PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT PREPARED AT THE DIRECTION OF COUNSEL
JOINT MEMORANDUM
Framework for Maintaining Attorney-Client Privilege and Work-Product Protection Across US and UK Jurisdictions
Independent Workplace Investigation Concerning Marcus Hale
May 12, 2023
Matter No.: 1017-00005
FROM:
Calderwood & Harkness LLP Bernard Crawford, Responsible Partner Devon Archer, Lead Associate 780 Seventh Avenue, 34th Floor New York, NY 10019
1999 Avenue of the Stars, Suite 2800 Los Angeles, CA 90067
Pendleton & Warwick LLP 20 Fenchurch Street, 8th Floor London EC3M 3BY United Kingdom
TO:
Dame Cordelia Ashworth Independent Non-Executive Director and Chair of the People & Culture Committee Aurelius Global Media Group PLC
Raymond Okoro Independent Non-Executive Director and Chair of the Audit & Risk Committee Aurelius Global Media Group PLC
CC:
Fiona Blackwood General Counsel Aurelius Global Media Group PLC
RE: Framework for Maintaining Attorney-Client Privilege and Work-Product Protection Across US and UK Jurisdictions — Independent Workplace Investigation Concerning Marcus Hale
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I. PURPOSE AND BACKGROUND
The purpose of this Joint Memorandum is to establish a comprehensive, binding protocol governing the creation, handling, sharing, and protection of privileged materials generated in connection with the independent workplace investigation (the "Investigation") authorized by the People & Culture Committee and the Audit & Risk Committee of the Board of Directors of Aurelius Global Media Group PLC ("AGMG" or the "Company"). This protocol is designed to ensure that attorney-client privilege, attorney work-product protection, legal advice privilege, and litigation privilege are preserved across both the United States and the United Kingdom throughout the course of the Investigation and any proceedings that may follow.
The Investigation concerns serious allegations of sexual harassment, retaliation, and the fostering of a hostile work environment directed against Marcus Hale, who currently serves as President of Aurelius Pacific Studios Inc. ("APS"). APS is a Delaware corporation and wholly owned US subsidiary of AGMG, with its principal place of business located at 3200 West Alameda Avenue, Suite 400, Burbank, California 91505. The allegations at issue relate to conduct that is alleged to have occurred at the APS offices in Burbank and at various off-site locations within the State of California.
AGMG is a public limited company incorporated in England and Wales, with its registered office situated at 45 Aldwych House, Kingsway, London WC2B 6AH, United Kingdom. The Company is listed on the London Stock Exchange (AIM market) and, as of the date of this memorandum, maintains a market capitalization of approximately £3.8 billion. AGMG employs approximately 14,200 individuals worldwide, of whom approximately 4,600 are based in the United States, predominantly within the operations of APS and its affiliated production and distribution entities.
The Investigation was formally opened on May 2, 2023, following the Company's receipt of a third-party ethics hotline complaint and a pre-litigation demand letter. Calderwood & Harkness LLP ("C&H") has been retained as independent outside counsel to conduct the Investigation. C&H's engagement is with AGMG's Board of Directors, acting through the People & Culture Committee chaired by Dame Cordelia Ashworth and the Audit & Risk Committee chaired by Raymond Okoro. Pendleton & Warwick LLP ("P&W") serves as AGMG's regular outside UK corporate counsel and is providing guidance in connection with the Investigation on matters of UK corporate governance obligations and privilege coordination under English law. P&W's involvement in the Investigation is limited to that advisory role.
The necessity for a cross-border privilege protocol arises from several interconnected features of this matter:
(a) The client, AGMG, is a UK-incorporated public limited company with a Board of Directors based principally in London;
(b) The Investigation concerns conduct occurring in California at a Delaware-incorporated subsidiary;
(c) Investigation findings will be reported to UK-based Board committees and to the Company's General Counsel, who is based in London;
(d) Potential litigation or regulatory proceedings could arise in either the United States or the United Kingdom, or both; and
(e) The legal regimes governing attorney-client privilege and related protections differ materially between the two jurisdictions, particularly following the English Court of Appeal's decision in Three Rivers District Council v. Governor and Company of the Bank of England (No. 5) [2003] EWCA Civ 474, which narrowed the scope of legal advice privilege as it applies to corporations under English law.
It should be noted that Elliot Vane, Chief Executive Officer of AGMG, has been formally recused from any oversight of or participation in the Investigation by resolution of the People & Culture Committee dated May 1, 2023. The Board liaison for the Investigation is Fiona Blackwood, General Counsel, who is based at the Company's London offices. All communications between counsel and the Board regarding the Investigation are to be channeled through Ms. Blackwood, subject to the protocols set forth herein.
This memorandum is itself a privileged communication prepared by C&H and P&W at the direction of counsel for the purpose of providing legal advice to the Company regarding the preservation of privilege. It should be treated accordingly and not disclosed to any person not identified as an authorized recipient herein.
