The Growing Risk of Providing Oral Summaries

Thus, the issue before the court in Herrera was whether the Firm's oral briefings to the government constituted a waiver of information that would otherwise be protected under the work-product doctrine. The defendants cited to a number of cases from various jurisdictions for the proposition that oral disclosures constitute a waiver of work-product protection; in response, the Firm sought to draw a line between the actual production of interview notes and providing the same or similar information orally. The court, for its part, turned its analysis on the question whether the Firm's oral briefings to the SEC “substantially increase[d] the opportunity for potential adversaries to obtain the information.”

Ultimately, the court rejected the Firm's argument, deeming that the issue of waiver turned on whether the oral summaries were “sufficiently detailed,” such that they ought to be viewed as the “functional equivalent” of the interview memoranda. In this regard, the court found that the Firm's work-product argument would be stronger if it had provided only “vague references,” “detail-free conclusions” or “general impressions” to the SEC staff. While the court did not expand upon what might be deemed “sufficiently” vague, it cited one decision — relied upon by the Firm — that the oral summary in question was “not very detailed,” and “no one could recall what portion of the report was disclosed.” Notably, the court was untroubled by the Firm's argument that the interview memoranda also contained lawyer impressions, inferences or commentary that may not constitute facts and that may not have been part of any oral summary.

Takeaways

In-house and outside counsel, long sensitive to the risk that disclosures may result in privilege waivers in subsequent civil litigation, often depend upon oral summaries as a risk-management technique. Indeed, the government routinely requests such disclosures during the course of investigations, as it contends that facts learned during witness interviews are not privileged and therefore would not be subject to a risk of waiver of any privilege or work-product protection if shared with others. See, United States Attorneys' Manual (USAM), Title 9: Criminal at 9-28.710-720. It is thus concerning that outside counsel in Herrera was deemed to have waived work-product protection as a consequence of providing such summaries of its witness interviews.

Against the backdrop of Herrera is a position frequently taken by the government that total cooperation — including disclosure of all relevant facts — is necessary to obtain cooperation credit. That is, while the government maintains that companies “need not produce, and prosecutors may not request, protected notes or memoranda,” see, USAM 9-28.720 at n.2, it is common practice for government regulators and enforcement agencies to request access to facts obtained through companies' internal investigations. For instance, the Department of Justice's (DOJ) Individual Accountability for Corporate Wrongdoing Memorandum — known colloquially as the Yates Memo — elevates the threshold requirement for any cooperation credit to complete disclosure of “all relevant facts” concerning individual misconduct. Historically, obtaining such credit was less absolute, in that the government doled out “at least some credit for cooperation, even if they failed to fully disclose all facts about individuals.”

Nor is the government's heightened emphasis on complete disclosure limited to the Yates Memo. For instance, the DOJ recently revised its Foreign Corrupt Practices Act Corporate Enforcement Policy to now presume that when a company meets all standards relating to “voluntary self-disclosure, full cooperation, and timely and appropriate remediation,” and “absent aggravating circumstances,” the company will have its case resolved through a declination. See, DOJ, Speech, “Deputy Attorney General Rosenstein Delivers Remarks at the 34th International Conference on the Foreign Corrupt Practices Act,” Nov. 29, 2017. Moreover, during a speech at the Annual National Institute on White Collar Crime in March 2018, Deputy Attorney General Rod Rosenstein stated that the DOJ wants to avoid imposing corporate-level penalties that disproportionately harm investors and other stakeholders as opposed to “wrongdoers.”

The Herrera decision — namely that work product protection is waived where summaries of witness interviews are provided orally to the government during an investigation — substantially weakens a long-standing method of toeing the line between providing all relevant facts to investigators while maintaining company privilege and protections. Compounding this dilemma is the government's “all or nothing” approach to cooperation credit and its heightened emphasis on targeting individual wrongdoing invariably. That is, while the government's policy is to only seek “all non-privileged evidence” implicating individuals, it stands to reason that when it comes time for the government to “vigorously test corporate disclosures for completeness,” companies now face an additional incentive to reveal what a culpable corporate constituent (i.e., an officer, director, employee or shareholder) says during an investigatory interview.

Conclusion

Herrera is just the latest in a line of cases where courts have taken a broadened view of waiver to conclude that verbal disclosures of the substance of witness interviews waives work-product protection for the memoranda themselves. See, e.g., SEC v. Vitesse Semiconductor Corp, No. 10-cv-9239, 2017 WL 2899082 at 3 (S.D.N.Y. July 14, 2011). At the same time, government investigators continue to press for oral summaries of such interviews, contending that the facts learned during the course of those witness interviews are not privileged. The Herrera decision — in endorsing an expansive view of actual waiver — provides the clearest example of a rejection of that argument. Thus, in-house and outside counsel must be mindful in the course of its internal investigations of the line of cases broadly interpreting actual waiver, especially as it relates to oral summaries, in order to avoid inadvertently arming civil litigants and government agencies with a new means of discovery of work-product materials.

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Marjorie J. Peerce, a member of this newsletter's Board of Editors, is Co-Managing Partner of Ballard Spahr LLP's New York office. Brad Gershel is an associate at the firm.