Attorney-Client Privilege - SELECTED ETHICS AND PROFESSIONALISM ISSUES LABOR AND EMPLOYMENT LAW

The attorney-client privilege protects disclosure of contents of communications between an attorney

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and the attorney’s client.

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Because lawyers representing corporations and organizations owe their fundamental allegiance to the entity, not to any of its officers, directors or employees,

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it must be determined which individuals within the entity are included within the scope of the attorney-client privilege.

1. The Tests for Determining Corporate “Client Confidences”

Courts have developed two different approaches to determining which communications between a lawyer and members of a corporation or organizational party are protected from disclosure by the attorney-client privilege: the “control group” test and the “subject matter” test.

“Control Group” Test. The “control group” test applies the privilege only to persons in a position to control or take substantial part in a decision about any action that the corporation could take upon advice of counsel.

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“Subject Matter” Test. The United States Supreme Court explicitly rejected the

“control group” test in Upjohn Co. v. United States, 449 U.S. 383 (1981). Although not

mother, even though case did not involve jury trial, such that state rule of professional responsibility would not apply; conflict was posed by the almost inevitable prospect that grandfather would act both as a percipient witness and an advocate in the dispute over child’s care and custody, most of the difficulties inherent in an attorney’s taking on the role of both advocate and witness were present regardless of whether testimony would be given in front of a jury or a judge, and there was no California-based policy reason not to apply broader ABA Model Rules to the case);

N.Y. City Ethics Op. No. 2005-03 (2005) (no per se bar to prevent lawyer from voluntarily testifying about a former client, but if the testimony would involve revelation of a “confidence” or “secret,” the lawyer should attempt to secure the former client’s consent before agreeing to testify); Utah Ethics Op. No. 04-02 (2004) (lawyer must determine whether, under the facts of the case, she is a “necessary witness” in the litigation; if she is and disqualification would not work a substantial hardship on the client, she must withdraw prior to trial). Cf. N.C.

Ethics Op. No. 2011-1 (2011) (lawyer-litigant who is likely to be a necessary witness is not automatically disqualified by Rule 3.7 from representing himself); Broad Breach Mgmt, Inc., 1994 N.L.R.B. LEXIS 370 (May 20, 1994) (NLRB has no duty to rule on ethical propriety of lawyer functioning as lawyer and witness).

86 Communications made to an individual in the reasonable, but mistaken, belief that the individual was an attorney may also be protected. See Gucci America, Inc. v. Guess?, Inc., 2011 WL 9375 (S.D. N.Y. Jan. 3, 2011) (communications between plaintiff corporation and its in-house counsel were protected by the attorney-client privilege even though at the time of the communications the counsel was an “inactive” member of the California bar; attorney-client privilege attaches to confidential communications made to an individual in the genuine, but mistaken, belief that the individual is an attorney and the corporation had a reasonable belief that the in-house counsel was an attorney throughout the relevant period).

87 Upjohn Co. v. United States, 449 U.S. 383, 395-96 (1981).

88 ABA Model Rules R. 1.13; ABA Model Code EC 5-18.

89 See Sterling Fin. Mgmt., L.P. v. UBS PaineWebber, Inc., 782 N.E.2d 895 (Ill. App. 2002) (control group test applies in Illinois notwithstanding Upjohn); Hayes v. Burlington N. & Santa Fe R.R. Co., 752 N.E.2d 470 (Ill.

App. 2001) (sole director of claims for particular region of railroad’s operations was member of “control group” for purposes of FELA case summary and letter to railroad’s general counsel on matter).

endorsing any broad alternative rule, the Court’s ad hoc, case-by-case balancing approach was consistent with the subject matter test of Diversified Indus., Inc. v. Meredith, 572 F.2d 596, 609 (8th Cir. 1977), which the Court cited with approval. Under the subject matter test of Diversified Industries, the attorney-client privilege is applicable to an employee’s communication if: (1) the communication was made for the purpose of securing legal advice; (2) the employee making the communication did so at the direction of his corporate superior; (3) the superior made the request so that the corporation could secure legal advice; (4) the subject matter of the communication is within the scope of the employee’s corporate duties; and (5) the communication is not disseminated beyond those persons who, because of the corporate structure, need to know its contents.