II. IDENTIFICATION OF PRIVILEGE HOLDERS
A. The Client for Privilege Purposes
A threshold issue in any cross-border investigation is the precise identification of the entity or entities that hold the attorney-client privilege and its English-law equivalents. In this Investigation, the privilege analysis proceeds as follows.
Under United States law, the client for purposes of attorney-client privilege is AGMG and, derivatively, its wholly owned subsidiary APS. Under well-established principles of corporate representation, the attorney-client privilege belongs to the corporate entity itself and not to any individual officer, director, or employee of the corporation. See Commodity Futures Trading Comm'n v. Weintraub, 471 U.S. 343, 348 (1985) (holding that the privilege of a corporation may be asserted or waived only by the corporation's management and directors). Individual officers and employees who communicate with C&H in the course of the Investigation do so in their corporate capacities, and such communications are privileged as communications between the Company and its counsel, subject to the conditions articulated in Upjohn Co. v. United States, 449 U.S. 383 (1981), and discussed further below.
Under English law, the client for purposes of legal advice privilege and litigation privilege is AGMG. Legal advice privilege runs to the corporation as the entity that has engaged P&W and, for purposes of the Investigation, C&H. As discussed in greater detail in Section III.B below, the scope of who qualifies as the "client" for legal advice privilege purposes under English law is narrower than under US law, which has significant implications for the handling of materials generated in this Investigation.
C&H's engagement is specifically with AGMG's Board of Directors, acting through its designated committees. The privilege belongs to AGMG and may be waived only by the Company through its authorized representatives, as identified in Section II.B below. Neither C&H nor P&W may independently waive the Company's privilege.
P&W's existing retainer is with AGMG in its capacity as the Company's regular outside UK corporate counsel. P&W's involvement in the Investigation is limited to providing guidance on UK corporate governance obligations and privilege coordination. P&W does not serve as counsel to APS, and its advisory role in the Investigation is supplementary to C&H's primary investigative role.
B. Authorized Representatives for Privilege Decisions
The authority to make privilege-related decisions in connection with the Investigation, including decisions regarding the assertion, maintenance, or waiver of privilege, is vested in the following persons and bodies:
(i) The People & Culture Committee of the Board of Directors, chaired by Dame Cordelia Ashworth, and the Audit & Risk Committee of the Board of Directors, chaired by Raymond Okoro, jointly hold authority over the Investigation and any privilege waiver decisions related to Investigation materials. No waiver of privilege may be authorized without the affirmative vote of both committees, unless the committees delegate that authority in writing to a designated individual.
(ii) Fiona Blackwood, General Counsel of AGMG, is authorized to communicate with C&H and P&W on privilege matters on behalf of the Board committees, subject to committee oversight. Ms. Blackwood serves as the primary conduit through which Investigation updates and privileged materials flow between counsel and the Board committees. Ms. Blackwood's authority in this regard is administrative and communicative; she is not independently authorized to waive privilege without committee approval.
For avoidance of doubt, the following individuals are specifically not privilege holders and should not be granted access to privileged Investigation materials:
(iii) Marcus Hale, the subject of the Investigation, is not a privilege holder. Mr. Hale's interests are adverse to the Company in the context of this Investigation, and he should not have access to privileged Investigation materials, including C&H's legal analysis, interview memoranda, or communications with the Board committees. Mr. Hale's personal counsel, Graham Thornfield of Thornfield & Associates LLP (10250 Constellation Boulevard, Suite 1950, Los Angeles, CA 90067), has no right to access, receive, or review privileged materials generated in connection with the Investigation.
(iv) Jenna Morales, one of the individuals whose allegations form a basis for the Investigation, is likewise not a privilege holder. Ms. Morales's counsel, Sandra Reeves of Nakamura Reeves LLP (515 South Flower Street, Suite 3600, Los Angeles, CA 90071), has no right to privileged Investigation materials. While Ms. Morales may be interviewed as a witness in the Investigation, the privilege in connection with any such interview belongs to the Company.
Additionally, CEO Elliot Vane, who has been formally recused from the Investigation, is not authorized to receive privileged Investigation materials, notwithstanding his position as Chief Executive Officer. Any request by Mr. Vane or his representatives for Investigation materials should be referred to Ms. Blackwood and, through her, to C&H.
C. Distinction Between Company Privilege and Individual Privilege
A critical feature of any internal investigation is the clear demarcation between the corporation's privilege and any personal privilege that individual witnesses might seek to claim. In this Investigation, C&H represents the Company — that is, AGMG and its subsidiary APS — and not any individual officer, director, or employee in their personal capacity.
To ensure that this distinction is clearly communicated and understood, Upjohn warnings (under US practice) and equivalent admonitions (consistent with English practice) will be administered to all witnesses at the outset of each interview. The warnings will clearly advise each witness of the following:
(a) That C&H represents the Company, not the individual witness;
(b) That the attorney-client privilege with respect to the interview and any communications made during the interview belongs to the Company, not to the individual;
(c) That the Company may choose to waive the privilege at its discretion, including by disclosing the substance of the witness's communications with counsel to third parties, regulators, or in litigation;
(d) That the witness should not treat the interview as creating an attorney-client relationship between the witness and C&H; and
(e) That if the witness believes he or she requires personal legal advice, the witness should retain independent personal counsel at the witness's own expense.
