## Facts

- The United States prosecuted Martha Stewart and Peter Bacanovic in connection with Stewart’s December 27, 2001 sale of ImClone Systems, Inc. stock and related statements to regulators and the public.
- By early 2002, multiple government entities were investigating the transaction, including the SEC, FBI, the U.S. Attorney’s Office, and a congressional subcommittee.
- During the investigative period, Stewart wrote an email to her attorney containing her factual account of events surrounding the stock sale for the purpose of obtaining legal advice.
- Stewart later forwarded the same email to her daughter.
- In pretrial discovery, the Government sought a ruling that the email was not protected by attorney-client privilege or work-product protection, or that any protection was waived by the forwarding.

## Issues

1. Whether Stewart’s email to counsel was protected by the work-product doctrine as material prepared in anticipation of litigation.
2. Whether forwarding the email to Stewart’s daughter waived attorney-client privilege.
3. Whether forwarding the email to Stewart’s daughter waived work-product protection.

## Decision

- The court held the email was protected work product prepared in anticipation of litigation, even though it was prepared by the client rather than the attorney.
- The court held that forwarding the email to Stewart’s daughter waived attorney-client privilege to the extent the privilege applied.
- The court held that forwarding the email to Stewart’s daughter did not waive work-product protection, and the Government could not compel production on that basis.

## Legal Principles

- Attorney-client privilege protects confidential client-lawyer communications made for the purpose of obtaining legal advice; voluntary disclosure to a third party outside the privilege generally waives the privilege.
- Work-product protection covers materials prepared in anticipation of litigation, including certain client-prepared materials created to assist counsel in defending or anticipating legal proceedings.
- Work-product waiver is not automatic upon third-party disclosure; waiver generally requires disclosure that is inconsistent with the adversarial system, such as disclosure that substantially increases the likelihood the material will reach an adversary.
- The same disclosure may waive attorney-client privilege yet preserve work-product protection because the doctrines serve different purposes and apply different waiver standards.

## Conclusion

The court concluded that Stewart’s forwarding of a litigation-related email narrative to her daughter destroyed confidentiality and thus waived attorney-client privilege, but it did not waive work-product protection because the disclosure did not materially increase the likelihood that an adversary would obtain the document.


United States v. Stewart, 287 F. Supp. 2d 461 (S.D.N.Y. 2003)