In a closely watched appeal for FirstEnergy with significant implications for companies and their counsel who regularly conduct corporate internal investigations, Sullivan & Cromwell persuaded the U.S. Court of Appeals for the Sixth Circuit to overturn a district court’s order that threatened to undermine the attorney-client privilege and work product doctrine. The decision follows on the heels of an August ruling from the appeals court staying enforcement of the district court’s order and goes further in rejecting attempts to invade these important protections.
Last year, in a securities class action in federal court in Ohio seeking billions in damages, the district court entered an order granting plaintiffs access to FirstEnergy’s internal investigations conducted by Jones Day and Squire Patton Boggs. FirstEnergy petitioned the appellate court to overturn the decision. In August, in response to a mandamus petition filed by S&C, the Sixth Circuit stayed the order pending the appeal. S&C’s position attracted significant amicus support, including from 39 leading law firms, 11 corporate and ethics scholars, and several organizations.
In its October 3 ruling on the merits, the Sixth Circuit went further than in its August ruling granting the stay. It held that the appeal met the “lofty standard” for mandamus relief, concluding that the internal investigations were protected by attorney-client privilege and work-product doctrine. In rulings of broad importance for companies conducting sensitive internal investigations, it held that disclosing “ultimate findings” from investigations does not waive these protections and that sharing information with auditors does not waive work product protection. The court recognized the “strong public interest” in preserving the attorney-client privilege and work-product doctrine in internal investigations, noting the “numerous amici that have filed briefs in support of FirstEnergy.”
The S&C team included Robert Giuffra Jr., Sharon Nelles, David Rein, Nicholas Menillo, Morgan Ratner and Maxwell Gottschall.