Featured Expert Contributor, White Collar Crime & Corporate Compliance
As Democrats assume control over the U.S. House of Representatives for the next Congress, many insiders anticipate an increase in congressional oversight investigations. Although much of the focus will be directed at the Trump administration itself, certain industries are also likely to be targeted, including health care, energy, financial services, pharmaceuticals, technology, and for-profit higher education, to name just a few. For many targets of this oversight activity, this will be their first foray into the unique world of congressional investigations where some of the usual rules don’t really apply.
Although it may look a lot like discovery in civil litigation, there are significant differences between litigating a lawsuit and responding to a congressional investigation. Unlike ordinary civil litigation, in a congressional investigation, the rules of evidence, the rules of procedure, and even common-law privileges don’t really apply, meaning that Congress does not even necessarily recognize an otherwise valid assertion of the attorney-client privilege in response to a request for documents or witness testimony. This reality can be of critical importance to a company that finds itself on the receiving end of a congressional subpoena.
The traditional basis for the attorney-client privilege is, of course, to provide individuals and companies a “safe zone” to consult their attorney without having to reveal, absent a waiver, those confidential communications to anyone else, including the government. This common-law privilege is widely accepted as one of the most fundamental tenets of America’s legal system and plays a significant role in legal proceedings of all types at the state and federal levels.
However, Congress has not always recognized the attorney-client privilege as a basis for withholding information from a congressional committee. The legal basis for Congress’ position is grounded in its constitutional authority to both investigate and to determine the rules for its proceedings, including oversight investigations. Although no federal court has ever conclusively determined whether a party has a right to assert the attorney-client privilege in the context of a congressional investigation, the U.S. Court of Appeals for the D.C. Circuit recently came close.
In 2016, the Senate Permanent Subcommittee on Investigations (“PSI”) issued subpoenas for documents to a company named Backpage and its CEO, Carl Ferrer. The company produced some documents but withheld others it deemed attorney-client privileged. PSI argued waiver because the company did not assert the privilege until relatively late in the process. The district court agreed and ordered that the subject documents be produced. PSI’s waiver argument strongly suggested that the attorney-client privilege could be properly asserted in the context of a congressional subpoena, but was waived in this situation.
Backspace appealed, and, later, upon completion of its investigation, PSI, apparently aware of the possibility of an adverse ruling on the privilege issue, informed the court of appeals that it was abandoning its interest in enforcing the subpoenas. The court of appeals then not only dismissed the case as moot, but actually vacated the district court’s holding, thus eliminating its potential precedential impact. This essentially restored the reality that such privilege assertions remain a matter of negotiation between congressional committees and the recipients of subpoenas, with no binding court decision on point.
The lack of judicial clarity concerning the assertion of the attorney-client privilege in the congressional context means attorneys representing clients before congressional committees must carefully navigate potential privilege claims. Some guidance does exist in the form of a D.C. Bar Ethics Opinion from 1999. The D.C. Bar opined that where a congressional subpoena seeks the production of privileged documents, and the issuing committee overrules the assertion of the privilege, counsel for the subpoena target is permitted, but not required, by the D.C. Rules of Professional Conduct to produce the subpoenaed documents. “A directive of a congressional subcommittee accompanied by a threat of fines and imprisonment pursuant to federal criminal law satisfies the standard of ‘required by law’ as that phrase is used in D.C. Rule of Professional Conduct 1.6(d)(2)(A).” See D.C. Bar Ethics Opinion 299 (Feb. 1999).
So, given the absence of any guiding precedent from the courts, what should counsel for a subpoena recipient do in the face of a subpoena that seeks privileged documents? The answer is that most committees will ordinarily recognize the attorney-client privilege, and have an informal process for the assertion of a privilege claim to include the submission of a privilege log to committee staff with a follow-on “in camera” review of a sample of privileged documents by staff. This practice varies from committee to committee and is all subject to negotiation. In most cases, the service of a subpoena marks the beginning of negotiations with staff on the subpoena’s scope and the target’s privilege claims.
Thus, if push comes to shove, and the congressional committee is willing to seek a contempt of Congress ruling by a court, counsel’s ability to object on the basis of privilege has likely reached its limit. Again, counsel is well-advised to attempt to negotiate a resolution to such a dispute well before the contempt process is set into motion. Congressional subpoenas are, after all, political, and like all things political, are subject to negotiation.