C&H has prepared a detailed Upjohn / Corporate Miranda Warning Script for use in all Investigation interviews, to be administered beginning May 22, 2023, the date on which witness interviews are currently scheduled to commence. The script has been reviewed by P&W to ensure consistency with English law requirements. A copy of the script is maintained in C&H's Investigation files under matter number 1017-00005 and has been provided to Ms. Blackwood for the Board committees' records.
III. APPLICABLE PRIVILEGE DOCTRINES
This section provides a detailed analysis of the privilege doctrines applicable in both the United States and the United Kingdom, along with an assessment of the regulatory dimensions that may bear on privilege protection. Understanding the differences and potential gaps between the two jurisdictions is essential to the protocols established in this memorandum.
A. United States — Federal and California Law
1. Attorney-Client Privilege
The attorney-client privilege in the United States is governed by federal common law in federal proceedings and by the California Evidence Code, Sections 950 through 962, in California state proceedings. The privilege protects confidential communications between counsel and the corporate client — here, AGMG and APS — made for the purpose of seeking or providing legal advice.
The seminal decision in Upjohn Co. v. United States, 449 U.S. 383 (1981), established that the attorney-client privilege in the corporate context extends to communications with corporate employees at all levels of the organizational hierarchy, provided that the communications were made at the direction of corporate superiors for the purpose of obtaining legal advice for the corporation. The Upjohn framework rejected the narrower "control group" test, which had limited the privilege to communications with senior management. Under Upjohn, the privilege may attach to communications between C&H and any AGMG or APS employee, regardless of rank, so long as the communication was made for the purpose of enabling counsel to provide legal advice to the Company regarding the subject matter of the Investigation.
California follows a substantially similar approach. Under the California Evidence Code, the attorney-client privilege belongs to the corporation, and the corporation's "holder of the privilege" for purposes of asserting or waiving the privilege is the corporation itself, acting through its authorized representatives. Cal. Evid. Code § 953. The privilege protects "a confidential communication between client and lawyer," which encompasses communications made to the lawyer by the client or the client's representative. Cal. Evid. Code §§ 952, 954.
For purposes of this Investigation, all confidential communications between C&H and the Company's authorized representatives, employees, and agents (including communications made at the direction of the Board committees or Ms. Blackwood for the purpose of obtaining legal advice) are protected by the attorney-client privilege under both federal common law and California statutory law.
2. Work-Product Doctrine
The work-product doctrine provides an independent layer of protection for materials prepared in connection with anticipated or pending litigation. Under federal law, the doctrine is codified at Federal Rule of Civil Procedure 26(b)(3), which protects "documents and tangible things that are prepared in anticipation of litigation or for trial by or for another party or its representative." Under California law, the corresponding provision is California Code of Civil Procedure Section 2018.030, which protects "a writing that reflects an attorney's impressions, conclusions, opinions, or legal research or theories" as absolute work product and other work-product materials as qualified work product.
The work-product doctrine distinguishes between two categories of protected materials:
(a) "Opinion" work product — consisting of the mental impressions, conclusions, opinions, and legal theories of counsel — receives near-absolute protection under both federal and California law. Opinion work product is virtually never subject to compelled disclosure, even upon a showing of substantial need.
(b) "Fact" work product — consisting of factual compilations, chronologies, and other non-opinion materials prepared in anticipation of litigation — is subject to qualified protection. Fact work product may be overcome by an opposing party's showing of substantial need and inability to obtain the substantial equivalent of the materials without undue hardship. Fed. R. Civ. P. 26(b)(3)(A)(ii); Cal. Code Civ. Proc. § 2018.030(b).
In the context of this Investigation, the following categories of materials constitute attorney work product:
• Investigation memoranda and analytical summaries prepared by C&H;
• Credibility assessments of witnesses prepared by C&H attorneys;
• Interview notes and memoranda prepared by C&H attorneys memorializing witness interviews;
• Internal counsel communications regarding legal strategy, factual analysis, and case assessment;
• The privileged draft investigation report to be prepared by C&H for the Board committees; and
• Documents reflecting the selection, organization, and compilation of factual materials by counsel in connection with the Investigation.
3. Governing Law for the Investigation
The underlying allegations that have given rise to this Investigation implicate, among other legal frameworks, the California Fair Employment and Housing Act ("FEHA"), codified at California Government Code Sections 12940 et seq. FEHA prohibits sexual harassment, retaliation, and the creation of a hostile work environment in the workplace and provides for civil remedies including compensatory and punitive damages. The allegations may also implicate federal anti-discrimination statutes, including Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e et seq., to the extent that federal claims are pursued.
The applicable privilege law in any future litigation will depend on the forum and the nature of the claims asserted:
• In California state-court litigation, the California Evidence Code will govern the assertion and scope of attorney-client privilege and work-product protection.
