Evidentiary Disclosures in Parallel Criminal and Civil ...

1 Evidentiary Disclosures in Parallel Criminal and Civil Proceedings Navigating the Discovery Minefield and Protecting Attorney-Client Privilege Today s faculty features: 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10. WEDNESDAY, JULY 18, 2012 Presenting a live 90-minute webinar with interactive Q&A Lee G. Dunst, Partner, Gibson Dunn & Crutcher, New York Joel M.

2 Cohen, Partner, Gibson Dunn & Crutcher, New York Sound Quality If you are listening via your computer speakers, please note that the quality of your sound will vary depending on the speed and quality of your internet connection. If the sound quality is not satisfactory and you are listening via your computer speakers, you may listen via the phone: dial 1-866-570-7602 and enter your PIN -when prompted. Otherwise, please send us a chat or e-mail immediately so we can address the problem. If you dialed in and have any difficulties during the call, press *0 for assistance. Viewing Quality To maximize your screen, press the F11 key on your keyboard.

3 To exit full screen, press the F11 key again. For CLE purposes, please let us know how many people are listening at your location by completing each of the following steps: In the chat box, type (1) your company name and (2) the number of attendees at your location Click the SEND button beside the box FOR LIVE EVENT ONLY If you have not printed the conference materials for this program, please complete the following steps: Click on the + sign next to Conference Materials in the middle of the left-hand column on your screen. Click on the tab labeled Handouts that appears, and there you will see a PDF of the slides for today's program.

4 Double click on the PDF and a separate page will open. Print the slides by clicking on the printer icon. Evidentiary Disclosures in Parallel Criminal and Civil Cases: Navigating the Discovery Minefield and Protecting Attorney-Client Privilege Lee G. Dunst Joel M. Cohen Strafford Webinar July 18, 2012 <Presentation Title/Client Name> Introduction DOJ and SEC investigations attract publicity and may negatively impact a company s stock price Private litigants may file Civil suits as a result Our legal system permits these proceedings to advance simultaneously Issues consequently arise regarding discovery and disclosure These are challenging issues and there is often no easy solution 6 <Presentation Title/Client Name> Discovery in Parallel Proceedings Defendant must coordinate two simultaneous discovery processes with different discovery rules Discovery in one proceeding may have an impact on

5 The other In Civil cases, parties are entitled to a broad range of discovery (Federal Rule of Civil Procedure 26(b)(1) permits discovery of any non-privileged matter relevant to any party s claim or defense ) In Criminal proceedings, discovery is more circumscribed (Federal Rule of Criminal Procedure 16 permits discovery only of relevant information within the defendant s possession, custody, or control that the defendant intends to in the defendant s case-in-chief at trial ) 7 <Presentation Title/Client Name> Lifting Automatic Stays in Parallel Securities Class Actions Pursuant to the Private Securities Litigation Reform Act, once a motion to dismiss has been filed in a securities class action case.

6 All discovery is automatically stayed Class action plaintiffs may try to use a defendant s prior production to the government in Parallel proceedings as a reason for the court to lift statutorily mandated stays on discovery There is no recognized exception to the Private Securities Litigation Reform Act discovery stay merely because a defendant produced documents to the government In seeking to lift the stay, plaintiffs may assert they are prejudiced by lack of discovery and claim that such limited discovery would not frustrate the goals of PSLRA or place a burden on the defendant Plaintiffs also may claim that a partial lifting of the stay is necessary where the lack of access to documents hampers the plaintiffs ability to make informed strategic decisions Courts generally adhere to the two-pronged statutory exception of evidence preservation and undue prejudice in deciding such motions (See 380544 Canada, Inc.)

7 V. Aspen Technology; Sisk v. Guidant Corp., 2007 WL 2049738 ( 2007)) 8 <Presentation Title/Client Name> Privilege in Parallel Proceedings In Civil cases, it is in the best interest of a party to protect privileged documents from disclosure In Criminal or regulatory investigations, cooperation may be in a party s best interest and may include waiving privilege under appropriate circumstances Benefits of cooperation and/or disclosure: Public relations Resolve investigation quickly Mitigating factor in prosecution/sentencing Government may permit a corporation take the lead in an internal investigation if disclosure is prompt and comprehensive 9 <Presentation Title/Client Name> Privilege and Cooperation Credit Former Deputy Attorney General Mark Filip released a memorandum with new cooperation credit policies in 2008 Under the Filip Memo.

8 Eligibility for cooperation credit may not be predicated upon the waiver of attorney-client privilege or work product protection Cooperation credit should be based solely on whether a corporation disclosed relevant facts SEC Division of Enforcement, Enforcement Manual (2011) has a similar policy SEC should not ask for privilege waivers without prior approval of the Director or Deputy Director A party s decision to assert privilege should not hurt his/her ability to obtain cooperation credit 10 <Presentation Title/Client Name> Disclosures to the Government and Waiver of Privilege When a party provides the government with privileged information during an investigation.

9 A litigant in a Parallel Civil case may argue that disclosure of privileged information to the government resulted in a broader waiver Disclosure of privileged documents to the government may constitute waiver of privilege as to those documents under certain circumstances The seminal case is In re Steinhardt Partners, , 9 F. 3d 230 (2d Cir. 1993), in which the Second Circuit held that privilege was waived and ordered documents to be disclosed because entity s voluntary submission of documents to the SEC waived the protections of the work product immunity as to private litigants seeking the documents at issue The Second Circuit reasoned that [a]n allegation that a party facing a[n].

10 Investigation and the prospect of a Civil fraud suit must make difficult choices is insufficient justification for carving a substantial exception to the waiver doctrine. Steinhardt, 9 F. 3d at 236 But the Second Circuit recognized that work product waiver may not always occur following disclosure to the government. Steinhardt, 9 F. 3d 230 11 <Presentation Title/Client Name> Disclosures to the Government and Waiver of Privilege (cont d) Federal Rule of Evidence 502 provides that disclosure of privileged information in a federal proceeding or to a federal office/agency may result in waiver of privilege as to all documents relating to the same subject matter if the waiver is intentional and the documents ought in fairness to be considered together Litigants should disclose privileged information to prosecutors only where the benefits of waiver likely exceed concerns about disclosure in Civil litigation Litigants should waive privilege only to the extent necessary Litigants can narrow the risk of broad waiver by refraining from using