In a December 9, 2011 Opinion, the D.C. Circuit affirmed a lower court’s decision that the SEC was not required to produce the notes of its staff members taken during an investigation of two individuals who were subsequently Government witnesses in a criminal prosecution of another individual. The Court found that notes were privileged under the work product doctrine, but did not decide whether they were protected under the deliberative process privilege. The case in another example of matters where defendants in securities fraud cases have sought the production of the SEC’s taken during its investigations – as discussed here, in his insider trading case, Mark Cuban has also sought the production of, among other things, the notes of the SEC attorneys taken during the investigations.
The dispute in the D.C. Circuit case arose in connection with the criminal prosecution of Walter Forbes (the former CEO of Cendant Corporation) for securities fraud. Two of the Government witnesses at the Forbes trial, Cosmo Corigliano and Kevin Kearney, had been investigated by the SEC for related securities investigations. That investigation resulted in 114 sets of notes of SEC staff members taken during their conversations with Messrs. Corigliano and Kearney and their attorneys. During the trial, the Department of Justice produced to Mr. Forbes attorneys 11 of the 114 sets of notes under the Government’s Rule 16 obligations (requiring, among other things, the production of documents material to the defendant’s case or documents that will be used at trial).
During and after the criminal proceedings, Mr. Forbes’s counsel – the law firm of Williams & Connolly – sent Freedom of Information Act ("FOIA") requests to the SEC seeking all of the 114 sets of notes of the SEC staff members. The SEC refused to disclose the notes under FOIA exemption 5, which includes work-product doctrine and the deliberative process privilege. After Mr. Forbes was convicted, Williams & Connolly sued the SEC to compel production and requested that the Court conduct an in camera review of the documents. The district court denied the motion for in camera review and granted the SEC’s motion for summary judgment.
The D.C. Circuit considered whether the DOJ’s production of the 11 sets of notes constituted a waiver of the work product doctrine with respect to the remaining notes. The Court noted that, while it is true that the voluntary disclosure of a privileged information regarding one conversation may require the production of the rest of the information about that one conversation, "it does not follow that an agency’s decision to release some documents protected by the work product privilege waives FOIA exemption 5 for all of the agency’s similar documents."
The Court noted that the "decision of the Justice Department to disclose the eleven sets of notes in the criminal proceeding has no bearing on whether FOIA permits the SEC to withhold the remaining 103 documents." The Court also drew a distinction between DOJ’s decision to produce certain documents and the SEC’s decision not to do so: "disclosure in criminal trials is based on different legal standards than disclosure under FOIA, which turns on whether a document would usually be discoverable in a civil case. Similar documents, in other words, are not – indeed must not be – treated similarly in the two different types of proceedings."
In affirming the decision not to conduct an in camera review, the Court rejected the law firm’s argument that the information could be used for a collateral attack on Mr. Forbes’ conviction or was material to his defense: "[i]t does not matter why the requester seeks the information, what the requester plans to do with it, or what harm the requester might suffer from not getting the information." The Court further noted that if the law firm believed that Mr. Forbes "should have received the notes during his criminal trial, FOIA is neither a substitute for criminal discovery … nor an appropriate means to vindicate discovery abuses."
The Court also concluded that because the SEC’s assertion of the work product doctrine had not been waived as to the notes, it did not need to consider whether the documents were protected under the deliberative process privilege.
As mentioned above, Mark Cuban has sought the production of SEC attorneys notes of discussions with other witnesses and faces similar privilege assertions. The D.C. Circuit’s ruling is distinguishable from Mr. Cuban’s case for a variety of reasons, including that Mr. Cuban is seeking the documents directly from the SEC in connection with a civil case against brought by the SEC (as opposed to Mr. Forbes’ needing the documents for his criminal case). Whether that distinction will result in a different result or not remains to be seen.