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Mitigating the Risk of Subject-Matter Waiver When Disclosing Privileged Materials to the Government

Client Alert | 2 min read | 10.16.09

New Federal Rule of Evidence 502 has been invoked in a high-profile securities case to avoid subject-matter waiver in connection with the disclosure of privileged materials and information to the government. The approach taken in this case provides a valuable lesson for companies facing government investigations.

In a case concerning Bank of America's controversial acquisition of Merrill Lynch, Judge Jed Rakoff of the Southern District of New York has endorsed a stipulation between BOA and the SEC that allows BOA to produce privileged materials to the SEC and other governmental authorities while mitigating the usual risk that parties in parallel private litigation will successfully claim broad subject-matter waiver. The SEC and BOA invoked Rule 502, and in particular Rule 502(a), which provides that even intentional disclosures of privileged material do not result in subject matter waiver unless the disclosed and undisclosed material concern the same subject matter and "ought in fairness to be considered together." Rule 502(d) further provides that agreements between the parties limiting waiver can be enshrined in court orders so that the protections of the agreement extend beyond the litigation at hand. The court acknowledged that Rule 502 "permits such cabined waivers" and endorsed the stipulation, thus preventing parties in other proceedings from arguing broad subject-matter waiver based on the BOA's disclosures to the SEC.

Companies dealing with government investigations often conclude that it is in their best interest to disclose otherwise privileged information to investigators. A Rule 502 agreement endorsed by court order can mitigate the serious, and potentially costly, risk of subject-matter waiver in parallel civil litigation. It remains to be seen, however, whether Rule 502 can be used in an even more favorable manner - to accomplish a "selective waiver" under which even the privileged material disclosed to the government retains its privileged status as to other parties and proceedings.

U.S. Securities and Exchange Commission v. Bank of America Corp ., Case No. 09-cv-06829, is pending in the U.S. District Court for the Southern District of New York. Copies of the order and attached stipulation are available here.

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Client Alert | 3 min read | 11.21.25

A Sign of What’s to Come? Court Dismisses FCA Retaliation Complaint Based on Alleged Discriminatory Use of Federal Funding

On November 7, 2025, in Thornton v. National Academy of Sciences, No. 25-cv-2155, 2025 WL 3123732 (D.D.C. Nov. 7, 2025), the District Court for the District of Columbia dismissed a False Claims Act (FCA) retaliation complaint on the basis that the plaintiff’s allegations that he was fired after blowing the whistle on purported illegally discriminatory use of federal funding was not sufficient to support his FCA claim. This case appears to be one of the first filed, and subsequently dismissed, following Deputy Attorney General Todd Blanche’s announcement of the creation of the Civil Rights Fraud Initiative on May 19, 2025, which “strongly encourages” private individuals to file lawsuits under the FCA relating to purportedly discriminatory and illegal use of federal funding for diversity, equity, and inclusion (DEI) initiatives in violation of Executive Order 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity (Jan. 21, 2025). In this case, the court dismissed the FCA retaliation claim and rejected the argument that an organization could violate the FCA merely by “engaging in discriminatory conduct while conducting a federally funded study.” The analysis in Thornton could be a sign of how forthcoming arguments of retaliation based on reporting allegedly fraudulent DEI activity will be analyzed in the future....