• In federal litigation in California, federal common law will govern the privilege for federal claims, while California privilege law will apply to state-law claims asserted under supplemental jurisdiction, pursuant to Federal Rule of Evidence 501.
This dual-regime framework underscores the importance of maintaining materials in a manner consistent with the requirements of both federal and state privilege law.
B. United Kingdom — Legal Advice Privilege and Litigation Privilege
1. Legal Advice Privilege
Under English law, legal advice privilege protects confidential communications between a client and its lawyers (whether solicitors or barristers, or their authorized representatives) made for the purpose of giving or obtaining legal advice. The privilege is absolute in nature and, unlike the US work-product doctrine's fact-work-product component, cannot be overridden by a showing of need.
However, the scope of who constitutes the "client" for purposes of legal advice privilege is materially narrower under English law than under the US Upjohn framework. Following the Court of Appeal's decision in Three Rivers District Council v. Governor and Company of the Bank of England (No. 5) [2003] EWCA Civ 474, and subsequent case law, legal advice privilege in England applies only to communications with persons who are authorized to seek and receive legal advice on behalf of the corporation. Unlike Upjohn, which extends the privilege to communications with employees at all levels, the Three Rivers framework limits the "client" to a defined group of authorized individuals — typically, those persons specifically tasked with instructing the lawyers and receiving advice on the corporation's behalf.
This narrower scope has significant practical implications for the Investigation. For AGMG, the individuals who should be identified as constituting the "client" for English legal advice privilege purposes are:
(i) Dame Cordelia Ashworth — Independent Non-Executive Director and Chair of the People & Culture Committee;
(ii) Raymond Okoro — Independent Non-Executive Director and Chair of the Audit & Risk Committee;
(iii) Fiona Blackwood — General Counsel; and
(iv) Patricia Sung — Chief People Officer, who provides HR records and policy input relevant to the Investigation.
Communications between C&H (or P&W) and these four authorized individuals for the purpose of giving or obtaining legal advice are protected by legal advice privilege under English law.
Critically, communications with other AGMG or APS employees — including, for example, Victor Gallegos (Vice President of Human Resources at APS), witnesses to the alleged misconduct, and other personnel — may not be protected by legal advice privilege under English law unless those individuals fall within the narrower Three Rivers framework. This is a material divergence from the US position under Upjohn, where such communications would ordinarily be privileged. The implications of this divergence for the handling of Interview materials and other Investigation documents are addressed in Sections IV, V, and VII below.
2. Litigation Privilege
Litigation privilege under English law is broader in scope than legal advice privilege and provides a separate basis of protection. Litigation privilege protects confidential communications between the client (or its lawyers) and third parties — including non-client employees and external consultants — made for the dominant purpose of contemplated or pending litigation. Unlike legal advice privilege, litigation privilege is not limited to communications with the narrow "client" group identified under Three Rivers.
For litigation privilege to attach, two conditions must be satisfied:
(a) Litigation must be reasonably in prospect or contemplated at the time of the communication; and
(b) The communication must have been made for the dominant purpose of the contemplated or pending litigation.
In this matter, the predicate for litigation privilege is well established. On April 20, 2023, the Company received a pre-litigation demand letter from Nakamura Reeves LLP, sent on behalf of Jenna Morales, alleging violations of FEHA and demanding substantial damages. The receipt of that demand letter placed litigation squarely in prospect as of that date. Accordingly, litigation privilege should attach to communications and documents generated for the dominant purpose of the Investigation to the extent they relate to anticipated litigation arising from the allegations concerning Marcus Hale.
It is important to note a key distinction between litigation privilege and legal advice privilege regarding their temporal scope: litigation privilege terminates upon the conclusion of the litigation for which the communications were made, whereas legal advice privilege is perpetual and survives the termination of the retainer and the conclusion of any proceedings.
3. Relevance of UK Privilege to This Investigation
Although the Investigation is being conducted by C&H (US counsel) in the United States concerning conduct that occurred at APS's facilities in California, the analysis of English privilege law is directly relevant to the protection of Investigation materials for several reasons:
(a) The Investigation report and related work product will be shared with UK-based Board members and the General Counsel, all of whom are based in London and whose receipt and handling of privileged materials may fall within the jurisdiction of English courts;
(b) Any UK regulatory inquiry — whether by the Financial Conduct Authority or otherwise — could require the assertion of privilege under English law with respect to documents held by AGMG in the United Kingdom;
(c) A shareholder derivative action brought under the Companies Act 2006 could involve disclosure obligations governed by English procedural rules, under which only English-law privilege protections would be recognized; and
(d) Cross-border discovery disputes in US proceedings may raise choice-of-law questions in which English privilege law is relevant.
For these reasons, the English privilege analysis runs in parallel with the US analysis, and both must be considered in every decision regarding the creation, handling, sharing, and potential disclosure of Investigation materials.
C. Potential Regulatory Dimensions
The Investigation and its subject matter may give rise to regulatory scrutiny in both jurisdictions, and the potential for regulatory proceedings must be factored into the privilege analysis.
