In re: Grand Jury ( 2018 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 17-4183
In re: GRAND JURY 16-3817 (16-4)
------------------------------
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
UNDER SEAL 1,
Intervenor - Appellant.
Appeal from the United States District Court for the Eastern District of Virginia, at
Alexandria. Liam O’Grady, District Judge. (1:16-dm-00062-70)
Argued: January 25, 2018 Decided: June 27, 2018
Before GREGORY, Chief Judge, NIEMEYER, and AGEE, Circuit Judges.
Vacated and remanded by unpublished opinion. Chief Judge Gregory wrote the opinion,
in which Judge Agee joined. Judge Niemeyer wrote a separate opinion concurring in the
judgment.
ARGUED: Peter John Romatowski, JONES DAY, Washington, D.C., for Appellant.
John Alexander Romano, UNITED STATES DEPARTMENT OF JUSTICE, Washington,
D.C., for Appellee. ON BRIEF: Karen P. Hewitt, San Diego, California, Meir Feder, New
York, New York, Kerri L. Ruttenberg, Washington, D.C., Daniel E. Reidy, JONES DAY,
Chicago, Illinois; David N. Kelley, DECHERT LLP, New York, New York; Brockton B.
Bosson, CAHILL GORDON & REINDEL LLP, New York, New York, for Appellant.
Dana J. Boente, United States Attorney, Jamar K. Walker, Assistant United States
Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Alexandria, Virginia; Tarek
Helou, Assistant Chief, Lorinda I. Laryea, Trial Attorney, Katherine A. Raut, Trial
Attorney, Fraud Section, Kenneth A. Blanco, Acting Assistant Attorney General, Trevor
N. McFadden, Deputy Assistant Attorney General, Criminal Division, Appellate Section,
UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellee.
Unpublished opinions are not binding precedent in this circuit.
2
GREGORY, Chief Judge:
Appellant corporation (“X Corp.”) 1 and the Government dispute whether a written
agreement between them preserved X Corp.’s attorney-client privilege and work-product
protection for information that the General Counsel of an X Corp. subsidiary disclosed to
the Government. We hold that it does.
I.
Several years ago, the U.S. Attorney’s Office for the Eastern District of Virginia
and the Fraud Section of the U.S. Department of Justice (collectively the “Government”)
opened a grand jury investigation into whether X Corp. and its subsidiaries violated certain
federal laws. To facilitate the investigation, X Corp. entered into a series of written
agreements with the Government, permitting employees of X Corp. and its subsidiaries to
share with the Government information protected by attorney-client privilege and work-
product protection. The Department of Justice (DOJ) drafted the agreements, all of which
are materially the same. Under these agreements, the Government obtained documents and
interviewed eighteen current and former employees.
One such agreement (the “Agreement”), at issue here, specifically allowed the
Government to interview the former General Counsel (“Doe”) of an X Corp. subsidiary.
The Agreement acknowledged that during the interview, Doe “might disclose privileged
1
The identity of the Appellant in this case is sealed. We therefore refer to the
Appellant by the pseudonym “X Corp.” and use other pseudonyms or generic terms to
identify related actors.
3
or protected information . . . defined herein as ‘Protected Information.’” J.A. 39. The
Agreement’s three operative paragraphs read as follows:
Please be advised that, to the extent any Protected Information is provided to
the Fraud Section or EDVa pursuant to this agreement, [X Corp. and its
directors] do not intend to waive the protection of the attorney work product
doctrine, attorney-client privilege, or any other privilege.
The Fraud Section and EDVa will maintain the confidentiality of any
Protected Information provided to the Fraud Section and EDVa pursuant to
this agreement and will not disclose such information to any third party,
except to the extent that the Fraud Section or EDVa determines in its sole
discretion that disclosure would be in furtherance of the Fraud Section’s or
EDVa’s discharge of its duties and responsibilities or is otherwise required
by law.
The Fraud Section and EDVa each agree that it will not assert that the
disclosure of any Protected Information by [Doe] provides the Fraud Section
or EDVa with additional grounds to subpoena other privileged materials
from [X Corp. and its directors] or [Doe] although any grounds that exist
apart from such disclosure shall remain unaffected by this agreement.
J.A. 39‒40. (We will refer to these paragraphs as “First Clause,” “Second Clause,” and
“Third Clause” respectively.) Attached to the Agreement was a list of topics of “Protected
Information” that Doe might disclose. The Government interviewed Doe pursuant to this
Agreement, and Doe indeed disclosed privileged and protected information.
