In McKesson HBOC, Inc. v. Superior Court of San Francisco County, 2004 WL 318616 (Cal. Ct. App. Feb. 20, 2004), the California Court of Appeal has held that providing an audit committee investigatorUsersy report and interview memoranda to the Securities and Exchange Commission and the Department of Justice constitutes a waiver of attorney-client privilege and attorney work product protection under California law.
Quote of note: “We see no real alignment of interests between the government and persons or entities under investigation for securities law violations. Even if we credit McKesson’s claim that it was interested in rooting out the source of the accounting improprieties, we still find the situation here is not qualitatively different than a defendant sharing privileged material with one plaintiff, but not another. Though McKesson and amicus curiae advance policy arguments for allowing sharing of privileged materials with the government, no one suggests that a defendant facing multiple plaintiffs should be able to disclose privileged materials to one plaintiff without waiving the attorney-client privilege as to the other plaintiffs.”
Corp Law Blog has a comprehensive and interesting post on the decision, including links to related materials. Note that the proposed legislation preserving the attorney-client privilege and work product protection for documents shared with the SEC referred to in the post – The Securities Fraud Deterrence and Investor Restitution Act – is still pending in Congress. Although the SEC has come out in favor of the bill, its progress has been stalled because of the provisions affecting state securities regulators.
Addition: No sooner said, then done. On Wednesday, the House Financial Services Committee approved the Securities Fraud Deterrence and Investor Restitution Act by a voice vote. The provision concerning document sharing with the SEC remains in the bill; the provision limiting the power of state securities regulators has been dropped.
The 10b-5 Daily 