In the United Kingdom, the following regulatory frameworks are relevant:
• The Financial Conduct Authority ("FCA") exercises supervisory authority over companies listed on the AIM market of the London Stock Exchange. FCA rules impose disclosure obligations on AIM-listed issuers, including requirements for timely disclosure of inside information. The Investigation and any adverse findings may constitute inside information requiring disclosure under the AIM Rules for Companies.
• The UK Corporate Governance Code, while not directly binding on AIM-listed companies, sets out principles and provisions regarding board leadership, risk management, and accountability that are relevant to the Board's handling of the Investigation.
• The Companies Act 2006 imposes duties on directors, including the duty to promote the success of the company (Section 172) and the duty to exercise reasonable care, skill, and diligence (Section 174). The Board's conduct of the Investigation and its response to any findings may be subject to scrutiny under these statutory duties.
In the United States, the following regulatory frameworks are relevant:
• The Securities and Exchange Commission ("SEC") may have jurisdiction to the extent there is a cross-border nexus arising from AGMG's international operations, the involvement of US investors, or any securities-fraud implications arising from the allegations (e.g., if the allegations bear on the accuracy of prior public disclosures).
• The California Civil Rights Department ("CRD") (formerly known as the Department of Fair Employment and Housing, or DFEH) may investigate the underlying allegations under FEHA, either in response to a complaint filed by Ms. Morales or on its own initiative.
• The Equal Employment Opportunity Commission ("EEOC") may become involved if federal employment discrimination claims are filed, including claims under Title VII.
Regulatory compulsion presents a particular risk to privilege protections because certain regulatory bodies have statutory or quasi-statutory powers to compel the production of documents, including documents that might otherwise be protected by privilege or work-product doctrine. While the scope of regulatory compulsion varies by jurisdiction and agency, the existence of these risks underscores the importance of the protocols established in this memorandum for minimizing waiver risk at every stage of the Investigation.
IV. PROTOCOLS FOR SHARING PRIVILEGED MATERIALS BETWEEN US AND UK COUNSEL
The cross-border character of this Investigation requires the regular sharing of privileged materials between C&H (US counsel) and P&W (UK counsel). The following protocols are designed to ensure that such sharing occurs without inadvertent waiver of privilege under either US or English law.
A. Approved Channels of Communication
All privileged communications between C&H and P&W shall be transmitted exclusively through the following approved channels:
(i) Encrypted email — using the secure email platforms maintained by both firms (C&H's SecureMail system and P&W's equivalent encrypted email functionality). No privileged materials shall be transmitted via unencrypted email, personal email accounts, or messaging applications that do not employ end-to-end encryption.
(ii) Secure file-sharing platform — C&H has established a secure, access-restricted virtual data room for the Investigation (the "Investigation Data Room"), hosted on an industry-standard document management platform with multi-factor authentication, encryption at rest and in transit, and detailed access logging. P&W has been granted access credentials to designated folders within the Investigation Data Room for the purpose of receiving and reviewing privileged materials relevant to their UK governance advisory role.
(iii) Physical documents — To the extent that physical documents containing privileged materials must be transmitted between the firms, such documents shall be sent by secure courier with full tracking capability and signature confirmation upon delivery. Physical documents shall be placed in sealed, tamper-evident envelopes or packages marked with the privilege legend specified below.
Under no circumstances shall privileged materials be transmitted via unencrypted channels, including standard postal mail without tracking and security measures, text message, consumer-grade file-sharing services, or any other channel that does not provide adequate security against interception or unauthorized access.
All privileged materials, whether transmitted electronically or in physical form, shall be clearly labeled with the following legend:
"PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT / LEGAL ADVICE PRIVILEGE — DO NOT DISCLOSE WITHOUT AUTHORIZATION"
B. Designated Points of Contact
To minimize the risk of inadvertent disclosure and to ensure orderly communication, the following individuals are designated as the exclusive points of contact for the transmission of privileged materials:
• C&H: Bernard Crawford (Responsible Partner) and Devon Archer (Lead Associate). All privileged communications from P&W or AGMG to C&H should be directed to Mr. Crawford and Mr. Archer. Other members of C&H's Investigation team (including Renata Vasquez, Nadia Petrov, and supporting attorneys and paralegals) may handle privileged materials internally within C&H but are not designated external points of contact.
• P&W: The designated partner at Pendleton & Warwick LLP (to be confirmed in writing by P&W upon the execution of this protocol). The designated P&W partner's role is advisory, focusing on UK corporate governance matters and privilege coordination under English law.
• AGMG: Fiona Blackwood (General Counsel). All communications between counsel and the Board committees regarding the Investigation shall be routed through Ms. Blackwood. Ms. Blackwood is responsible for ensuring that privileged materials reaching the Board committees are provided only to Dame Cordelia Ashworth and Raymond Okoro, in their capacities as committee chairs, and to Patricia Sung to the extent necessary for her role in providing HR records and policy input.