Years later, the Government subpoenaed Doe to testify before a grand jury about
the same statements Doe made during the interview. 2 X Corp. moved to intervene on the
ground that the subpoena seeks privileged or protected information. The district court
granted the intervention. X Corp. then moved for a protective order to quash the subpoena.
2
The Government concedes that the Agreement precludes it from seeking additional
information not disclosed in the interview.
4
Finding that the Agreement waived attorney-client privilege and work-product protection
for Doe’s interview statements, the district court denied X Corp.’s motion. X Corp. timely
appealed.
II.
We have jurisdiction under 28 U.S.C. § 1291 and the Perlman doctrine to review
the district court’s order denying X Corp.’s motion to quash. See Perlman v. United States,
247 U.S. 7, 13 (1918); In re Grand Jury Subpoena, 836 F.2d 1468, 1470 n.2 (4th Cir.
1988). The Perlman doctrine provides that a disclosure order, such as the one here,
“directed at a disinterested third party is treated as an immediately appealable final order
because the third party presumably lacks a sufficient stake in the proceeding to risk
contempt by refusing compliance.” Church of Scientology of Cal. v. United States, 506
U.S. 9, 18 n.11 (1992); accord In re Naranjo, 768 F.3d 332, 346 (4th Cir. 2014) (holding
that Perlman doctrine applies “when there exists a real possibility the third party will not
risk being found in contempt” (internal quotation marks omitted)). Here, Doe—the party
directed to testify to allegedly privileged information—is a disinterested third party
because Doe no longer works for X Corp. or its subsidiary.
III.
The merits of this case turn on whether the Agreement preserved X Corp.’s attorney-
client privilege and work-product protection such that X Corp. may prevent Doe from
5
testifying before the grand jury. Interpretation of the Agreement presents a question of law
that we review de novo. See United States v. Lopez, 219 F.3d 343, 346 (4th Cir. 2000).
The parties agree on several important points: (1) The information that Doe
provided in the interview—and that the Government now seeks to elicit before the grand
jury—was protected by attorney-client privilege and work-product doctrine before Doe
disclosed it. (2) Any voluntary disclosure of privileged or protected information typically
waives both attorney-client privilege and work-product protection. See In re Martin
Marietta Corp., 856 F.2d 619, 622‒23 (4th Cir. 1988). And (3) parties may contract to
limit the effect of such a disclosure on the disclosing party’s right to assert privilege in
future proceedings. See, e.g., Fed. R. Evid. 502(e) (providing that agreement to limit effect
of waiver by disclosure is binding on parties to it); United States v. Deloitte LLP, 610 F.3d
129, 141 (D.C. Cir. 2010) (indicating that confidentiality agreement between disclosing
party and recipient may prevent waiver of work-product protection); Westinghouse Elec.
Corp. v. Republic of Philippines, 951 F.2d 1414, 1427 (3d Cir. 1991) (noting that disclosure
agreement between company and DOJ preserved company’s right to invoke attorney-client
privilege against DOJ).
The sole question is whether the Agreement here limited the effect that Doe’s
disclosure otherwise would have had on X Corp.’s right to assert privilege against the
Government, the other contracting party. To answer that question, we apply standard
principles of contract interpretation. See United States v. Gillion, 704 F.3d 284, 292 (4th
Cir. 2012).
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A.
When interpreting a contract, we look at the agreement’s language to determine the
parties’ intent. Quesenberry v. Volvo Trucks N. Am. Retiree Healthcare Benefit Plan, 651
F.3d 437, 440 (4th Cir. 2011). We must read the contract “to give effect to all its provisions
and to render them consistent with each other.” Mastrobuono v. Shearson Lehman Hutton,
Inc., 514 U.S. 52, 63 (1995); accord Levin v. Alms & Assocs., Inc., 634 F.3d 260, 267 (4th
Cir. 2011) (noting that contracts “must be read ‘as a whole’” and so that provisions
harmonize (citation omitted)). “Where the words of a contract in writing are clear and
unambiguous, its meaning is to be ascertained in accordance with its plainly expressed
intent.” M & G Polymers USA, LLC v. Tackett, 135 S. Ct. 926, 933 (2015) (quoting 11 R.
Lord, Williston on Contracts § 30:6, p. 108 (4th ed. 2012)). 3
B.
