Westinghouse Electric Corp. v. Republic of the Philippines
951 F.2d 1414 (1991)
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Rule of Law:
The voluntary disclosure of materials protected by the attorney-client privilege or the work-product doctrine to a government agency during an investigation results in a complete waiver of those protections, preventing the disclosing party from asserting them against other adversaries in subsequent litigation.
Facts:
- In the mid-1970s, Westinghouse Electric Corporation sought a contract to build a nuclear power plant in the Philippines and retained Herminio Disini, a close associate of then-President Ferdinand Marcos, as a special sales representative.
- After Westinghouse secured the contract, press reports alleged that the company had bribed Philippine officials through Disini.
- In 1978, the U.S. Securities and Exchange Commission (SEC) began investigating Westinghouse for potential securities law violations related to the alleged illegal payments.
- In response, Westinghouse retained the law firm Kirkland & Ellis to conduct an internal investigation into the bribery allegations.
- Westinghouse disclosed a letter report and oral findings from the Kirkland & Ellis investigation to the SEC to cooperate with the agency's inquiry.
- The U.S. Department of Justice (DOJ) also initiated an investigation into Westinghouse's conduct concerning the Philippine contract.
- Westinghouse, under a confidentiality agreement, disclosed the Kirkland & Ellis reports and related documents to a DOJ grand jury to cooperate with its investigation.
- Subsequently, the Republic of the Philippines initiated its own investigation into the contract procurement activities.
Procedural Posture:
- The Republic of the Philippines and its National Power Corporation sued Westinghouse in the U.S. District Court for the District of New Jersey for tortious interference and conspiracy.
- During discovery, the Republic requested production of the documents Westinghouse had previously disclosed to the SEC and DOJ.
- Westinghouse objected to the request, asserting attorney-client privilege and work-product protection.
- A magistrate judge ruled that Westinghouse had waived both protections and ordered the production of the documents.
- Westinghouse appealed the magistrate's ruling to the district court judge, who affirmed the order compelling production.
- Westinghouse then filed a petition for a writ of mandamus with the U.S. Court of Appeals for the Third Circuit, asking it to set aside the district court's discovery order.
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Issue:
Does a company's voluntary disclosure of documents protected by the attorney-client privilege and work-product doctrine to government agencies during an investigation waive those protections only as to the government, or does it effect a complete waiver as to all other adversaries?
Opinions:
Majority - Becker, Circuit Judge.
Yes, a company's voluntary disclosure of privileged documents to government agencies effects a complete waiver as to all other adversaries. The court rejected the 'selective waiver' theory, which would allow a party to disclose privileged information to the government while maintaining the privilege against other parties. The purpose of the attorney-client privilege is to encourage full and frank communication between attorneys and clients to promote the observance of law; it is not to encourage voluntary cooperation with government agencies. Extending the privilege to protect disclosures to the government would create an entirely new privilege, which is a task for Congress, not the courts. Similarly, the work-product doctrine is waived when disclosed to an adversary, which the SEC and DOJ were in this context, because such disclosure is foreign to the doctrine's purpose of protecting the adversarial system. Confidentiality agreements with the government do not prevent waiver because the act of voluntary disclosure to a third party is what breaks the confidentiality essential to the privilege.
Analysis:
This decision firmly rejects the 'selective waiver' doctrine, aligning the Third Circuit with the D.C. Circuit's stricter approach and creating a circuit split with the Eighth Circuit. The ruling establishes a bright-line rule that forces corporations to make a difficult strategic choice: either fully cooperate with government investigations by disclosing privileged materials, thereby risking their use in subsequent civil litigation, or withhold such materials to preserve privilege, potentially leading to a more adversarial relationship with government investigators. This precedent significantly raises the stakes for companies conducting internal investigations and deciding how to engage with regulatory bodies, as cooperation with one adversary can strip them of their defenses against another.