C. Restriction on Further Distribution
Privileged materials generated in connection with the Investigation shall not be shared beyond the authorized recipients identified in Section II.B above without the prior written authorization of both C&H and P&W. The following specific restrictions apply:
(i) Board committee members who receive privileged materials in their capacity as committee chairs or members shall be instructed — and hereby are instructed — not to further disseminate such materials to any non-authorized persons. This restriction expressly includes Elliot Vane, Chief Executive Officer, who has been recused from Investigation oversight and is not authorized to receive privileged Investigation materials. Any request by Mr. Vane or his office for Investigation-related information should be referred to Ms. Blackwood and, through her, to C&H.
(ii) External auditor — Investigation materials shall not be shared with AGMG's external auditor, Greystone Advisors LLP, without a prior privilege analysis conducted jointly by C&H and P&W. If disclosure to Greystone is determined to be necessary, it should be made only pursuant to a common-interest agreement or non-waiver agreement executed between the Company and Greystone, or through the provision of a limited factual summary that does not disclose privileged legal analysis. Greystone has been notified of the existence of the Investigation in general terms but has not been provided with any privileged materials.
(iii) Insurance carriers and broker — Investigation materials shall not be shared with Northbridge Mutual Insurance Co. (carrier under EPLI Policy No. NM-EPLI-2023-00417) or Castlemaine Underwriters Ltd. (carrier under D&O Policy No. CU-DO-2023-11283), or with Kessler & Dunn Insurance Brokers Ltd. (the Company's insurance broker), without a prior privilege analysis conducted jointly by C&H and P&W. Notice letters were sent to both carriers on May 5, 2023, providing sufficient factual detail to satisfy policy notice requirements without disclosing privileged substance. The notice letters were reviewed and approved by C&H and P&W before transmission.
(iv) Regulatory bodies — No privileged Investigation materials shall be disclosed to any regulatory authority, including the FCA, SEC, CRD, or EEOC, without the prior written approval of both C&H and P&W, following a full assessment of waiver implications under both US and English law.
D. Common-Interest Doctrine
To the extent that AGMG and its wholly owned subsidiary APS share a common legal interest in defending against potential claims arising from the Investigation — including potential claims by Jenna Morales, Claire Ngo, Darren Whitfield, or others — communications between their respective counsel may be protected under the common-interest doctrine (as recognized under US federal and California law) and the common-interest privilege (as recognized, to a more limited extent, under English law).
Under US law, the common-interest doctrine permits parties with a shared legal interest to exchange privileged communications and attorney work product without waiving privilege, provided that the communications are made in furtherance of the common legal interest. The doctrine is well established in the context of corporate parent-subsidiary relationships where both entities face exposure arising from the same set of facts.
Under English law, the common-interest privilege is more narrowly construed and typically requires a pre-existing shared interest in the context of pending or contemplated litigation. The scope of the English common-interest privilege may be more limited than its US counterpart, and C&H and P&W will continue to monitor developments in English case law in this area.
In this Investigation, C&H represents the interests of the corporate group — both AGMG and APS — and P&W provides UK governance advice to the parent company. The common-interest framework supports the sharing of privileged materials between C&H and P&W without waiver of privilege in either jurisdiction, subject to the protocols set forth herein.
Should AGMG or APS in the future engage separate counsel for the subsidiary or for any individual director or officer in connection with matters arising from the Investigation, the common-interest framework would need to be reassessed. In particular, the engagement of personal counsel for any individual whose interests may diverge from those of the Company could necessitate the negotiation of a formal common-interest agreement or, in certain circumstances, the erection of information barriers. C&H and P&W should be consulted before any such engagement is made.
V. WAIVER RISKS AND MITIGATION STRATEGIES
Privilege protection is fragile. The protections of attorney-client privilege, work-product doctrine, legal advice privilege, and litigation privilege can be lost through inadvertent disclosure, selective waiver, subject-matter waiver, or through the placement of privileged advice "at issue" in litigation or other proceedings. This Section identifies the principal waiver risks applicable to this Investigation and sets forth mitigation strategies for each.
A. Inadvertent Disclosure
Inadvertent disclosure of privileged materials remains one of the most common bases for privilege waiver, particularly in document-intensive investigations and litigation involving large volumes of electronic data.
Under federal law, Federal Rule of Evidence 502(b) provides that inadvertent disclosure of a privileged communication or attorney work product does not operate as a waiver if: (i) the disclosure was inadvertent; (ii) the holder of the privilege took reasonable steps to prevent disclosure; and (iii) the holder promptly took reasonable steps to rectify the error, including (if applicable) by following the procedures set forth in Federal Rule of Civil Procedure 26(b)(5)(B). This provision provides meaningful protection against inadvertent waiver in federal proceedings, but its protections are contingent on the holder's demonstration of reasonable precautionary measures.
Under California law, California Evidence Code Section 912 provides that the attorney-client privilege is waived when the holder of the privilege, "without coercion, has disclosed a significant part of the communication or has consented to disclosure made by anyone." Disclosure to a third party generally waives the privilege unless the disclosure is reasonably necessary for the purpose of the communication or is otherwise protected. California law is somewhat less forgiving of inadvertent disclosure than federal law, making precautionary measures all the more critical for materials that may be at issue in California state-court proceedings.
