5th Circuit Decision Emphasizes Privilege Rights of Corporations

Our firm is ever mindful of the importance of the attorney client privilege and has had success curbing aggressive government tactics that invade the privilege.  Harbor Healthcare Systems LP v. United States, 5th Circuit Court of Appeals Case No. 19-20624, provides additional fodder in protecting our clients from such infringement.

In Harbor, the 5th Circuit Court of Appeals held that the government cannot disregard attorney-client and work-product privileges when they raid corporate offices, even when protected by search warrants obtained before the raids and the use of a ‘taint team’ of attorneys to review the seized documents and emails before use in legal proceedings. The ruling sets clear precedent that the government must respect corporations’ right to confidential attorney communications.

At issue in the appeal was whether the government had the right to refuse the return of privileged documents seized from raids of Harbor’s properties. The 5th Circuit affirmed that Harbor met the governing circuit test for the return of its property by showing both the government’s “callous disregard” for Harbor’s rights as well as the ongoing harm as a result of the government’s failure to respect its attorney-client and work-product privileges.

The government asserted that they showed sufficient regard for Harbor’s rights because they obtained search warrants to raid Harbor’s offices and utilized a team of independent lawyers to review the seized documents for privileged material. Further, the government challenged Harbor’s need to physically possess the seized privileged materials since they are merely copies of originals in Harbor’s possession. Last, the government claimed that Harbor’s demand for the return of documents was an attempt to prevent the government’s use of the materials in the matter, asserting that the appellate court should wait for potential criminal charges before deciding on a course of action regarding the privileged information.

The 5th Circuit dismissed the government’s arguments, claiming Harbor has a right to confer with its lawyers in confidence. “Harbor remains injured as long as the government retains its privileged documents,” the appeals court said. “That injury can only be made whole by the government returning and destroying its copies of the privileged material.”

Further, the appeals court stated that the government failed to obtain specific authorization to seize privileged materials. The government was aware that its search of Harbor’s premises and the chief compliance officer’s computer would return communications with Harbor’s attorneys.

The government even conceded in a stipulation that it did not notify the magistrates who signed its 2017 search warrants that privileged material would likely be seized. The government made “no attempt to respect Harbor’s right to attorney-client privilege,” the 5th Circuit wrote.

The government’s improper acts continued, as rather than destroying documents that the taint team deemed to be protected by privilege, the government chose to keep them. As a result, the 5th Circuit stated, “A taint team serves no practical effect if the government refuses to destroy or return the copies of documents that the taint team has identified as privileged.” Hence, the government “conceded that it has no intent to respect Harbor’s interest in the privacy of its privileged materials as the investigation unfolds.”

Harbor asked the 5th Circuit to adopt a skeptical view of taint teams. However, the appeals court merely ruled that the government’s taint team process failed to protect Harbor’s privacy interests. The decision sets clear precedent that the government must respect corporations’ right to confidential and privileged attorney communications.