Case Briefs: Waiving the Attorney-Client and Work Product Privileges

February 2006

In 2005, the Southern District of New York published two opinions focusing on whether the attorney-client privilege and/or work product privilege was waived.  One case concerned waiver when information is shared with a testifying expert.  The other case addressed waiver when a company discloses information to a governmental agency.  These cases have relevance for attorneys and clients involved in drug or medical device litigation because the use of expert testimony and interaction with governmental agencies are common occurrences.  The cases illustrate that before a party shares any information with its testifying expert or with a governmental agency, it must be aware that such information will most likely lose the protections provided by the attorney-client and work product privileges.  

In re Omeprazole Patent Litigation, 2005 U.S. Dist. Lexis 6112 (S.D.N.Y. Feb. 18, 2005 ).

In Omeprazole, defendant produced its testifying expert’s report to plaintiff in this patent litigation.  Subsequent to the production of the report but prior to the expert’s deposition, defense counsel informed plaintiff by letter that it decided to withdraw certain defenses and therefore deleted paragraphs from its expert’s report.  At the expert’s deposition, defense counsel refused to let the expert answer any questions regarding the deleted paragraphs or conversations between the expert and defense counsel as to counsel’s reasons for deciding to delete certain parts of the report.  The court found the actions of defense counsel violated the discovery rules and neither the attorney-client nor the work product privilege applied.

Defense counsel asserted that it had the right to instruct its expert not to answer these questions because it had amended his reports to delete certain opinions.  First, the court noted that “[e]xpert reports are not pleadings and that a party may amend at will.”  Then, the court stated that “[e]ven if a party could ‘amend’ expert reports by simply sending a letter such as [defense counsel] did here, that does not, by itself, foreclose deposition testimony on the report both before and after the ‘amendment’ – and [defense counsel] has pointed to no rule, practice, or authority to the contrary.”  Thus, the court found that the expert could be deposed on the deleted sections of his amended report.

Next, the court addressed defense counsel’s argument that it could instruct the expert to refuse to answer questions concerning communications between defense counsel and the expert as to why counsel decided to amend the report.  The court rejected this position.  First, the court noted that the communications took place with a testifying expert and that Federal Rule of Civil Procedure (FRCP) 26 “makes clear that documents and information disclosed to a testifying expert in connection with his testimony are discoverable by the opposing party, whether or not the expert relies on the documents and information in preparing his report.”  Then, the court reasoned that questions posed to the expert regarding whether defense counsel told the expert its reasons for deleting some sections of his report were “clearly related to the subject matter of [his] expert report.”  In short, defense counsel “knew or should have knows that communications with a testifying expert witness concerning the subject matter of the expert’s report are not privileged.”

Based on Omeprazole and FRCP 26, before sharing any information or documents with testifying experts, counsel must make sure that they are comfortable with that information being disclosed to the other side. 

In re Natural Gas Commodity Litigation, 2005 U.S. Dist. N.Y. 11950 (S.D.N.Y. June 21, 2005 ).

Often times, pharmaceutical companies volunteer information and data to the FDA to comply with requests to provide such information.  With the current news coverage of the FDA and its oversight of pharmaceutical companies, it’s conceivable that such disclosures to the government may increase or be subject to greater scrutiny.  For a myriad of reasons, pharmaceutical companies may not want all information disclosed to the FDA to be subject to disclosure to third-parties.  Natural Gas shows that the majority rule makes such disclosures per se waivers of the attorney-client and work product privileges. But, the Second Circuit Court of Appeals follows the minority rule and analyzes waiver on a case-by-case basis.

Energy companies conducted internal investigations into alleged inaccurate reports concerning natural gas transactions made to trade publications.  These internal investigations were created with the help of outside consultants.  The Federal Energy Regulatory Commission and the Commodity Futures Trading Commission (the “governmental agencies”) requested the companies to provide the results of these internal investigations, including any attorney-client memorandum that summarized certain data analysis.   Pursuant to confidentiality and non-waiver agreements, the companies agreed to disclose these documents to the governmental agencies.       

Subsequently, these energy companies were sued by natural gas futures traders.  The traders moved to compel production of the documents that the energy companies disclosed to the governmental agencies.  The energy companies asserted the attorney-client and the work product privileges.  First, the court noted that in the Second Circuit,  “[c]rafting rules relating to privilege in matters of governmental investigations must be done on a case-by-case basis.”  But, the court stated that the Second Circuit’s case-by-case approach is the minority position.   The majority of federal circuit courts have adopted a per se waiver approach when documents are disclosed to governmental agencies.

Applying the case-by-case approach to the facts before it, the Natural Gas court found that the existence of confidentiality and non-waiver agreements favored upholding the privileges.  Another factor supporting the decision to uphold the privileges was that the energy companies produced the factual documents that provided the data for the withheld work product analysis.  Because the futures traders received the same factual data as the energy companies, they could hire their own experts to “perform their own analyses of the trading data and the data reported to the trade publications.”  Thus, the court upheld the privileges and did not require the energy companies to produce all of the documents that they disclosed to the governmental agencies.

Natural Gas provides two lessons for pharmaceutical and medical device litigation.  First, the majority rule is that disclosure to governmental agencies results in a per se waiver of attorney-client and work product privileges.  Based on this lesson, companies and counsel should be very careful in deciding whether to voluntarily disclose documents or information to the government.  Second, confidentiality and non-waiver agreements should be secured before disclosing information or documents to the government.  Although not every circuit will enforce these agreements, they do play a critical role in the Second Circuit’s case-by-case approach and will at least provide a reasonable and good faith basis to argue for a modification of the law in circuits that currently follow the per se waiver approach.


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