Counsel?

Choice of Law

To decide this scope-of-waiver issue, the court first had to decide which privilege law to apply—federal or state.  The court correctly noted that, under FRE 501, state privilege law governs civil cases regarding a defense for which state law supplies the rule of decision.  And here, Symbria’s claim for breach of the restrictive covenants arose under Illinois law, so Illinois privilege law applied.

Scope of Waiver

The choice-of-law decision proved somewhat pivotal to the parties’ arguments.  Symbria cited a federal-law decision for the proposition that the advice-of-counsel waiver extends beyond the lawyers’ opinions that a defendant discloses.  By relying on legal advice, that decision held, the defendant opens the door and “must produce not only other communications and opinions of the same attorney, but also privileged information from other counsel involving the same subject.”

But federal law and Illinois privilege law differed on this scope, and with Illinois privilege law governing, the federal decision was not controlling.  Illinois privilege law, the court found, “demonstrated a protective approach to the attorney–client privilege and work product doctrine” and did not extend advice-of-counsel waiver to subsequently retained counsel.

Ruling

Applying Illinois’ protective approach, the court held that UMHS’s advice-of-counsel defense waived the privilege over its communications with Deal Counsel, as UMHS conceded, but also over its communications with Startup Counsel.  The waiver did not, however, extend to UMHS’s Litigation Counsel.

The important consideration for the court was one of timing—at what point in time did UMHS rely and act upon legal advice. Thus, the court found—

Whether [UMHS] believed the SPA permitted them to set up the MedRehab entities depends on what they knew at that time, not what their current counsel, or any other lawyer, told them after the fact.

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