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90 See In re County of Erie, 473 F.3d 413 (2^nd Cir. 2007) (emails between assistant county attorney and county officials, which proposed changes to existing strip search policies to make them constitutional and to provide guidance to executive officials within the sheriff’s department to take steps to implement policy, were protected from disclosure by the attorney-client privilege; each of the emails was sent for the predominant purpose of soliciting or rendering legal advice since they conveyed to the officials responsible for formulating, implementing and monitoring county’s correctional policies, a lawyer’s assessment of the Fourth Amendment requirements and provided guidance in crafting and implementing alternative policies for compliance); In re Ford Motor Co., 110 F.3d 954, 964-65 (3^rd Cir. 1997) (minutes of meeting attended by top-level executives of automobile manufacturer, in which general counsel briefed attendees about a report he had drafted regarding vehicle that was subject of plaintiff’s product liability claims, were protected by attorney-client privilege under either Pennsylvania or Michigan law, as ultimate decision at meeting was reached only after legal implications of doing so were discussed, and disclosure of documents would reveal legal advice secured by attendees); In re Grand Jury Subpoena, 886 F.2d 135 (6^th Cir. 1989) (city council was client of city attorney with respect to closed condemnation hearings held pursuant to city code; therefore, district court erred in concluding that city council could not invoke attorney-client privilege to protect minutes of the meetings); Shaffer v. American Medical Assn., 662 F.3d 439 (7th Cir. 2011) (in FMLA case, memorandum prepared by department head regarding rationale for staff reductions, prepared for the sole purpose of meeeting with in-house counsel regarding threatened litigation concerning the decision, was privileged, even though prepared after the decision in question was made); United States v. Graf, 610 F.3d 1148 (9th Cir. 2010) (Defendant, who was functional equivalent of employee of health insurance company, was not entitled to personal claim of attorney-client privilege to protect his communications with corporate counsel for company;

although defendant was primary agent with whom corporate counsel communicated, counsel never informed defendant that he was their client, all matters discussed between defendant and counsel related to the company, the company paid all legal bills, and defendant admitted that he never requested that counsel represent him personally.);

Sprague v. Thorn Ams., Inc., 129 F.3d 1355 (10th Cir. 1997) (legal memorandum allegedly addressing employer’s disparate treatment of women prepared for higher management by in-house attorney acting within scope of employment protected by attorney-client privilege, even if communications do not contain confidential matters;

plaintiff’s affidavit by management employee referring to contents of memorandum did not waive privilege; power to waive privilege rests with corporation’s management and is normally exercised by its officers and directors);

Howell v. Joffe, 483 F. Supp. 2d 659 (N.D. Ill. 2007) (lawyer for defendant left voice mail message on answering machine of former parochial school student who had sued church and diocese for allege childhood sexual abuse, then incorrectly hung up phone and proceeded to speak with an employee of the defendant about the plaintiff; the communication was protected from disclosure under the attorney-client privilege, to the extent the message inadvertently memorialized prior confidential conversation between defense counsel and clergy; prior conversation involved, inter alia, comparison between former student and others who had made similar allegations.); Verschoth v.

Time Warner, Inc., 85 Fair Empl. Prac. Cas. (BNA) 1528 (S.D. N.Y. 2001) (conversations between a freelance editor and a staff editor in which legal advice about the plaintiff was discussed was not protected by the attorney-client privilege because the freelance editor did not manage or supervise employees and was not responsible for effecting corporate policy regarding the legal advice given). Rivera v. Kmart Corp., 190 F.R.D. 298, 303 (D.P.R.

2000) (documents authored by corporate official in charge of corporation’s insurance claims were protected by attorney-client privilege, where the information was needed by the corporation’s lawyers, and in-house counsel who received information from official was acting as an attorney when he received the documents; moreover, subjects

Upjohn and its progeny are binding only upon federal courts,

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although many state courts now reach the same result.

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discussed therein were consistent with giving subsequent legal advice); Brennan v. Western Nat. Mut. Ins. Co., 199 F.R.D. 660 (D.S.D. 2001) (handwritten note by employee of insurer which memorialized advice given by insurer’s attorney over telephone was covered by attorney-client privilege in insured’s bad faith action against workers’

compensation insurer); Variable Annuity Life Ins. Co. v. PENCO, Inc., 2006 U.S. Dist. LEXIS 12258 (S.D. Tex.

March 7, 2006) (questions asked and answers given in interviews conducted by a company employee at president’s request were not protected by the attorney-client privilege simply because the company communicated the information to its counsel and one cannot bring communications within the attorney-client privilege simply by giving them to an attorney; however, any communications between company employees and company’s counsel regarding the proper course of action based on the results of the interviews would be protected as an attorney-client communication); Cf. Miles v. Great Northern Ins. Co., 671 F.Supp.2d 231 (D.Mass. 2009), judgment affirmed, 634 F.3d 61 (1^st Cir. 2011) (information withheld from fire insurer by attorney/insured in examination under oath conducted during insurer’s investigation into whether insured had intentionally set fire, namely identities of persons that allegedly had threatened to “destroy” insured, was not protected by attorney-client privilege; information in question was within exception for prevention of criminal or fraudulent act reasonably believed likely to result in substantial injury to financial interests or property of another); State ex rel. Leslie v. Ohio Hous. Fin. Agency, 824 N.E.2d 990 (Ohio 2005) (communications by employees of State Departments are subject to the attorney-client privilege.).

