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...standing. Companies falling within the territorial realm of the Securities Exchange Commission ("SEC") are required to disclose material events that could potentially impact their financial position, both to the SEC and to the public. (58) Companies typically satisfy disclosure requirements resulting from certain material events by filing report on Form 8-K or Form 6-K. (59) A Form 8-K is a "current report" by which a public company alerts the SEC to material corporate events about which shareholders should have notice. (60) The Form 6-K is the report used by certain foreign companies that are not subject to a Form 8-K filing. (61)
Often times attorneys aiding companies in preparing reports on Form 8-K or Form 6-K create or rely on otherwise privileged documents in making the required disclosures. For example, a company and its attorneys may use privileged documents to estimate and compute a reserve figure--an amount set aside to cover potential litigation or other costs caused by a material event. That reserve amount is publicly disclosed via the required SEC report, but the underlying documents relied on to calculate the amount are generally not made public. Making public only the reserve number typically gives lawyers comfort that the underlying documents on which they relied will remain confidential, but a recent case out of Houston put that comfort to the test. (62)
A. By Reporting a Reserve Figure to the SEC, Does a Company Waive Privilege as to the Confidential Documents it Relied on to Calculate the Figure?
Plaintiffs in the case entitled In re BP Products, argued that the underlying documents that supported BP Products' reserve figure lost any privilege once the figure was made public through a Form 6-K filing with the SEC. (63) The estimated liability--or reserve figure--was computed by an in-house attorney who relied on confidential information (e.g., legal and factual analyses of the claims and lawsuits) to arrive at an estimate. That confidential information was never disclosed to the SEC. The trial court nonetheless agreed with plaintiffs' subject matter waiver argument, reasoning, in part, that BP Products "waived any privilege or protection that may once have attached to the subject matter ... by voluntary disclosure to the federal government...." (64) Although the court of appeals ultimately instructed the trial court to vacate its ruling, companies should take note--and tread carefully when disclosing information outside the company.
It may seem obvious that the work product privilege should protect an attorney's methodology in computing a...
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