In re Grand Jury Subpoena
274 F.3d 563 (2001)
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Rule of Law:
A corporation may unilaterally waive its attorney-client privilege for communications made by corporate officers in their official capacity, and this waiver overcomes any personal privilege claim by the officers unless the communications are clearly segregable and relate solely to the officers' individual legal matters.
Facts:
- Oldco was a closely held corporation run by CEO Richard Roe and VP Morris Moe.
- A. Nameless Lawyer served as Oldco's primary outside counsel and also represented Roe and Moe in their individual capacities.
- The intervenors (Roe, Moe, and Lawyer) claimed the existence of a long-standing, unwritten joint defense agreement providing that their communications with Lawyer were jointly privileged and could not be disclosed without unanimous consent.
- There were no corporate records authorizing Oldco to enter into such an agreement.
- A federal grand jury began investigating Oldco's 'rebate program' in 1997.
- In 1998, Newparent, Inc. acquired Oldco.
- Following the acquisition, Oldco entered into a plea agreement with the government regarding the rebate program.
- As part of its plea, Oldco, under its new management, expressly waived all applicable attorney-client and work product privileges and agreed to cooperate with the government's investigation.
Procedural Posture:
- A federal grand jury issued a subpoena duces tecum to Newparent, Inc., seeking documents from its subsidiary, Oldco.
- Richard Roe, Morris Moe, and A. Nameless Lawyer intervened in the proceeding and filed a motion to quash the subpoena in the U.S. District Court.
- The intervenors also requested an evidentiary hearing and sought a grant of immunity to present evidence.
- The U.S. District Court denied the motion to quash without holding an evidentiary hearing, implicitly denying the other requests.
- The district court stayed the production of documents pending an appeal.
- The intervenors (appellants) appealed the denial of their motion to the U.S. Court of Appeals for the First Circuit.
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Issue:
Can former corporate officers, asserting a joint attorney-client privilege with the corporation based on an alleged oral joint defense agreement, prevent the disclosure of subpoenaed corporate documents when the corporation has explicitly waived its privileges?
Opinions:
Majority - Selya, Circuit Judge.
No. Former corporate officers cannot prevent the disclosure of corporate documents based on a joint privilege claim when the corporation has waived its privilege. A corporation's waiver is effective for all communications made by officers in their corporate capacity. Any personal privilege an officer may have extends only to communications that are clearly separable from corporate matters and pertain solely to the officer's individual rights and liabilities. The default assumption is that corporate counsel represents the entity, not the individuals within it. To overcome this, officers must satisfy the five-prong test from In re Bevill, with the crucial fifth prong requiring that the communications did not concern the company's general affairs. Here, the intervenors failed to allege that any communications were segregable or solely related to their individual affairs; instead, they argued all communications were jointly privileged, a theory the court rejects. Furthermore, a private joint defense agreement cannot expand the scope of a legal privilege or prevent a client from waiving privilege over their own communications. The alleged 'rolling' joint defense agreement here is also unenforceable as it was not formed in response to a specific, identifiable litigation.
Analysis:
This decision solidifies the principle that a corporation's attorney-client privilege belongs to the corporate entity alone and can be waived by current management, even over the objections of former officers involved in the communications. By requiring officers claiming a personal privilege to demonstrate that their communications with corporate counsel were strictly segregated from company affairs, the court makes it significantly more difficult for individuals to shield evidence in corporate investigations. The ruling also curtails the use of broad, open-ended joint defense agreements as a tool to create a 'code of silence,' limiting their validity to circumstances involving actual or imminent litigation. This strengthens the hand of government investigators when a corporation chooses to cooperate against former insiders.
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