Under English law, inadvertent disclosure of privileged material may result in waiver unless the disclosing party acts promptly to assert privilege and to recall the document. English courts have generally held that a party who inadvertently discloses a privileged document retains the ability to assert privilege if the disclosure was truly accidental and the party takes immediate steps to recover the document and to object to its use. However, the outcome in any particular case depends on the circumstances, and there is no statutory safe harbor equivalent to Rule 502(b).
Mitigation measures for this Investigation include the following:
(i) All privileged documents shall bear clear privilege markings in accordance with the labeling protocol set forth in Section VI.A.
(ii) All electronic transmissions of privileged materials shall use the encrypted channels specified in Section IV.A.
(iii) The document review platform being used for the review of the approximately 38,600 filtered items currently under review (from the approximately 214,000 unique items collected by Linden Forensics Group Inc.) includes privilege-logging functionality and will be configured to flag potentially privileged documents for review by C&H attorneys.
(iv) A quality-control review ("QC review") shall be conducted before any production of documents in any litigation or regulatory proceeding. The QC review shall include a secondary review of all documents identified as potentially privileged and a random sampling of documents designated as non-privileged to verify the accuracy of the privilege review.
(v) In the event of an inadvertent disclosure, the disclosing party shall immediately notify C&H and P&W, and C&H shall take prompt steps to recall the document, assert privilege, and invoke the protections of Rule 502(b) (in federal proceedings) or the applicable state-law or English-law equivalent.
B. Selective Waiver
The doctrine of selective waiver — under which a privilege holder discloses privileged materials to one party (such as a regulator) while seeking to maintain the privilege as against all other parties — has been the subject of considerable litigation and is not broadly recognized.
Under US law, most federal circuits do not recognize selective waiver. Disclosure of privileged materials to a government agency or regulator is generally treated as a waiver of the privilege as to all parties, not merely as to the agency or regulator. See, e.g., Westinghouse Elec. Corp. v. Republic of the Philippines, 951 F.2d 1414 (3d Cir. 1991); In re Qwest Commc'ns Int'l Inc., 450 F.3d 1179 (10th Cir. 2006). California law similarly does not recognize selective waiver. Accordingly, any disclosure of privileged materials to a regulator — even under a confidentiality agreement — carries a substantial risk that the privilege will be deemed waived as to all parties, including adverse litigants.
Under English law, selective waiver is generally not recognized. Voluntary disclosure of privileged material to a third party, including a regulator, may waive privilege broadly, entitling other parties to demand production of the same materials.
Mitigation: If any disclosure of privileged materials to a regulator (including the FCA, SEC, CRD, or EEOC) is contemplated at any stage of the Investigation or subsequent proceedings, both C&H and P&W must be consulted in advance to assess the waiver implications under both US and English law. The following protective measures should be considered:
(a) Negotiation of a confidentiality agreement with the regulator restricting the further use and dissemination of disclosed materials;
(b) Application to the relevant court for a protective order or non-waiver order (e.g., under Federal Rule of Evidence 502(d), which permits court orders providing that disclosure in connection with federal proceedings does not constitute a waiver);
(c) Preparation of factual summaries or presentations that convey necessary information to the regulator without disclosing the substance of privileged legal analysis.
C. Subject-Matter Waiver
Under US law, the voluntary disclosure of a privileged communication on a particular subject may trigger a waiver of privilege as to all communications on the same subject matter, to the extent fairness requires. Federal Rule of Evidence 502(a) codifies this principle, providing that, in federal proceedings, disclosure of a privileged communication or work product operates as a waiver of the privilege "in a federal or state proceeding" as to "an undisclosed communication or information" only if the waiver is intentional, the disclosed and undisclosed communications concern the same subject matter, and "they ought in fairness to be considered together."
This risk is particularly acute in the context of public statements, securities filings, and Board resolutions that may reference the Investigation or its findings. For example, if AGMG issues a press release or securities filing stating that the Investigation found certain facts or reached certain conclusions, an adverse party could argue that the Company has selectively disclosed privileged material and that, in fairness, all Investigation communications on the same subject matter should be produced.
Mitigation: Any partial disclosure of Investigation findings — whether in securities filings submitted to AIM or the FCA, press releases, Board resolutions, or other public or semi-public communications — must be carefully drafted to avoid triggering subject-matter waiver. All such communications should be reviewed by both C&H and P&W before issuance, with a specific focus on ensuring that:
(a) The communication does not disclose the substance of privileged legal advice or the conclusions of the privileged Investigation report;
(b) The communication is limited to factual statements that are independently known or verifiable without reference to privileged materials; and
(c) The communication does not characterize the Investigation's findings in a manner that could be construed as a voluntary disclosure of the substance of the privileged report.
D. Waiver Through Personnel Actions
A significant and frequently litigated waiver risk arises in the context of adverse employment actions taken on the basis of an internal investigation. If AGMG or APS relies on the Investigation's findings to support the termination of Marcus Hale for cause — specifically under Section 9.2(b) of Mr. Hale's employment agreement, dated January 7, 2019, which permits termination for cause based on specified grounds including misconduct — and if Mr. Hale subsequently challenges the termination in litigation, the Company may face arguments that it has placed the Investigation's privileged legal advice "at issue" and thereby waived the privilege.
