In Re Pacific Pictures Corp.: Ninth Circuit Rejects 'Selective Waiver' Of Attorney-Client Privilege

On April 17, 2012, the United States Court of Appeals for the Ninth Circuit issued its decision in In re Pacific Pictures Corp., No. 11-71844, ___ F.3d ___, 2012 WL 1293534 (9th Cir. Apr. 17, 2012), holding that a party waives attorney-client privilege in any future litigation by voluntarily disclosing privileged documents to the federal government. In issuing this decision, the Ninth Circuit resolved a critical issue for entities facing agency investigations and joined the majority of other circuits in rejecting the theory of "selective waiver."

Background on Pacific Pictures

The Pacific Pictures case emerged from a dispute between the heirs of the creators of the comic book character Superman (the "Heirs") and DC Comics, the company to whom Superman's creators ceded their intellectual property rights in the 1930s. Around 2000, Hollywood producer and attorney Marc Toberoff ("Toberoff") created a joint venture with the Heirs in order to manage the litigation with DC Comics and to work toward production of a new Superman movie. One of Toberoff's employees, David Michaels ("Michaels") later absconded with copies of several documents from the files of Superman's creators. Michaels sent the documents to DC Comics, along with a cover letter detailing an alleged plan by Toberoff to gain control of the Superman character for himself. DC Comics gave the documents to an outside attorney who then sought to obtain them through discovery in the pending litigation. Toberoff refused to produce the documents, claiming they contained privileged communications he had with the Heirs. In April 2007, a magistrate judge ordered Toberoff to turn over certain documents, including Michaels' cover letter, to DC Comics. In December 2008, Toberoff finally produced at least some of the documents.

In 2010, DC Comics filed suit against Toberoff, the Heirs, and three entities controlled by Toberoff ("Petitioners"), alleging that Toberoff interfered with its contractual relationships with the Heirs. Michaels' cover letter formed the basis of the lawsuit and was incorporated into the complaint. Shortly after the suit was filed, Toberoff asked the U.S. Attorney's Office to investigate Michaels. In response, the U.S. Attorney's Office issued a grand jury subpoena for the documents, as well as a letter stating that if Toberoff voluntarily complied with the subpoena the government would "'not provide the ... documents ... to non-governmental third parties except as may be...