U.S. Ninth Circuit Rejects 'Selective Waiver' Of The Attorney-Client Privilege

In In re Pacific Pictures Corporation, decided on April 17, 2012, the U.S. Court of Appeals for the Ninth Circuit joined a long list of courts that have rejected the so-called "selective waiver" theory of privilege.1 The Court's holding underscores that, before revealing potentially privileged information to the government, counsel must carefully balance the benefits likely to flow from disclosure against the costs of a privilege waiver.

The traditional justification for the attorney-client privilege is that it promotes adequate legal representation by encouraging frank communica-tion between client and attorney. If the client voluntarily discloses privileged communications to a third party, however, courts generally have held that the privilege has been waived as to the whole world, and thus the communications are discover-able in any litigation. The reasoning behind this waiver rule is that if a client is willing voluntarily to divulge this information to a third party, he likely would have divulged it to his attorney even without the privilege. Therefore, the basic justification for the privilege — the promotion of communications between client and lawyer — no longer applies.2

Despite this well-settled doctrine, litigants have often argued that voluntary disclosure of privileged material to one particular third party — the government — should not result in a waiver of the attorney-client privilege as to anyone else. This "selective waiver" theory generally has been justified on the ground that it promotes voluntary disclosures to the government. Such disclosures are well worth encouraging, the argument goes, because they further the paramount goal of effective enforcement of the law.

The Courts of Appeals, however, have, with one exception, rejected the selective waiver theory.3 According to the majority view, selective waiver does not further the purposes underlying the attorney-client privilege because it does not encourage frank communication between lawyer and client. Instead, it merely encourages commu-nication between the client and the government. Therefore, it is, in essence, an entirely different privilege that should be created, if at all, by Congress, not by the courts.

The Ninth Circuit's Pacific Pictures decision applied this reasoning to somewhat unusual facts. The case arose out of a long-running dispute between D.C. Comics on the one hand, and the heirs to the creators of Superman and their business partner, Marc...