Courts have recognized an "at issue" or "implied waiver" doctrine under which a party that relies on privileged communications as a sword (e.g., to justify a business decision) may be deemed to have waived the privilege as a shield. See, e.g., Hearn v. Rhay, 68 F.R.D. 574, 581 (E.D. Wash. 1975). If the Company's termination letter or Board resolution references C&H's privileged advice or the Investigation's privileged conclusions as a basis for the termination, Mr. Hale's counsel could argue — with some force — that the Company has placed the advice "at issue" and that fairness requires disclosure of the underlying privileged materials.
Mitigation: To minimize this waiver risk, the following steps should be taken:
(i) The termination decision, if made, should be framed as based on the Company's independent assessment of the underlying facts, not on reliance on privileged legal advice provided by C&H. The Board resolution authorizing the termination should reference the factual grounds for termination without disclosing the substance of C&H's privileged legal analysis or conclusions.
(ii) Any termination letter delivered to Mr. Hale should cite the specific factual bases for the for-cause termination under Section 9.2(b) of the employment agreement, without referencing or attaching the privileged Investigation report or any privileged memoranda.
(iii) C&H and P&W shall collaborate on the drafting of any Board resolution or termination communication to ensure that the language employed is consistent with the preservation of privilege and does not create an "at issue" waiver.
(iv) In any subsequent litigation, the Company's defense of the termination decision should rely on the independently established facts, rather than on the content of privileged communications with counsel.
E. Cross-Border Waiver Considerations
Perhaps the most complex waiver risk in this Investigation arises from the fact that the privilege laws of the United States and the United Kingdom are not coextensive. A disclosure that does not waive privilege under US law may nonetheless waive privilege under English law, and vice versa. Several specific scenarios illustrate this risk:
(a) Communications with non-authorized employees that are privileged under Upjohn (US) may not be privileged under the Three Rivers standard (England). If such communications are disclosed in US proceedings without waiver of US privilege, they may nonetheless be deemed unprotected by legal advice privilege in subsequent English proceedings.
(b) Litigation privilege under English law terminates upon the conclusion of litigation, while the attorney-client privilege and work-product doctrine under US law are more enduring. Materials that lose litigation privilege protection in England after the conclusion of a proceeding could become vulnerable to disclosure in subsequent English proceedings, even if they remain privileged in the US.
(c) The absence of a recognized selective-waiver doctrine in either jurisdiction means that any disclosure to a regulator in one jurisdiction may have waiver implications in the other.
Practical rule: To address these cross-border waiver risks, the following overarching principle shall govern the handling of all privileged Investigation materials:
Before any disclosure of Investigation-related materials to any third party — whether in the context of litigation, regulatory proceedings, auditor communications, insurance carrier interactions, or otherwise — both C&H and P&W must provide written clearance confirming that privilege is maintained under both US and English law. No disclosure shall be made until such dual clearance has been obtained.
Where the English-law standard is more restrictive than the US standard (as is the case with legal advice privilege under Three Rivers), the more restrictive standard shall govern the handling of the material in question. Where the US standard is more restrictive (as may be the case with respect to selective waiver analysis in certain circumstances), the US standard shall govern. In all cases, the goal is to maintain the highest level of privilege protection recognized under either jurisdiction.
VI. DOCUMENT HANDLING AND LABELING PROTOCOL
Proper handling, labeling, storage, and logging of privileged documents are essential components of any effective privilege-protection strategy. The following protocols apply to all materials generated or received in connection with the Investigation.
A. Privilege Markings
Consistent and prominent privilege markings serve as evidence that the privilege holder took reasonable steps to preserve the confidentiality of privileged materials — a factor that is relevant under both US and English law in assessing whether an inadvertent disclosure constitutes a waiver.
The following labeling conventions shall apply:
(i) All memoranda, correspondence, interview notes, analytical documents, and other materials prepared by C&H in connection with the Investigation shall bear the following legend, prominently displayed at the top of the first page and, where practicable, in the header or footer of each subsequent page:
"PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT"
(ii) All documents prepared by P&W, or jointly by C&H and P&W, shall bear the following dual-jurisdiction legend:
"PRIVILEGED AND CONFIDENTIAL — LEGAL ADVICE PRIVILEGE / LITIGATION PRIVILEGE / ATTORNEY WORK PRODUCT"
(iii) Documents shared between US and UK counsel shall bear dual-jurisdiction markings that reflect the privilege protections asserted under both legal regimes. The combined legend shall read:
"PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT / LEGAL ADVICE PRIVILEGE / LITIGATION PRIVILEGE — DO NOT DISCLOSE WITHOUT AUTHORIZATION"
These markings shall be applied to all privileged materials regardless of format (electronic or physical) and regardless of the channel through which the materials are transmitted.
B. Storage and Access Controls