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Federal Court Ruling Creates Possible Harbinger for Information Shared from Internal Investigations with The Government

INTRODUCTION 

Privilege assertions and waivers are a hot area for internal investigations and government proffers. One burning question centers around whether a party may claim privilege over materials that it furnished to the government. A new ruling from the District of New Jersey sheds light on this domain. In United States v. Coburn,Judge Kevin McNulty ruled that Cognizant Technology Solutions Corporation’s (Cognizant) disclosure of a summary of findings to the U.S. Department of Justice (DOJ) constituted a significant waiver of privilege.While the parameters are not clearly defined, the ruling signals that both in-house counsel and outside counsel need to be ever more mindful of what is produced and shared with the government in proffer sessions. At the very least, Coburn presents a valuable data point for white-collar attorneys going forward. 

BACKGROUND

Gordon J. Coburn and Steven Schwartz (collectively, Defendants) submitted several subpoenas to two companies, one of which was Cognizant.Defendants are accused of Foreign Corrupt Practices Act violations while employed as Cognizant’s president and chief legal officer.Defendants’ subpoenas requested, inter alia, “documents revealing all statements made by Cognizant employees describing conversations with Schwartz related to this investigation.”In doing so, Defendants’ “claim[ed] that Cognizant has waived any privilege regarding the entire subject of Cognizant’s internal investigation” by disclosing those privileged documents to the government.6

ATTORNEY-CLIENT PRIVILEGE AND WAIVER 

Once the elements and conditions of attorney-client privilege are established,these issues frequently focus on what constitutes waiver. The Coburn court stated that the privilege is waived “when a client discloses otherwise privileged communications to a third party.”Such disclosures are considered waivers because disclosing privileged communications to a third party implies that a client would have made the statement to their attorney regardless of whether the privilege applied.In other words, “the basic justification for the privilege no longer applies.”10 To put the Coburn rule another way, privilege may be waived by disclosure “if that disclosure undermines the purpose behind [the] privilege.”11

But the inquiry does not end there. If attorney-client privilege is waived through disclosure to a federal office or agency, a court must determine the scope of that waiver. And the scope of such waiver “extends to an undisclosed communication . . . only if: (1) the waiver is intentional; (2) the disclosed and undisclosed communications or information concern the same subject matter; and (3) they ought in fairness to be considered together.”12 This is also called subject-matter waiver. 

COBURN’S ANALYSIS

Defendants in Coburn argued that Cognizant effected a subject matter waiver over “any communications regarding conduct alleged in the indictment and any materials related to Cognizant’s internal investigation” by disclosing a summary of the investigation’s findings to the DOJ.13 The court found that this was too expansive of a characterization, but it “agree[d] that there was a significant waiver.”14 From there, the court analyzed whether there was a waiver and then the breadth of any such waiver. 

On waiver, the court ruled that Cognizant could not claim privilege over materials furnished to the government. Rather than allow the threat of prosecution to be an excuse or mitigating factor, it was exactly a threat of prosecution that “undermin[ed] the purpose of [attorney-client privilege]” because handing over materials “to a potential adversary” effectively “destroyed any confidentiality [Cognizant] may have had.”15  

On breadth, the court ruled that “Cognizant’s voluntary turnover of materials or revelation of the fruits of its investigation to the DOJ also entailed a waiver of the privilege as to communications that ‘concern the same subject matter’ and ‘ought in fairness be considered together’ with the actual disclosures to DOJ.”16 To more tangibly and specifically describe the breadth of the waiver, the court broke down three categories of materials or information as to which Cognizant waived privilege to because of their conveyance to the government. 

First, privilege was waived “as to all memoranda, notes, summaries, or other records of interviews” given “to the extent that summaries of interviews were conveyed to the government, whether orally or in writing.”17 Essentially, under this ruling, if any interview summary was given to the government, all relevant documents about that interview are within the scope of waiver. 

Second, if the interview summaries “directly conveyed the contents of documents or communications, those underlying documents or communications themselves are within the scope of the waiver.”18 While the court only mentions documents or communications, this portion of the ruling implies that any relevant information or materials expounded upon in an interview summary is subject to the scope of any waiver.

Third, waiver reached “documents and communications that were reviewed and formed any part of the basis of any presentation, oral or written, to the DOJ in connection with this investigation.”19 This was the broadest portion of the court’s ruling, as it opened the door to an obligation to produce any information or material that was relied upon in crafting a DOJ presentation. While this obviously extends to formal and recorded information, it creates a scenario where informal communications (e.g., text messages, social media) and private, unrecorded client conversations relating to the presentation fall within the scope of waiver.

It remains to be seen how or if the ruling in Coburn will be interpreted or applied by other courts or in other contexts. Nonetheless, the ruling highlights that counsel involved in white-collar investigations must traverse a tightrope between helping their clients garner cooperation credit while also preventing a broad waiver of privileged materials. As Cognizant has now seen, good-faith disclosure could inadvertently lacerate that tightrope and force the release of any related information previously covered by attorney-client privilege.  

No. 19-CR-00210, 2022 WL 357217 (D.N.J. Feb. 1, 2022). 

Id. at *7. 

3 Id. at *1. 

Id. at *1 n.1.

5 Id. at *6. 

Id. at *

The Coburn court outlined the Third Circuit’s statement of attorney-client privilege and its application by quoting In re Grand Jury Investigation, 599 F.2d 1224, 1233 (3d Cir. 1979). For the sake of brevity, we do not discuss the requirements and standards for establishing attorney-client privilege. 

8 Coburn, 2022 WL 357217, at *4. 

See Westinghouse Elec. Corp. v. Republic of Philippines, 951 F.2d 1414, 1424, 1428 (3d Cir. 1991). 

10 Id. at 1424 (internal quotation marks and citations omitted). 

11 In re Chevron Corp., 633 F.3d 153, 165 (3d Cir. 2011). 

12 Fed. R. Evid. 502(a) (emphasis added).

13 Coburn, 2022 WL 357217, at *7. 

14 Id. 

15 Id. 

16 Id. (quoting Shire LLC v. Anneal Pharms., LLC, No. 11-CV-03781, 2014 WL 1509238, at *6 (D.N.J. Jan. 10, 2014) (citing Fed. R. Evid. 502(a))). 

17 Id. 

18 Id. 

19 Id. 

Copyright 2023 K & L GatesNational Law Review, Volume XII, Number 77
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About this Author

Mark A. Rush, KL Gates, False Claims Act defense attorney, complex commercial litigation lawyer
Partner

Mr. Rush is a partner with the firm and concentrates his practice on litigation as a trial lawyer, with emphasis on internal investigations, corporate criminal defense, Bank Secrecy Act and AML issues, False Claims Act defense and complex commercial litigation. Mr. Rush has defended public and private corporations, financial institutions, public officials, government contractors, hospitals and healthcare systems who are subjects of federal and state grand jury investigations and investigations by various federal and state agencies. His representations also include...

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Aloysius Chang Dispute Resolution Attorney KL Gates Law Firm Singapore office
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Aloysius Chang is an associate in the Singapore office.

Prior to joining K&L Gates, Mr. Chang was a legal associate at the chambers of one of Asia’s foremost arbitrators, where he acted as tribunal secretary and/or assistant for various arbitral tribunals in commercial and investment arbitrations across various institutional rules. He also has experience assisting on appellate cases before the Dubai International Financial Centre Courts.

Of note, Aloysius is the winner of the Christopher Bathurst Prize 2016, for his...

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