91 See In re Bieter Co., 16 F.3d 929 (8^th Cir. 1994).

92 See Samaritan Found. v. Goodfarb, 862 P.2d 870 (Ariz. 1993) (rejecting control group test) (overruled in other respects by statute); Fireman’s Fund Ins. Co. v. Superior Court, 196 Cal. App.4th 1263 (2011) (Attorney-client privilege precluded property insurer’s attorney from being compelled to answer deposition questions as to (a) what she told a partner in her firm in order for him to write a personal check to a witness in an investigation of insured’s property damage claims, (b) as to whether attorney explained to partner who the witness was before partner wrote the check, and (c) as to how another attorney at the firm drafted a witness’s declaration without speaking to the witness, in an investigation of insured’s property damage claims; the questions sought the other attorney’s evaluation of the witnesses and legal opinions involved in the drafting of the declaration and are not discoverable, absent evidence that those legal opinions had been shared with anyone outside the firm.); Zurich Amer.

Ins. Co. v. Superior Ct., 155 Cal. App. 4^th 1485 (2007) (in bad faith action by insured against insurer, insured sought insurer’s internal documents, and the trial court held that only documents between lawyers and insurance company personnel enjoy the attorney-client privilege and thus the privilege would not apply to communications between and among personnel who were not lawyers even if they deal with acting upon, or implementing, the lawyer’s advice;

the court of appeals reversed and held that insofar as legal advice was discussed or contained in communications among insurer’s employees to whom disclosure of legal advice or opinions was necessary to further purpose of legal consultation, those communications came within attorney-client privilege and thus were presumptively privileged);

Scripps Health v. Super. Ct., 109 Cal. App. 4th 529 (2003) (confidential occurrence reports prepared by a hospital were protected by the attorney-client privilege where the reports were confidential reports prepared by hospital employees under its risk management plan and pursuant to the directive of its legal department and the reports were

“primarily created for the purpose of attorney review, whether or not litigation is actually threatened at the time the report is made”); Smith v. Laguna Sur Villas Cmty. Ass’n, 79 Cal. App. 4^th 639 (2000) (condominium association, but not individual homeowners, held attorney-client privilege with respect to law firm retained for construction defect lawsuit against developer, and thus dissident homeowners who questioned the amount of law firm’s bills could not demand production of the law firm’s work product or legal bills); Woodbury Knoll, LLC v. Shipman and Goodwin, LLP, 48 A.3d 16 (Conn. 2012) (Trial court’s decision to grant the request of defendant law firms in an underlying legal malpractice case for privileged, attorney-client communications from a non-party law firm, on the basis the requested materials were not, or no longer were protected by the attorney-client privilege, constituted an abuse of discretion; the request for any and all documents related to non-party law firm’s representation of plaintiff clients in an unrelated action clearly embodied a request for privileged materials); Lash v. Freedom of Information Commission, 14 A.3d 998 (Conn. 2011) (Communications between assistant town attorney and town’s first selectman related to legal advice, as required to establish that the communications were exempt, pursuant to attorney-client privilege, from disclosure requirements of FOIA; communications discussed strategy concerning

pending litigation arising from request to town board of estimate and taxation for geographical information system (GIS) data, stated that attorney took action in response to a suggestion by one of the town official, reported the results of the action, and offered a strategic analysis of those results.); Ford Motor Co. v. Hall-Edwards, 997 So.2d 1148 (Fla.App. 2008), review denied, 14 So.3d 241 (Fla. 2009) (Corporate counsel database was a mechanism for manufacturer’s inside and outside counsel to communicate among each other, exchanging thoughts, opinions, strategies, mental impressions, and advice regarding defense of lawsuits and claims solely for the purpose of, and in furtherance of, the rendition of legal services to manufacturer, and, thus, was confidential communication immune from discovery under attorney work product and attorney-client privileges, where opposing party did not challenge manufacturer’s affidavits or testimony attesting to privileges); Gabriel v. Northern Trust Bank, 890 So.2d 517 (Fla.

App. 2005) (discovery request seeking documents that “relate to” specific allegations of the complaint improperly sought documents protected by the attorney-client privilege and work product doctrine; counsel’s determinations as to what documents were responsive to the request could indicate counsel’s litigation strategy.); Keefe v. Bernard, 774 N.W.2d 663 (Iowa 2009) (Iowa rejects “control group” test); Lexington Pub. Library v. Clark, 90 S.W.3d 53 (Ky. 2002) (definition of “representative of the client” in Ky. Rules of Evidence was intended to embody the principles enunciated in Upjohn); Neighborhood Dev. Collaborative v. Murphy, 233 F.R.D. 436 (D. Md. 2005) (the

“intermediary doctrine” protected the attorney-client privilege with respect to communications between the law firm representing defendant and financial advisor, as these privileged communications were made in confidence for the purpose of obtaining legal advice from the law firm); Gifford v. Target Corp., 723 F. Supp.2d 1110 (D. Minn.

