The opinion of the court was delivered by: Getzendanner, District Judge.
MEMORANDUM OPINION AND ORDER
Plaintiffs' Committee's motion to compel testimony by William
J. Fitzpatrick raises the question of whether disclosure of
documents and giving of testimony protected by the
attorney-client privilege to the SEC in compliance with a
subpoena constitutes a limited or a complete waiver of the
I have decided to apply the holding of The Permian Corporation
v. United States, 665 F.2d 1214 (C.A.D.C. 1981), that voluntary
disclosure of privileged documents and testimony to the SEC is a
complete waiver of the attorney-client privilege.
In this case the disclosures to the SEC were voluntary in that,
while the documents were produced pursuant to subpoena, the
privilege could have been asserted and was not. The decision not
to assert the privilege and to fully disclose all attorney-client
communications involving Mr. Fitzpatrick was stated on the record
by counsel for Loeb Rhoades & Co. and Mr. Fitzpatrick at the time
of Mr. Fitzpatrick's testimony.*fn* No confidentiality was sought
for the documents, despite a specific warning by the SEC that the
documents may be covered by the Freedom of Information Act, and
the documents subsequently were turned over by the SEC to Trustee
Holland, one of the plaintiffs in these consolidated cases. No
one was put on notice that the privilege was claimed by Loeb
Rhoades until Mr. Fitzpatrick was deposed by Trustee Holland in
The cases which recognize a limited waiver based on public
policy considerations of encouraging full cooperation with
government agencies conducting investigations are rejected by me.
They are also factually distinguishable. In this case, there were
no specific documents prepared by independent outside counsel
which directly related to the same issues being investigated by
the SEC as in Diversified Industries, Inc. v. Meredith,
572 F.2d 596 (8th Cir. 1978); Byrnes v. IDS Realty Trust, 85 F.R.D. 679
(S.D.N.Y. 1980); and In re Grand Jury Subpoena Dated July 13,
1979, 478 F. Supp. 368 (E.D.Wis. 1979). Here Mr. Fitzpatrick was
both a corporate officer and in-house general counsel of Loeb
Rhoades who was involved in the day-to-day business of Loeb
Rhoades. He testified that it was difficult to separate his
roles. He has already given a lengthy deposition (several
thousands of pages) in these cases as a "fact witness." It is
possible that other corporate officers, partners, or managerial
personnel from Loeb Rhoades could have testified before the SEC
with respect to the same facts to which Mr. Fitzpatrick testified
without waiving any attorney-client privilege.
On the facts as I understand them, Loeb Rhoades probably could
have fully cooperated and also maintained its privilege. (In any
event, Loeb Rhoades chose to waive the privilege without
negotiating with the SEC as to whether such waiver was necessary
to what the SEC would consider "full cooperation.") That would
not have been true, for example, in Diversified and Byrnes
because of the nature of the investigative documents involved in
those cases. Thus, the public policy consideration of encouraging
cooperation with the SEC is not strong in this case.
The recent case of Teachers Insurance and Annuity Association
of America v. Shamrock, 521 F. Supp. 638 (S.D.N.Y. 1981), holds
that in the SEC context there is a limited waiver provided the
right to assert the privilege in subsequent proceedings is
specifically reserved at the time the disclosure is made. Such a
rule still would permit clients to pick and choose those to whom
disclosure could be made without incurring the penalty of loss of
I agree with the opinion in The Permian Corporation v. United
States, supra, that "the attorney-client privilege should be
available only at the traditional price: a litigant who wishes to
assert confidentiality must maintain genuine confidentiality."
665 F.2d at 1222.
Accordingly, the motion to compel ...