In a closely watched appeal that will have significant implications for corporate internal investigations, Sullivan & Cromwell won a stay of a federal court order that threatened to undermine the attorney-client privilege and work product doctrine. The appeal arose in a securities class action in federal court in Ohio seeking billions in damages against FirstEnergy Corp. The August 7 stay issued by the U.S. Court of Appeals for the Sixth Circuit was achieved on a “mandamus” appeal, which are rarely granted.
Last year, the district court entered an extraordinary order granting plaintiffs access to FirstEnergy’s internal investigations conducted by two other firms. These investigations were initiated amid government investigations and litigation alleging that former FirstEnergy executives made improper political contributions. In July 2024, S&C petitioned the Sixth Circuit to overturn the court’s decision and to stay it pending the appellate court’s ruling.
The Sixth Circuit held that FirstEnergy is likely to succeed on the merits and does not need to comply with the district court’s order pending the final outcome of the appeal. Importantly, the court held that the internal investigations are likely protected from disclosure by the attorney-client privilege and work-product doctrines. The appellate court also agreed with FirstEnergy that disclosing the materials now would cause irreparable harm to the company. The court reaffirmed the “strong public interest” in preserving protecting the attorney-client privilege in internal corporate investigations, stressing that “numerous amici” filed briefs in support of FirstEnergy.
Amicus support was filed by 39 leading law firms, 11 corporate and ethics scholars, and several legal and business groups.
FirstEnergy is represented by Robert Giuffra Jr., Sharon Nelles, David Rein, Nicholas Menillo and Morgan Ratner and Maxwell Gottschall.