Applying these principles, we conclude that the Agreement preserves X Corp.’s
privileges as to the Government. Holding otherwise would require us to discount the plain
language of the Agreement’s First Clause, which expressly reserves those privileges. The
Government argues that, because the Agreement’s Second Clause permits the Government
to share the information it received from Doe with third parties in carrying out its
responsibilities, the First Clause cannot mean what it says. Instead, the Government
3
We reject the Government’s suggestion that, because courts construe the attorney-
client privilege narrowly, we should disfavor a finding that a contract’s language preserves
privilege. Principles governing the scope of the attorney-client privilege have no bearing
on the contract-interpretation question before us.
7
contends, the First Clause provides a basis for X Corp. to assert privilege only against third
parties. We find nothing in the Agreement or the law to support such a construction. While
the Agreement permits the Government to use the information it obtained from Doe in its
investigation of X Corp., it precludes the Government from compelling Doe to testify to
that information in a judicial proceeding.
The First Clause plainly conveys X Corp.’s intent not to waive any privileges. It
states, “[T]o the extent any Protected Information is provided to the Fraud Section or EDVa
pursuant to this agreement, [X Corp. and its directors] do not intend to waive the protection
of the attorney work product doctrine, attorney-client privilege, or any other privilege.”
J.A. 39. This language contemplates that Doe would disclose privileged information in the
interview and provides that X Corp. retains its privileges notwithstanding that initial
disclosure. Nothing in the Agreement qualifies this reservation of privilege.
The Government argues that the First Clause has no effect on the Government. In
its view, the Second Clause waives X Corp.’s privileges as to the Government by
authorizing the Government to disclose the Protected Information to third parties. The
Second Clause states that the Government will maintain the confidentiality of any
privileged information that Doe provided “except to the extent that the Fraud Section or
EDVa determines in its sole discretion that disclosure would be in furtherance of the Fraud
Section’s or EDVa’s discharge of its duties and responsibilities or is otherwise required by
law.” J.A. 39. Therefore, according to the Government, the First Clause cannot preserve
privilege against the Government’s subpoena; its only effect is to preserve privilege against
potential third-party requests for disclosure. We disagree.
8
The Government’s reading fails to account for the difference between the topic of
the First Clause—privilege—and that of the Second Clause—confidentiality. Privilege is
“the right to refuse to disclose information in response to judicial inquiry.” 23 Charles
Alan Wright et al., Federal Practice & Procedure § 5423 (1st ed. 2018) (emphasis added).
By agreeing in the First Clause that X Corp. retained its privileges, the parties agreed that
the Government could not compel disclosure of the Protected Information in judicial
proceedings. In contrast, confidentiality involves “prevent[ing] others from making
extrajudicial disclosures.” Id. (emphasis added). Thus, in the Second Clause, the parties
agreed that the Government would not share the Protected Information with third parties
outside judicial proceedings except in furtherance of its duties.
Contrary to the Government’s position, the exception in the Second Clause qualifies
only the Government’s promise to keep the information confidential. See Abbott v. United
States, 562 U.S. 8, 25‒26 (2010) (“The ‘grammatical and logical scope’ of a proviso . . .
‘is confined to the subject-matter of the principal clause’ to which it is attached.” (quoting
United States v. Morrow, 266 U.S. 531, 534‒35 (1925))). It does not modify the First
Clause and thus does not negate X Corp.’s reservation of privilege. The Second Clause’s
exception allows the Government to share the Protected Information in certain
circumstances out of court, but it does not permit the Government to compel disclosure of
that information in court. To be sure, absent an agreement, voluntary disclosures of
information—whether Doe’s initial disclosure to the Government or the Government’s
further disclosure to other parties—vitiate the attorney-client privilege and work-product
protection. See In re Grand Jury Subpoena, 341 F.3d 331, 336 (4th Cir. 2003) (attorney-
9
client privilege); In re Martin Marietta, 856 F.2d at 625 (work-product protection). But,
here, the First Clause prevents that result; it preserves X Corp.’s privileges, at least as to
the Government, even if Doe disclosed the information in the interview and even if the
Government in turn disclosed it to a third party. 4
Moreover, we find the Government’s interpretation of the First Clause
unpersuasive. Saying that the First Clause does not bind the parties that signed the
Agreement, but instead potentially addresses X Corp.’s rights against third parties that did
not sign it, effectively renders the First Clause meaningless. Disclosure agreements, such
as the one here, bind only the parties to the agreement, not third parties. See Fed. R. Evid.
