## Facts

- The SEC invited Tesoro Petroleum Corp. to participate in a voluntary disclosure program concerning questionable or illegal foreign payments.
- Tesoro retained Fulbright & Jaworski to conduct an internal investigation and prepare an investigative report with supporting materials (investigation documents).
- Tesoro, through counsel, voluntarily produced the investigation documents to the SEC.
- A federal grand jury investigating related matters later obtained the same materials through subpoenas issued to Fulbright & Jaworski and to Vinson & Elkins (another Tesoro law firm).
- Tesoro shareholders filed class and derivative actions alleging that Tesoro insiders manipulated stock to take the company private, partly to avoid disclosure obligations that could have revealed earlier foreign payments.
- In discovery for the shareholder litigation, plaintiffs issued subpoenas duces tecum to Fulbright & Jaworski, Vinson & Elkins, and Tesoro seeking those same investigation documents.
- The subpoenaed parties resisted, asserting attorney-client privilege and work-product protection, arguing that any waiver from disclosures to the SEC and grand jury was “limited” to those recipients.
- The district court compelled production, holding privilege and work-product protections were waived by disclosure; the subpoenaed parties appealed.

## Issues

1. Whether voluntary disclosure of internal investigation materials to the SEC waives attorney-client privilege and work-product protection as to private civil litigants seeking the same materials.
2. Whether federal common law recognizes a “selective” or “limited” waiver allowing disclosure to the SEC and a grand jury while preserving protection against third-party civil discovery.

## Decision

- The D.C. Circuit affirmed the order compelling compliance with the subpoenas.
- Voluntary disclosure of the investigation documents to the SEC, and production of the same materials to the grand jury, waived attorney-client privilege as to the materials disclosed.
- The disclosure also waived work-product protection because it was inconsistent with maintaining confidentiality against adversaries.
- The court rejected “selective” or “limited” waiver for disclosures to the SEC and a grand jury in these circumstances.
- SEC confidentiality practices did not prevent waiver as to private litigants under federal privilege law.

## Legal Principles

- Attorney-client privilege is generally waived when privileged communications (or materials revealing them) are voluntarily disclosed to third parties outside the privilege.
- Work-product protection may be waived when disclosure materially increases the likelihood that an adversary will obtain the materials; disclosure to enforcement authorities in an investigative context can constitute such a waiver.
- Federal common law does not permit a party to disclose privileged materials to the government to obtain cooperation benefits while withholding the same materials from private civil opponents.
- Agency confidentiality expectations or nonpublic treatment of submissions do not, by themselves, preserve attorney-client privilege or work-product protection against third-party discovery once disclosure has occurred.

## Conclusion

The D.C. Circuit held that Tesoro’s disclosure of internal investigation materials to the SEC and their acquisition by a grand jury waived attorney-client and work-product protections as to the disclosed documents, and it refused to recognize a selective waiver that would preserve protection against shareholder-plaintiffs in civil discovery.


In re Subpoenas Duces Tecum, 738 F.2d 1367 (D.C. Cir. 1984)