April 17, 2012; see amended opinion filed May 10, 2012
Petition for Writ of Mandamus D.C. No. 2:10-cv-03633-ODW-RZ
The opinion of the court was delivered by: O'scannlain, Circuit Judge:
Argued and Submitted February 7, 2012-Pasadena, California
Before: Alex Kozinski, Chief Judge, Diarmuid F. O'Scannlain and N. Randy Smith, Circuit Judges.
Opinion by Judge O'Scannlain
We must decide whether a party waives attorney-client privilege forever by voluntarily disclosing privileged documents to the federal government.
In the 1930s, writer Jerome Siegel and illustrator Joe Shuster joined forces to create the character that would eventually become Superman. They ceded their intellectual property rights to D.C. Comics when they joined the company as independent contractors in 1937.*fn1 Since the Man of Steel made his first appearance in 1938, he has been fighting for "truth, justice, and the American way." Shuster, Siegel, their heirs ("Heirs"), and D.C. Comics have been fighting for the rights to his royalties for almost as long.
Marc Toberoff, a Hollywood producer and a licensed attorney, stepped into the fray around the turn of the millennium. As one of his many businesses, Toberoff pairs intellectual property rights with talent and markets these packages to movie studios. Having set his sights on Superman, Toberoff approached the Heirs with an offer to manage pre-existing litigation over the rights Siegel and Shuster had ceded to D.C. Comics. He also claimed that he would arrange for a new Superman film to be produced. To pursue these goals, Toberoff created a joint venture between the Heirs and an entity he owned. Toberoff served as both a business advisor and an attorney for that venture. The ethical and professional concerns raised by Toberoff's actions will likely occur to many readers, but they are not before this court.
While the pre-existing litigation was pending, Toberoff hired lawyer David Michaels to work for one of his companies. Michaels remained in Toberoff's employ for only about three months before absconding with copies of several documents from the Siegel and Shuster files. Unsuccessful in his initial attempt to use the documents to solicit business from the Heirs, Michaels sent the documents to executives at D.C. Comics. While he did not include his name with the package, he did append a cover letter, written in the form of a timeline, outlining in detail Toberoff's alleged master plan to capture Superman for himself.
This happened no later than June 2006, and the parties have been battling over what should be done with these documents ever since. Rather than exploiting the documents, D.C. Comics entrusted them to an outside attorney and sought to obtain them through ordinary discovery in the two ongoing lawsuits over Superman. Considering every communication he had with the Heirs to be privileged-regardless of whether the communication was in his capacity as a business advisor or an attorney-Toberoff resisted all such efforts. Ultimately, in April 2007, a magistrate judge ordered certain documents, including Michaels' cover letter, turned over to D.C. Comics. A few months later, Toberoff at long last reported the incident to the authorities (specifically the Federal Bureau of Investigation). In December 2008, Toberoff finally produced at least some of the documents.
In 2010, D.C. Comics filed this lawsuit against Toberoff, the Heirs, and three entities in which Toberoff owned a controlling interest (collectively, the "Petitioners"), claiming that Toberoff interfered with its contractual relationships with the Heirs. Michaels' cover letter formed the basis of the lawsuit and was incorporated into the complaint. Toberoff has continued to resist the use of any of the documents ...