Consider what would happen if government agents executed a search warrant at your business and collected hundreds of emails between employees and outside counsel. What would you do? A recent case from the Fifth Circuit illustrates an effective approach: seek the return of privileged materials by filing a motion for return of property under Fed. R. Crim. P. 41(g). The case also highlights effective strategies that businesses, inside counsel, and outside counsel can use to ensure that privileged information is protected.
After Harbor Healthcare System became the subject of two qui tam lawsuits and a civil Department of Justice investigation, prosecutors from the local U.S. Attorney’s Office obtained warrants to search a handful of its locations and offices.1 Agents seized smartphones, computers, hard drives, and email accounts — “3.59 terabytes of data and hundreds of boxes of paper records.”2 Critically, this included the computer, email account, iPhone, and office files of Harbor’s director of compliance. Harbor maintained that these materials included a trove of communications protected by attorney-client privilege, such as recent communications between the director of compliance and outside counsel regarding the government’s civil investigative demand.
In response, Harbor Healthcare filed a motion for return of property under Fed. R. Crim. P. 41(g). That rule allows “[a] person aggrieved by an unlawful search and seizure of property or by the deprivation of property [to] move for the property’s return.” Fed. R. Crim. P. 41(g). And because there was no pending criminal case, Harbor Healthcare filed the motion as a plaintiff. The district court dismissed the case for lack of equitable jurisdiction.
Under Richey v. Smith, the Fifth Circuit has a four-part test to determine whether the government must return property in a pre-indictment case:
(1) Whether the motion for return of property accurately alleges that the government agents . . . displayed a callous disregard for the rights of the plaintiff;
(2) Whether the plaintiff has an individual interest in and need for the material whose return he seeks;
(3) Whether the plaintiff would be irreparably injured by the denial of the return of the property; and
(4) Whether the plaintiff has an adequate remedy at law for the redress of his grievance.3
The Fifth Circuit found that Harbor Healthcare satisfied all the Richey factors and reversed the district court. The Fifth Circuit concluded the government had exhibited a “callous disregard” for Harbor Healthcare’s rights by (1) making no attempt to respect the attorney-client privilege even though it knew the director of compliance’s office and computer contained privileged materials and (2) retaining materials that the government had already identified as privileged. Harbor Healthcare had a need for the privileged materials not because it desired to access government copies (as the district court framed the interest), but rather “[to] protect[] the privacy of the privileged material in the documents.”4 Any injury to that privacy is irreparable and cannot be remedied by a motion to suppress, because suppression excludes unconstitutionally obtained evidence from trial but does not force the government to return or destroy its copies. Id.
The case presents helpful lessons for all companies — including those that are not currently under investigation or threat of prosecution.
- Be prepared. To have the property returned, a business must identify, with specificity, which records are privileged and what privilege is involved. Harbor Healthcare was able to identify 3,843 emails from the director of compliance’s account. That allowed Harbor Healthcare to allege “a privacy harm arising from the seizure and retention of specific attorney-client privileged documents.”5 In contrast, courts have denied motions to return property where the company failed “to identify specific privileged documents in the hands of the government or provide a legal basis for asserting a particular privilege.”6 For businesses, the ability to identify privileged documents should start long before any seizure occurs: training staff on the attorney-client privilege, implementing consistent policies that prominently identify privileged records, and taking steps not to inadvertently waive privilege can help ensure an organization is capable of responding when necessary. Preparation should also involve regular communication with outside counsel when questions arise.
- Know your rights. The Harbor Healthcare decision is a strong statement in support of privacy, including for corporate entities. According to the court, “[t]he whole point of privilege is privacy.”7 The panel recognized that its decision may frustrate government investigations, yet justified its holding. It stated, “Although the privilege may at times prevent the government from obtaining useful information, this is the price we pay for a system that encourages individuals to seek legal advice and to make full disclosure to the attorney so that the attorney can render informed advice.”8 The attorney-client privilege is a crucial aspect of our legal system. Businesses should not be reluctant, or embarrassed, to assert it.
- Look for experience. Large-scale government investigations can be complex and intimidating. Companies need to have outside counsel they can trust and rely on to navigate the process. This includes familiarity with complicated electronic discovery procedures. The Harbor Healthcare court downplayed the district court’s “concern about the practicality of it parsing through reams of Harbor documents” by noting that the “concern can be assuaged by the array of document-review options.”9
This past term, Justice Neil Gorsuch wrote that, “If men must turn square corners when they deal with the government, it cannot be too much to expect the government to turn square corners when it deals with them.”10 The Harbor Healthcare decision shows this principle in action. Courts will not permit the government to seize and sit on privileged information. And victims of this abuse have recourse: a motion for return of property. To ensure their privacy is protected, businesses need to work with counsel to make smart decisions before and during an investigation.
1 Harbor Healthcare Sys., L.P. v. United States, 5 F.4th 593, 595 (5th Cir. 2021). Although the case was originally released as an unpublished, non-precedential decision, see Harbor Healthcare Sys., L.P. v. United States, No. 19-20624 (5th Cir. July 15, 2021), the panel chose to publish the decision two weeks later.
2 Id. at 596.
3 Richey v. Smith, 515 F.2d 1239, 1243–44 (5th Cir. 1975) (cleaned up).
4 Harbor Healthcare, 5 4th at 599.
5 Harbor Healthcare, 5 F.4th at 600.
6 Id. (quoting United States v. Search of Law Office, Residence, and Storage Unit Alan Brown, 341 F.3d 404, 414 (5th Cir. 2003)).
7 Id. at 599.
8 Id. (quoting Taylor Lohmeyer Law Firm P.L.L.C. v. United States, 982 F.3d 409, 411 (5th Cir. 2020)) (Elrod, J., dissenting from denial of rehearing en banc).
9 Id. at 601 n.4.
10 Niz-Chavez v. Garland, 141 S. Ct. 1474, 1486 (2021).