2010)(E-mail sent by employer’s senior manager to her supervisor with a courtesy copy to employer’s in-house counsel and another employee, which summarized conversation between manager and outside counsel as to selection of store team leaders, was entitled to attorney-client privilege in employees’ FLSA action against employer; manager, pursuant to her supervisors’ discretion, included counsel on communication relating to matter affecting scope of manager’s duties and requested thoughts of in-house counsel, and e-mail also described content of a previous privileged discussion manager had with outside counsel regarding legal analysis and strategy.); Mich.

Ethics Op. No. RI-348 (July 26, 2010) (lawyer may rely on nonlawyer assistant as an intermediary to gather information from client and then relay the lawyer’s advice back to the client, provided lawyer takes steps to prevent the assistant from elaborating or adding to the lawyer’s advice); ATV Watch v. New Hampshire Dep’t of Transportation, 20 A.3d 919 (N.H. 2011) (Documents related to discussions between attorney for Department of Transportation and attorney for New Hampshire Department of Resources and Economic Development were made for purposes of facilitating rendition of professional legal services to DOT, and thus, were privileged attorney-client communications, for purposes of petitioners’ request to DOT for records relating to use of all-terrain vehicles on former railroad corridors converted to rail trails); State ex rel. Leslie v. Ohio Hous. Fin. Agency, 824 N.E.2d 990 (Ohio 2005) (communications by attorney-employees of State Departments are subject to the attorney-client privilege.); Tobaccoville USA, Inc. v. McMaster, 692 S.E.2d 526 (S.C. 2010) (Attorney client privilege applied to documents between Attorney General (AG) and National Association of Attorneys General concerning cigarette importer’s status as tobacco product manufacturer under Master Settlement Agreement (MSA) on recovery of tobacco related health care costs, if the documents contained confidential communications pertaining to legal matters; although AG had not retained Association attorneys, Attorney General was paid member and solicited Association attorneys for legal advice and consultation on matters relating to the tobacco litigation, the MSA, subsequent enforcement of the MSA, and tobacco regulation.); In re E.I. DuPont de Nemours and Co., 136 S.W.3d 218 (Tex. 2004) (attorney-client privilege may apply to communications between attorneys and employees who are not executives or supervisors); In re Small, 346 S.W.3d 657 (Tex. App. 2009) (in suit by former lessee against energy company and its landman for fraudulent inducement, assertion by former lessee that company’s attorney-client privilege was waived because it included company’s landman was rebutted by evidence that landman was retained to assist attorney regarding curative measures being taken on the property title, and he understood his communications were confidential); In re Houseman, 66 S.W.3d 368 (Tex. App. 2001) (psychiatrist employed by attorney to assess client’s mental competency was “representative of the lawyer” and thus his testimony was barred by attorney-client privilege); In re Fontenot, 13 S.W.3d 111 (Tex. App. 2000) (documents submitted by physician to his liability insurance carrier, written narrative provided to attorney in another lawsuit and confidential claim questionnaire with same written narrative attached, after he received pre-suit notices of claim in medical malpractice case covered by the attorney-client privilege; physician’s contract of insurance expressly confers upon insurer right and duty to obtain and facilitate legal representation for physician in the event he is faced with a liability claim and it is undisputed that physician was communicating directly with his attorney when he copied the letter to the insurer

Note that the privilege will not apply if the communications at issue were not created for the purpose of securing legal advice to the corporation;

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or the individual providing the advice is

and attached it to the questionnaire); Moler v. CW Management Corp., 190 P.3d 1250 (Utah 2008) (For a person to qualify as a representative of the client, for purposes of attorney-client privilege, there is no requirement that the person must be retained to give legal advice or that the person’s services must be essential to legal representation of the client; in order to resolve whether a person qualifies as a representative of the client, the district court need make only determine whether the individual was “one having authority to obtain professional legal services, or to act on advice rendered pursuant thereto, on behalf of the client, or one specifically authorized to communicate with the lawyer concerning a legal matter”); Broyles v. Thurston County, 195 P.3d 985 (Wash. App. 2008) (Communications that occurred at meeting between female deputy prosecuting attorneys (DPAs) and attorneys who ultimately represented them in workplace discrimination action against county were privileged, regardless of whether a female DPA who attended the meeting but was not a plaintiff in the subsequent action believed she was a client or was willing to waive the privilege). See also Section 12-2234.B of the Ariz. Statutes (communication between an

In document SELECTED ETHICS AND PROFESSIONALISM ISSUES LABOR AND EMPLOYMENT LAWYERS DENNIS P. DUFFY, ESQ. BAKERHOSTETLER (Page 54-92)