Analysis: Does the Privilege Cover Post-Accident Investigation Reports? Reply

In a case that should prove instructive for corporate legal and risk-management departments, a Washington state appellate court ruled that the attorney–client privilege protected a post-accident investigation report from discovery in a personal-injury case.  The case provides a privilege roadmap for companies that conduct post-accident investigations as a matter of course.  Doehne v. Empres Healthcare Mgt., LLC, 2015 WL 4756393 (Wash. Ct. App. Aug. 11, 2015).  You may access the opinion here.

Investigation listThose Pesky Wheel Stops

The plaintiff left a healthcare facility managed by the defendant, Empres, and tripped and fell on a wheel stop in the parking lot.  Empres has an in-house legal department as well as a risk-management department.  The risk manager “acts as a conduit between the legal department and insurers regarding liability issues.”

After the accident, Empres’s legal department directed the risk manager to conduct an investigation into the wheel-stop fall.  The risk manager then instructed an Empres operations manager’s administrative assistant to do the investigation and prepare a report.  And she did so “consistent with how [she] generally performed these tasks for [her] employer.”

Privilege Ruling

Using language that corporate legal departments may in the future cite with some frequency, the appellate court stated that the “attorney–client privilege applies to any information generated by a request for legal advice, including documents created by clients with the intention of communicating with their attorneys.” (emphasis added).  By contrast, the privilege “does not protect documents that are prepared for some purpose other than communicating with an attorney.”  (emphasis added).

Here, while a report from an operations manager’s administrative assistant seems far removed from the legal department, Empres submitted the assistant’s declaration stating that she prepared the report for and provided it to Empres’s “risk management and legal departments.”  And this declaration sealed the privilege, with the court noting that the privilege applies “to communications between in-house counsel and multiple lower-level employees in an organization when those communications are made in order to secure legal advice.”

The plaintiff argued, with support, that the assistant prepared the report consistent with her regular duties and did not provide the report to any specific attorney.  While true, the court rejected this theory, noting that “the purpose rather than the manner of preparation guides [its] analysis.”  And because Empres proved that the assistant prepared the report to assist in-house counsel in addressing liability issues, the privilege protected it from discovery.

PoP Analysis: Contrast and Compare

The Doehne decision contrasts with other rulings on post-accident reports that PoP has profiled.  In Nelson v. Intercontinental Hotels Group Operating Corp., 2013 WL 5890612 (N.D. Ill. Nov. 1, 2013), discussed in this post, the court ruled that the privilege did not apply to post-accident reports conducted in accordance with the company’s regular business policy.

In Nelson, however, there was no evidence that the company’s legal department directed the post-accident investigation; whereas, in Doehne, the legal department requested the investigation, and the privilege applied even through ultimately conducted by a lower-level employee.

And in Mega Manufacturing, Inc. v. Eighth Judicial District Court, 2014 WL 2527226 (Nev. May 30, 2014), profiled in this post, the Nevada Supreme Court rejected the privilege for an engineer’s post-accident report provided to the company’s outside counsel.   Again, it appears there was little evidence that the company’s lawyers actually directed the investigation, a key in the Doehne decision.

In sum, in order to establish the privilege, companies should endeavor to have its counsel, in-house or outside counsel, direct the investigation, even if delegated, and ensure that the investigation findings are for the purpose of the attorney rendering legal advice to the company.  Otherwise, post-accident reports conducted by business employees for business employees will likely receive no privilege protection.

18 Questions Doom Counsel’s Inadvertent Disclosure Argument and Waive Privilege Reply

We all know that lawyers must “promptly take steps to rectify” an inadvertent disclosure of privileged information or risk privilege waiver.  FRE 502.  And while the term “promptly” may have different meanings in different contexts, a federal court has ruled that permitting a lawyer to ask 18 deposition questions about an inadvprivilege boxertently disclosed, privileged email before lodging an objection was not prompt enough.  Waste Connections of N.C., Inc. v. K.R. Drenth Trucking, Inc., 2015
WL 4647823 (W.D.N.C. Aug. 5, 2015).  You may read the opinion here.

Background

In this breach-of-contract case, the corporate plaintiff produced over 11,000 emails and documents, including emails between the company’s Division Vice President and two in-house lawyers.  One of these emails contained a statement indicating the vice president’s interpretation of a pertinent contract provision.

