United States: SDNY Strikes A Blow Against Selective Waivers

On November 20, 2013, US District Judge Paul G. Gardephe of the US District Court for the Southern District of New York issued a decision with potentially significant consequences for attorneys conducting internal investigations and parties seeking to obtain (or shield) disclosure of witness interview notes memorializing such investigations. Gruss v. Zwirn, 09-CV-6441 (S.D.N.Y., Nov. 20, 2013).

Gardephe's ruling, issued in a defamation action brought against a hedge fund by a former employee, followed a request for clarification after an earlier ruling in July 2013. Through the two rulings, Gardephe ordered production, for in-camera inspection by the court, of interview notes prepared by outside counsel for the fund pertaining to 21 witnesses whose statements were obtained in the course of an internal investigation.

The witness statements were voluntarily disclosed to the US Securities and Exchange Commission (SEC), in summary form, through PowerPoint presentations. Gardephe found that the fund's voluntary production of the PowerPoint presentations to the SEC containing summaries of what the 21 witnesses told outside counsel during the internal investigation constituted a subject-matter waiver warranting the production of the underlying witness interview notes, subject to redaction of opinion work-product material (which plaintiff in the defamation action did not seek).

Gardephe's rulings offer a broad application of the Second Circuit's decision in In re Steinhardt Partners, L.P., 9 F.3d 230 (2d Cir. 1993), and further limit the utility of the "selective waiver" doctrine, under which a party may, under narrowly circumscribed conditions, voluntarily produce privileged material to an adversary on a selective basis, while maintaining the privilege as to others.

Indeed, Gardephe's rulings arguably expand on Steinhardt's repudiation of selective waiver in three important ways:

  1. The court ignored a confidentiality agreement between the fund and the SEC that sought to insulate the voluntary SEC production from a waiver claim, finding that a carve-out in the confidentiality agreement permitting disclosure "in furtherance of [the SEC's] discharge of its duties and responsibilities" rendered the agreement illusory;
  2. the court extended the waiver to witness interview notes prepared by outside counsel that were not themselves produced to the SEC; and
  3. the court expanded on doctrinal opposition to selective waiver, highlighting purported "strategic and manipulative" abuses of selective productions while minimizing the indisputable salutary purposes of the doctrine (e.g., promotion of cooperation with governmental investigations).


Beginning in 2006, the subject hedge fund initiated an internal investigation after allegations of impropriety in the collection and use of management fees came to light. Attention for the improprieties ultimately focused on the fund's chief financial officer , who resigned in late 2006.

Outside counsel interviewed 21 separate witnesses and prepared privileged and confidential memoranda summarizing the results of those interviews. In early 2007, the fund distilled those interview memoranda into a PowerPoint presentation. The PowerPoint and certain related documents were voluntarily produced without subpoena to the SEC under a purported confidentiality agreement, which provided, in part, that:

[B]y providing or disclosing the protected materials to the [SEC] pursuant to this agreement, [the fund] does not intend to waive the protection of the attorney work-product doctrine, attorney-client privilege, or any other privilege applicable as to third parties. [The fund] believes that the protected materials are protected by, at minimum, the attorney work-product doctrine and the attorney-client privilege. [The fund] believes that the protected materials warrant protection from disclosure. The [SEC] will maintain the confidentiality of the protected materials pursuant to this agreement and will not disclose them to any third party, except to the extent that the [SEC] determines that disclosure is required by law or would be in furtherance of the Commission's discharge of its duties and responsibilities [emphasis added].

The underlying witness interview memoranda were not produced to the SEC.

At various points during the investigation, the fund made statements to investigators and regulators that implicated the CFO and minimized the culpability of others within the fund.

The CFO subsequently sued the company, seeking damages for breach of contract and defamation, among other claims. During the course of the litigation, the fund produced the PowerPoint previously provided to the SEC, but withheld the underlying witness interview memoranda, maintaining that those documents retained their privileged status.

Magistrate Judge Michael H. Dolinger agreed in a 2011 decision, citing the aforementioned confidentiality agreement with the SEC and the fact that the witness interview memoranda, unlike the PowerPoint, were never produced to the SEC.

Counsel for the CFO appealed, and Gardephe reversed, finding that the confidentiality agreement was "a fig leaf" and "illusory," and that the fact that the witness interview memoranda had not been previously produced was not dispositive because production of the PowerPoint constituted a waiver of the underlying source material.

In the November 20, 2013, supplemental ruling, Gardephe rejected outside counsel's request for clarification, which argued in part that counsel itself holds a privacy interest in certain work product, separate and apart from the interests of its client, under New York state case law. Sage Realty Corp. v. Proskauer Rose Goetz & Mendelsohn LLP, 91 N.Y.2d 30.

The court found that federal law governed the issue and that the basis for the narrow state law exception had not been met in any event because the dispute was not between a firm and its former client, but with a third party, and because plaintiff was seeking factual statements of the witness, and not seeking opinion work product or counsel's own private information (e.g., summaries of discussions involving counsel's own counsel).


The rulings in Gruss are notable for several reasons. First, Gardephe's decisions highlight the judiciary's skepticism of "selective waiver" arguments generally. Gardephe repeatedly expressed concern that the selective assertion of privilege undermines the underlying search for the truth, and pointedly quoted Steinhardt's admonition that "selective waiver" not become "merely another brush on an attorney's palette, utilized and manipulated to gain tactical or strategic advantage."

The decisions also emphasize judicial disagreement about the use of confidentiality agreements—however strong they may be—as a shield against waiver claims. In fact, the dicta in Steinhardt suggesting that a confidentiality agreement can operate as a shield against waiver remains the subject of dispute in lower courts, and the modern trend continues to move against the recognition of such agreements in selective waiver disputes.

Finally, the waiver of privilege as to underlying source material arguably extends Steinhardt and further raises the stakes for practitioners inclined to share privileged material with regulators.

Practice Pointers

In the wake of the Gruss decisions, practitioners in the Southern District of New York and elsewhere conducting internal investigations may wish to re-assess language in standard confidentiality agreements governing the voluntary disclosure of privileged material to governmental regulators to ensure that such agreements are sufficiently stringent to pass judicial scrutiny.

Practitioners may also wish to reconsider the scope of voluntary productions of privileged material to governmental regulators, especially in situations where collateral civil litigation is expected, and assess whether such productions are better made voluntarily or through subpoena processes.

Finally, practitioners should pay close attention to the contents of witness interview notes lest those notes find their way into the hands of an adversary after selective production of related material to regulators.

Click here to read the July 10, 2013 decision.

Click here to read the November 20, 2013 decision.

This article appeared in Law360 on January 14, 2014.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions