Privilege claims for the "Bliley" documents: mixed rulings imperil basic principles: when a Congressional committee compels production of documents and places them on the Internet, is the claimed privilege lost forever?

• Author: Reilly, John P.

RECENT rulings by courts in the cigarette product liability litigation address a novel issue concerning the limits of attorney-client privilege and work product protection--the extent to which claims of privilege survive the compelled production of documents in response to a Congressional subpoena.

In 1998, in response to a subpoena from the Commerce Committee of the U.S. House of Representatives, the major tobacco companies produced thousands of documents for which the companies claimed attorney-client privilege and work product protection. The companies produced the documents only after the chairman of the committee, Rep. Thomas Bliley of Virginia, declared that he would not recognize the companies' claims of attorney-client privilege and work product protection and after he threatened to initiate contempt proceedings if the companies failed to produce the documents.

Rep. Bliley later published the documents on the Internet. Plaintiffs in civil litigation against the tobacco companies since then have sought to use the documents in discovery and trial proceedings, arguing that the companies waived or otherwise lost any privileges by producing the documents to Congress.

THE BACKGROUND

The privileged documents the tobacco companies eventually produced to Congress in 1998 were first placed at issue in the State of Minnesota's third party "cost recovery suit" brought in Minnesota state court against the major tobacco companies. In that case, the state and Blue Cross/Blue Shield of Minnesota sought the recovery of Medicaid and other health care expenses spent in treating smoking-related illnesses. The plaintiffs in the case served hundreds of document requests. The companies eventually produced millions of pages of documents but withheld more than 200,000 documents for which they asserted claims of attorney-client privilege and/or work product protection. (1)

After the plaintiffs challenged all of the companies' claims of privilege, the court undertook an unprecedented "sampling" procedure to resolve the privilege challenges. It directed the companies to organize their documents under 14 subject categories, and it appointed a special master to review sample documents from each category and on that basis make category-wide conclusions as to the merits of the privilege claims. After reviewing less than 2 percent of the documents at issue, the special master upheld the privilege claims for 10 of the 14 categories and found that documents in the remaining four categories should be produced. The court thereafter affirmed the special master's findings. (2)

Ultimately, the court ordered the companies to produce approximately 39,000 of these documents to the plaintiffs, affirming the finding that these documents either were not privileged in the first instance or that they should be produced under the crime-fraud exception to the attorney-client privilege. (3) The companies pursued review through the Minnesota appellate courts and the U.S. Supreme Court, but the appeals were unavailing. (4)

The companies produced the documents to the plaintiffs on April 6, 1998, after the expiration of several court-ordered stays, subject to a ruling barring the public release of the documents. (5)

In February 1998, the House Commerce Committee had subpoenaed the 37,000 documents the Minnesota court had ordered produced. The companies responded by asserting claims of attorney-client privilege and work product protection, and the committee deferred enforcing its subpoena while the companies exhausted their appellate remedies in the State of Minnesota case. On April 6, the same day that the companies produced the documents to the plaintiffs in the case, Rep. Bliley stated in a letter to Meyer Koplow of Wachtell, Lipton, Rosen & Katz:

The claim of privilege for the documents requested in the subpoenas will not be recognized. Further, unless the documents in question are produced immediately, I intend to proceed with a contempt resolution for enforcement of the subpoenas by the House of Representatives. I urge your clients to remedy their current non-compliance by immediately producing the subpoenaed documents. (6) He also threatened the companies with criminal contempt proceedings and declared that the committee would conduct a "confidential review" of the documents "to determine their suitability for public release." The companies produced the documents the same day, with accompanying letters that reiterated the privilege claims and urged the committee to maintain confidentiality for the documents. (7) The committee posted most of the documents on its Internet website on April 22, 1998, and added documents on June 8.

In May 1998, the parties settled the Minnesota lawsuit, and under the terms of that settlement the plaintiffs moved for public disclosure of the privileged documents. The tobacco companies opposed this disclosure and, after losing this issue in the trial court, continued to litigate the issue. The Minnesota Court of Appeals affirmed the disclosure order on February 22, 2000, and the Minnesota Supreme Court denied review on April 25. (8) The companies have since made the privileged documents available at the public document depository that stores documents produced in the State of Minnesota litigation.

The tobacco companies have continued to assert privilege and work product protection for many of the documents produced to the House Commerce Committee, and the plaintiffs in tobacco personal injury, class action and health care reimbursement litigation have persistently challenged these claims. They argue that the companies waived any privilege protections for the documents once and for all when they produced the documents to Congress, and alternatively that the companies waived the privilege by consenting to public release of the documents when they settled the Minnesota case.

Their specific contention is that the companies waived their privilege claims by agreeing to a provision in the consent judgment in the Minnesota case that states the plaintiffs in that case may "seek court approval" to place privileged documents in a public document depository. They also argue that the mere presence of the documents in the public domain, by itself, trumps any privilege assertion. Finally, they have urged that the claims of privilege should be rejected on "public policy" grounds based on actions taken by the Congress and the Minnesota courts.

PRIVILEGE AND WAIVER

The attorney-client privilege, the oldest of the common law privileges, exists "to encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and administration of justice." (9) It protects confidential communications "necessary to obtain informed legal advice--which might not have been made absent the privilege." (10) The courts have recognized that "full and frank communication between attorneys and their clients promotes the broader public interest." (11)

The work product doctrine "promotes the adversary system directly by protecting the confidentiality of papers prepared by or on behalf of attorneys in anticipation of litigation," permitting attorneys to prepare work on behalf of a client without fear that their work product will be used against their client. (12) To be protected by the work product doctrine, materials must be prepared in anticipation of litigation. Under Federal Rule of Civil Procedure 26(b)(3), a plaintiff must show substantial need and undue hardship to justify production of factual materials protected under the work product doctrine. Work product that reveals the opinions, judgments and thought processes of counsel is accorded an even higher level of protection. (13)

The attorney-client privilege may be waived if confidential communications are disclosed to third parties or if the privileged materials are used in a manner that is not consistent with maintaining confidentiality. The courts generally have found a waiver of privilege, however, only when the disclosures to a third party are made in a voluntary manner. Thus, a voluntary disclosure that is inconsistent with the confidential nature of the attorney-client relationship may waive the privilege. (14)

In Permian Corp. v. United States, for example, the D.C. Circuit held that voluntary disclosure of privileged documents and testimony to the Securities and Exchange Commission waived the asserted privilege. (15) In Westinghouse Electric Corp. v. Republic of the Philippines, the Third Circuit held that voluntary disclosures of documents by a corporation to the SEC and to the Department of Justice waived the corporation's privilege and work product protection for the disclosed material. (16) A party who waives the privilege by voluntarily disclosing privileged materials to a third party risks waiver not only as to the specific communication disclosed, but also as to all other communications relating to the same subject matter, creating what is known as a "subject matter" waiver. (17)

Courts also recognize the converse principle--that compelled disclosures of privileged communications or work product protected materials are not voluntary and do not result in a waiver of privilege. When a disclosure is compelled or involuntary, privilege claims have been upheld when the privilege holder has made reasonable efforts to protect and preserve the privilege, notwithstanding the destruction of confidentiality for the compelled disclosures. (18)

For example, in Shields v. Sturm, Ruger & Co., the Fifth Circuit refused to find waiver of work product protection for a survey used in a previous judicial proceeding when the survey's use in that previous case was compelled by court order and produced over objections. (19) The court stated that when a party is compelled to disclose privileged work product and does so only after objecting and taking other reasonable steps to protect the privilege, "one court's disregard of...