502(e) (providing that agreements limiting effect of waiver by disclosure do not bind third
parties unless incorporated into court orders). And, generally, waiver of privilege as to the
Government results in waiver as to all other parties. 5 Nothing in the clause itself supports
the distinction the Government draws either. Given both our obligation to give meaning
4
We do not decide whether the Agreement preserves X Corp.’s privileges vis-à-vis
a third party to whom the Government disclosed information from Doe’s interview, as that
is not the question before us. For the same reason, we find inapposite the cases the
Government cites involving attempts by third parties to access information a company
shared with the government under a confidentiality agreement. See In re Pacific Pictures
Corp., 679 F.3d 1121 (9th Cir. 2012); In re Qwest Commc’ns Int’l Inc., 450 F.3d 1179(10th Cir. 2006); In re Mutual Funds Investment Litigation, 251 F.R.D. 185 (D. Md. 2008).
5
All but one of our sister circuits have rejected the selective-waiver doctrine. See
Pacific Pictures, 679 F.3d at 1127 (collecting cases). And, although the Fourth Circuit has
not expressly decided the selective-waiver question, we do not think a party as well-
represented as X Corp. would gamble on us joining the one circuit that recognizes the
doctrine—particularly in light of our prior cases. See In re Weiss, 596 F.2d 1185, 1186
(4th Cir. 1979) (per curiam) (finding that selective-waiver argument raised as defense to
grand-jury subpoena was not “compelling reason” to reverse district court decision
compelling testimony).
10
to all clauses of a contract and the First Clause’s plain language, we conclude that the First
Clause means what it says: X Corp. retains its privileges as to the Government.
The Government further argues that the Agreement’s Third Clause presumes a
waiver of privilege and thus indicates that the preceding paragraphs do not preserve X
Corp.’s privileges. The Third Clause states that the Government agrees not to assert that
Doe’s disclosure of privileged information gives the Government additional grounds to
subpoena other privileged materials from X Corp. In the Government’s view, this
provision would be unnecessary if the First Clause preserved X Corp.’s privileges.
We agree that the Third Clause presumes a disclosure, which would cause a waiver
absent an agreement, but nothing in the Third Clause requires finding that the other
provisions create a waiver. The First and Third Clauses serve distinct purposes. While the
First Clause preserves X Corp.’s privileges for the disclosed information, the Third Clause
preserves X Corp.’s privileges for other related information. And the latter is not
superfluous because Doe’s disclosure would likely waive privilege not only for the specific
information revealed, but for all information on the same subject matter. See United States
v. Bolander, 722 F.3d 199, 222 (4th Cir. 2013); Hawkins v. Stables, 148 F.3d 379, 384 n.4
(4th Cir. 1998); United States v. Jones, 696 F.2d 1069, 1072 (4th Cir. 1982).
In essence, the Agreement maintains the status quo regarding X Corp.’s privileges.
It nullifies the effect of both Doe’s initial disclosure of privileged information and the
Government’s later disclosure of the same information on X Corp.’s ability to assert
privilege against the Government. As a result, X Corp. may assert privilege here as if Doe
had never disclosed the information in the first instance.
11
Construing the Agreement to preserve X Corp.’s privileges also serves important
policy considerations. Cooperation between private entities and the Government furthers
the truth-finding process. Such negotiations “give potential defendants an opportunity to
explain away suspicious circumstances, give the government an opportunity to avoid
embarrassing and wasteful mistakes, and give the public a greater likelihood of a just
result.” In re Keeper of Records, 348 F.3d 16, 28 (1st Cir. 2003). Declining to hold the
Government to the terms of an agreement it struck would discourage private entities from
cooperating with the Government in the future.
IV.
For the foregoing reasons, the district court’s decision denying X Corp.’s motion
for a protective order is
VACATED AND REMANDED.
12
NIEMEYER, Circuit Judge, concurring in the judgment:
While I would read the Second Clause to modify the First Clause, concluding that
they both implicate the attorney-client privilege — as confidentiality is an essential aspect
of that privilege — I find the exception in the Second Clause and its effect on the privilege
to be ambiguous. To make the exception meaningful, it must be referring to some external
event that prompts the Justice Department to conclude that it must, as a matter of duty,
disclose the privileged material. Otherwise, the exception would swallow the promise of
confidentiality, rendering it meaningless. But the exception provides no guidance as to
what such an event might be. Because a waiver of the attorney-client privilege — one of
the most important and protected in the law — should be clear, I agree that we should not,
in such an ambiguous circumstance, default to find a waiver. Accordingly, I concur in the
judgment.
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