Finding that a lower court had underestimated the harm resulting from the government’s seizure and ongoing possession of privileged material, the Fifth Circuit ruled recently that a “taint team” process was insufficient to protect the rights of the party holding the privilege.  The appellate court’s ruling is part of a trend in which courts have expressed skepticism that the use of “taint teams” by the government is an adequate safeguard against undermining the sacrosanct attorney-client privilege.

As part of a criminal investigation spawned by civil False Claims Act qui tam actions, the government executed search warrants at the offices of Harbor Healthcare System and seized “a wealth of information protected by the attorney-client privilege” including communications between the company’s Director of Compliance and its outside counsel.  Harbor subsequently filed a motion for return of property as provided for in Federal Rule of Criminal Procedure 41(g).  The District Court ultimately granted a government motion to dismiss that proceeding, finding that a “filter team” and screening process were adequate to protect Harbor’s privileged information.

The Fifth Circuit reversed and remanded. Harbor Healthcare Sys. LP v. United States, 5th Cir., No. 19-20624, 7/15/21. 5th Cir. Opinion. The court found, among other things, that the government had “displayed a callous disregard” for Harbor’s rights because it “made no attempt to respect Harbor’s right to attorney-client privilege in the initial search” and “further disregarded Harbor’s rights” because it had “refuse[d] to destroy or return the copies of documents that the taint team has identified as privileged.”  The court also rejected the government’s argument that Harbor had no “practical need for access to the copies of the documents retained by the government” because “Harbor’s need does not lie in accessing the government’s copies” but rather “in protecting the privacy of the privileged material in the documents.”  The court ultimately ruled that “[t]he government’s ongoing intrusion on Harbor’s privacy constitutes an irreparable injury” which could only be cured “by the government returning and destroying its copies of privileged material.”

The Fifth Circuit’s opinion, which was published over the government’s objection, is in line with rulings by other courts, including the Fourth Circuit, which two years ago found the use of a “filter team” made up of prosecutors and federal agents and proposed to the judge ex-parte by prosecutors improper.  There the government seized thousands of emails from an attorney where less than 1% of the emails were related to the primary target of the investigation and many of which contained privileged communications and attorney work product concerning other law firm clients who “are being investigated by, or are being prosecuted by,” federal prosecutors.  Among the reasons cited by the Fourth Circuit for its conclusion were “the Team’s creation inappropriately assigned judicial functions to the executive branch” and “the use of the Team contravene[d] foundational principles that protect the attorney-client relationships.”  In re Search Warrant, 4th Cir., No. 19-1730, 6/13/19.  4th Cir. Opinion.

As these appellate decisions illustrate, in cases where the government demonstrates disregard for the importance of the attorney-client privilege and does not adequately respect the rights of the privilege-holder, aggrieved companies and individuals may find a receptive audience in the judiciary.

Photo of Stephen M. Byers Stephen M. Byers

Stephen M. Byers is a partner in the firm’s White Collar & Regulatory Enforcement Group and serves on the group’s steering committee. He is also a member of the firm’s Government Contracts Group and E-Discovery & Information Management Group. Mr. Byers’s practice involves…

Stephen M. Byers is a partner in the firm’s White Collar & Regulatory Enforcement Group and serves on the group’s steering committee. He is also a member of the firm’s Government Contracts Group and E-Discovery & Information Management Group. Mr. Byers’s practice involves counseling and representation of corporate and individual clients in all phases of white collar criminal and related civil matters, including: internal corporate investigations; federal grand jury, inspector general, civil enforcement and congressional investigations; and trials and appeals.

Photo of Halie Kaplan Halie Kaplan

Halie Kaplan is a discovery attorney in the E-Discovery & Information Management Practice in Crowell & Moring’s New York office. Halie’s practice focuses on electronic discovery and information management in a wide range of practice areas, including banking and securities, antitrust, commercial litigation…

Halie Kaplan is a discovery attorney in the E-Discovery & Information Management Practice in Crowell & Moring’s New York office. Halie’s practice focuses on electronic discovery and information management in a wide range of practice areas, including banking and securities, antitrust, commercial litigation & regulatory defense. She has experience in all phases of discovery, including document collections, formulating discovery strategy, first and second level review, quality control, privilege review, and privilege logs. Halie also has experience with the use of technology to efficiently manage and streamline discovery.