Three Subject Matter Waiver Decisions Send Mixed Signals: Part III

March 10, 2021

Under general common law doctrine and Federal Rule of Evidence 502, courts normally hold that disclosing privileged communications only triggers a subject matter waiver if the disclosure seeks some advantage in court. But some courts find a subject matter waiver in broader circumstances.

In Dougherty v. Esperion Therapeutics, Inc., securities fraud plaintiffs argued that defendant waived its privilege protection by sending optimistic draft press releases to the FDA and the SEC that the company mentioned were "drafted on the advice of counsel." No. 16-10089, 2020 U.S. Dist. LEXIS 222811, at *9 (E.D. Mich. Nov. 30, 2020). The company later sent revised (more pessimistic) press releases that caused its stock to drop 48% in one day. Plaintiffs claimed that the first press releases misrepresented the FDA's position on some testing. Pointing to notions of "fairness," the court found that defendant had waived its privilege – and required it to produce "all drafts of both . . . press releases" and "counsel's notes, editorial comments, memoranda, and emails related to the drafting of and revisions to the various drafts." Id. at *12-13.

Many courts would not have found a waiver in this circumstance – apparently based merely on defendant’s unsurprising statement that its lawyer advised it to issue a press release. And most courts would not impose such a remarkably broad subject matter waiver. But any time a client references a lawyer's involvement when seeking some advantage (even outside a court), a subject matter waiver risk looms. It is best if lawyers are never mentioned.

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