At the vice president’s deposition, defense counsel showed him one of these emails and asked 18 questions about it without objection from plaintiff’s counsel.  The parties took a 49-minute lunch break and, upon resumption of the deposition, plaintiff’s counsel informed defense counsel that it appeared his client inadvertently produced privileged documents.

Defense counsel then filed a motion asking the court to deem the privileged waived as to the email used at the deposition as well as all inadvertently disclosed privileged emails.

Consent Protective Order

The parties agreed that a Consent Protective Order, available for review here, governed the vice president’s deposition and related discovery.  While the Order provides guidance regarding the identification and return of inadvertently produced documents, it was silent regarding the precautionary measures that the parties must take to avoid inadvertently producing privileged information.  The court took note of the absence of any governing provisions.

Adequate Measures

In the absence of guidance from the Consent Protective Order, the court defaulted to FRE 502 to determine whether the corporate plaintiff took adequate precautionary measures to prevent inadvertent disclosures.  The plaintiff argued that objections to privileged materials do not have to be immediate, but the court determined that allowing 18 questions before asserting an objection was neither immediate nor prompt.

The Court is sympathetic with counsel, but does not believe that he should be afforded greater protection than an attorney at trial who does not object to evidence at the critical point when tendered.

The court found the privileged waived and ordered production.

PoP Analysis

Two lessons arise from the Waste Connections opinion.  First, if lawyers agree on a protective order that governs inadvertent disclosures, then they should consider including an agreement on precautionary measures that each party must take to avoid inadvertent production of privileged information.  Without identified and agreed-upon measures, courts will default to FRE 502 (or state equivalent) to determine the adequacy of procedures.  A word of caution: if a party agrees to certain pre-production measures, then he must adhere to them or risk indefensible waiver.

Second, while allowing your opponent lawyer 18 questions on a putatively privileged document may not seem overly permissive, particularly when the lawyer was unsure how defense counsel obtained the documents and felt secure in the Consent Protective Order, the court’s ruling instructs lawyers to object immediately, even with a protective order, and prevent further questioning until all of the facts are known.

D.C. Circuit (Again) Upholds Privilege for In-House Counsel’s Internal Investigation Reply

Following its significant July 2014 opinion that the attorney–client privilege covers corporate internal investigations led by in-house counsel, the D.C. Circuit has ruled that the in-house lawyer did not subsequently waive that privilege by reviewing the investigation materials prior to his deposition or by placing the Investigationinvestigation results “at issue” in the case.  In re Kellogg Brown & Root, Inc., 2015 WL 4727411 (D.C. Cir. Aug. 11, 2015).  You may read the decision here.

Initial Decision

In a July 2014 opinion that PoP discussed in this post, the D.C. Circuit reversed a district court’s decision that the attorney–client privilege did not cover KBR’s internal investigation into whether the company defrauded the government by inflating invoices to the Department of Defense.  The court held that the privilege applies so long as the company’s legal department directed the investigation.

But on Remand …

On remand, KBR presented its in-house counsel as its 30(b)(6) representative on the topic of KBR’s internal investigation.  In preparation for the deposition, KBR’s in-house lawyer reviewed the internal-investigation materials, but KBR’s outside counsel asserted privilege objections to the in-house lawyer’s testimony about the investigation.

KBR later filed a summary judgment motion and, in a footnote, stated that KBR routinely conducts internal investigations; discloses adverse findings to the government but never discloses the investigation on privilege grounds; conducted an internal investigation into this particular matter but did not disclose any findings to the government.

The district court held that, under Federal Rule of Evidence 612, KBR waived the attorney–client privilege because the in-house lawyer reviewed internal-investigation documents in preparation for his deposition. And it ruled that KBR waived the privilege by placing the internal investigation “at issue” by referencing the investigation in a MSJ footnote.

The D.C. Circuit quickly reversed both decisions on a writ of mandamus.

No Rule 612 Waiver

FRE 612 provides that an adverse party may review documents that a witness “uses a writing to refresh memory.” The district court applied a “balancing test,” evaluating reasons to pierce the privilege and reasons to uphold the privilege.  The D.C. Circuit, however, held the balancing test “inappropriate in the first instance” and that, if identifying documents as privileged automatically “constitutes testimonial reliance,” then the attorney–client privilege “would mean nothing at all.”

