A recent opinion from the Court of Appeals for the Fifth Circuit (“Fifth Circuit”) found that the federal prosecutors demonstrated a “callous disregard” for a corporate litigant’s attorney-client and work-product privileged documents seized during a pre-indictment raid of corporate offices. The appellate court was critical of the government’s “taint team” (or “filter team”), finding that it served no practical purpose because it refused to destroy or return privileged materials. The message from the Fifth Circuit is clear: The government must respect a target’s confidential attorney-client communications.
In 2014 and 2016 Harbor Healthcare Systems, L.P. (“Harbor”) was the subject of two qui tam lawsuits alleging violations of the False Claims Act. In March of 2017, the Civil Division of the Department of Justice (“Civil Division”) issued a Civil Investigative Demand to Harbor, demanding that Harbor turn over certain documents and answer questions. Harbor’s Director of Compliance, Eric Sprott, immediately began working on Harbor’s response and enlisted the help of Justo Mendez, Harbor’s former general counsel, as outside counsel. Harbor timely responded to the Civil Division’s demand and provided the necessary documents and answered the Civil Divisions questions.
The Civil Division turned Harbor’s documents and answers over to the Criminal Division of the Department of Justice (“Criminal Division”) to investigate possible criminal activity. Prosecutors in the Criminal Division obtained search warrants for Harbor’s offices authorizing the seizure of computers, communications devices, and data (including email exchanges between Harbor employees, agents, and representatives). The Criminal Division executed the search warrants on May 18, 2017, and seized Harbor’s devices and data, as well as devices and data used by Sprott.
Harbor claimed that the devices and data used by Sprott contained information protected by attorney-client privilege, including Sprott’s communications with Mendez regarding the Civil Division’s Investigative Demand. The government established a “filter team” to review all of the seized devices and data for privileged information. Harbor provided the filter team with lists of lawyers and law firms that may have had contact with Harbor or its employees. Harbor also requested that the government return all privileged information. The government, however, did not respond.
As a result of the government failing to respond to Harbor’s request for the return of any privileged information, Harbor filed a motion for the return of property under Federal Rule of Criminal Procedure 41(g). The district court held a hearing on Harbor’s motion. It insisted that the parties test a screening process on the emails seized from Sprott. Harbor identified 3,843 emails from Sprott’s account as privileged. Harbor also provided notice to the government that its filter team had already transferred a large amount of the emails identified as privileged to the Civil and Criminal Division. Before the government completed the screening process, it filed a motion to dismiss Harbor’s 41(g) motion, alleging that Harbor’s property (the devices and data) would not suffer irreparable harm and that Harbor’s motion was no longer necessary because of the screening process. The district court granted the government’s motion to dismiss, reasoning that the screening process would address Harbor’s privilege issues and that Harbor had another available remedy in a post-indictment motion to suppress any privileged information.
The Court of Appeals for the Fifth Circuit (“Fifth Circuit”) found that the district court committed an error by granting the government’s motion to dismiss Harbor’s Rule 41(g) motion. The Fifth Circuit found that the government’s actions showed a “callous disregard” for Harbor’s attorney-privilege rights. In support of its finding, the Fifth Circuit pointed out that the government stipulated that it did not have authorization from the judge that signed the search warrant to seize attorney-client privileged materials from Harbor and that the government knew Sprott’s devices and data contained attorney-client privileged information when they served the search warrants. Furthermore, the Fifth Circuit noted that the government conceded that its filter team served no practical purpose because it refused to destroy or return privileged materials. Therefore, the Fifth Circuit found that the government showed no respect for Harbor’s privacy interests in the privileged materials.
The Fifth Circuit also addressed the district court’s erroneous finding that Harbor had a viable remedy in a post-indictment motion to suppress. First, the Fifth Circuit noted that the government may never file criminal charges, meaning that Harbor would have no ability to file a post-indictment motion to suppress and challenge the government’s seizure of the privileged materials. Second, the Fifth Circuit pointed out that motions to suppress and Rule 41(g) motions provide different relief. While a motion to suppress addresses the admissibility of evidence at a trial, a Rule 41(g) motion only deals with returning property that was unlawfully seized to the party that filed the motion. Harbor simply wanted the privileged materials returned.
White Collar Defense Attorneys
Freeman Law represents companies, executives, and individuals in regulatory and white-collar government investigations and prosecutions. We employ a proactive approach to defend vigorously and strategically position our clients. White-collar matters often involve parallel regulatory and civil proceedings. Freeman Law can navigate the complexities and collateral consequences of multiple proceedings. And when it comes to the court of public opinion, we employ ethical and strategic tactics to manage publicity. Schedule a consultation or call (214) 984-3000 to discuss your allegations and investigations concerns.
