Clearly, JPMorgan and the Federal Energy Regulatory Commission have divergent views of how much information the bank's energy division needs to disclose to its regulator. On Nov. 14, for instance, when FERC commissioners barred JPMorgan Ventures Energy from selling energy at market rates for six months, they cited the bank's omission of material information in filings related to bidding in the California energy market. And that's only the latest disclosure dispute between FERC and JPMorgan. You may recall that last summer, FERC lawyers took the opportunity of a fight over the bank's assertion ofattorney-client privilege to reveal publicly that the regulator is pursuing an enforcement investigation of JPMorgan's alleged manipulation of energy markets in California and the Midwest. (The enforcement action is related to, but separate from, the Nov. 14 sanction.)

In the discovery fight, FERC accused JPMorgan and its lawyers at Sutherland Asbill and Skadden, Arps, Slate, Meagher & Flom of claiming privilege over emails that didn't deserve the protection. Some of the supposedly privileged communications, as FERC counsel Thomas Olson explained in a declaration filed in July in federal district court in Washington, were between non-lawyers, yet when FERC asked Catherine Krupka of Sutherland and William Scherman of Skadden to explain why emails between people who are not attorneys can be shielded by attorney-client privilege, the bank continued to assert that the communications involved the discussion of privileged material, so the privilege applied.

Last spring, after several rounds of demands from FERC and rebuffs from Skadden and Sutherland, the bank turned over unredacted versions of 28 of the disputed emails. It refused, however, to produce the final 25, holding fast to its claim of privilege. In July, FERC made good on its threats to subpoena the documents and reveal its investigation of JPMorgan. The bank, in turn, accused the regulator of engaging in an "abusive litigation tactic" by using the privilege dispute to tell the world about a non-public, incomplete investigation. "In the normal course, when the enforcement staff seeks a subpoena in the context of an ongoing non-public investigation, it does not publicly disclose detailed information about the underlying investigation itself," JPMorgan said.

U.S. Magistrate Judge Deborah Robinson of Washington tried to get FERC and the bank to resolve the dispute themselves, but it's not very surprising, given the stakes for JPMorgan and the nastiness of the cross-accusations, that they failed. It was left to the magistrate judge to decide whether JPMorgan's redactions in those last 25 emails were justified by attorney-client privilege.

On Thursday, Robinson vindicated JPMorgan's privilege claims. In a six-page ruling, the judge said that she had reviewed unredacted versions of the 25 emails and that "the information redacted indeed is shielded from disclosure by the attorney-client privilege," she wrote. "More specifically, the court finds that the redactions are of communications between (JPMorgan) and its counsel, acting as counsel, with respect to legal advice relating to facts communicated confidentially to counsel by (the bank)."

FERC had argued that Robinson should regard JPMorgan's privilege claims with extra suspicion since the bank had essentially admitted to initially asserting the privilege over 28 emails that didn't merit protection. Robinson said the regulator was misreading the case law. Its interpretation, she said, would have had the effect of punishing JPMorgan's lawyers for voluntarily revisiting their claim.

So JPMorgan has won the battle, but the war -- FERC's market manipulation investigation -- continues. We'll have to wait and see whether the bank's intransigent view of its discovery obligations will come back to haunt it.

JPMorgan counsel Krupka referred me to a bank representative, who didn't respond to an email request for comment. A Skadden representative declined to comment, as did a FERC spokesman.

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