The court noted that the district court’s decision essentially permits parties to notice “internal investigations” as a deposition topic and, when the deponent reviews the investigation in preparation, defeat the privilege through a Rule 612 waiver argument.  The court rejected the plaintiff’s “absurd position” that KBR should have had someone give the in-house lawyer a “summary” of the internal investigation rather than having him personally review it.

This makes no sense.  Such a rule would encourage entities to provide less knowledgeable corporate representatives for deposition, thus defeating the purpose of civil discovery to establish the fullest possible knowledge of the issues and facts before trial.

In short, a party cannot, through a deposition notice, put a privileged internal investigation “at issue” and then use Rule 612 to seek production of the privilege material.  As the court stated, “[a]llowing privilege and protection to be so easily defeated would defy reason and experience.”

No “At Issue” Waiver

While KBR’s footnote reference to it not providing investigation findings to the Department of Defense “presented a more difficult question,” the court held that KBR did not actually disclose the investigation findings.  And because KBR sought no specific relief by using the internal investigation, it did not put the investigation “at issue” and no waiver occurred.

***

My thanks to my law partner and excellent appellate lawyer, Scott Smith, for bringing this notable opinion to my attention.

Privilege Covers In-House Lawyer’s Communications with “Indirect Subsidiary” Reply

The USDC for the Western District of Texas (Austin) recently held that the attorney–client privilege protects from discovery communications between a parent company’s in-house counsel and management personnel of an “indirect subsidiary.”  The court ruled that the joint-client doctrine applied as the in-house lawyer supplied a well-crafted affidavit establishing the client relationship and all elements of the privilege.  Nester v. Textron, Inc., 2015 WL 1020673 (W.D. Tex. Mar. Org Chart9, 2015).  You may read the decision here.

Background

In this products-liability case, the plaintiff claimed that Textron negligently designed the “kick off brake system” on its E-Z-GO Workhorse cart.  In 2005, a fatal accident occurred in the United Kingdom involving a similar model distributed by Ransomes Jacobsen, Ltd (RJL), an indirect subsidiary of Textron.  The British Health & Safety Executive (HSE) investigated the incident, and Textron’s in-house counsel provided legal advice to RJL during the investigation.

The corporate chain for this “indirect subsidiary,” illustrated in the accompanying chart, is: RJL, a British company, is a subsidiary of British company Ransomes Limited (RL).  RL is a subsidiary of British company Textron Acquisition Limited, which is a subsidiary of Textron Atlantic, LLC, a Delaware company.  And Textron Atlantic is a subsidiary of the defendant in this case, Textron, Inc.

The plaintiff sought in discovery communications between Textron, Inc.’s in-house lawyer and RJL personnel created during the HSE investigation.  Textron asserted that RJL was a joint client of Textron’s in-house counsel and, therefore, the attorney–client privilege protected these communications from discovery.

In-House Counsel Affidavit

I commend for your review the Textron in-house counsel affidavit, available here, because it adequately covered all of the elements to establish the joint-client doctrine and the corporate attorney–client privilege.  The lawyer explained the Textron–RJL relationship and that RJL “engage[d] [him] to provide legal advice and counsel” related to the UK accident and the HSE investigation.

Regarding the communications, the in-house lawyer covered all of the necessary elements to establish the attorney–client privilege, stating that he was Assistant General Counsel at the time and provided “professional legal services to and represented the legal interests of” RJL and Textron.  And as to the specific emails at issue, the lawyer persuasively stated that they “were confidential, and intended to remain confidential, and were made for the primary purpose of securing professional legal services” to RJL.

Ruling

In this diversity case, the court correctly held that state privilege law supplies the rule of decision, and then applied Texas’s attorney–client privilege set forth in Tex. R. Evid. 503(b).   On a side note, it appears that neither the parties nor the court addressed whether Texas’s conflict-of-laws rules mandated application of UK privilege law.

Based primarily on Textron’s in-house counsel’s affidavit, the court ruled that he was “engaged to represent both RJL and Textron as joint clients during the 2005 HSE investigation.”  And because of this joint-client situation, the court ruled that “it is black letter Texas law” that the attorney–client privilege covers the emails between Textron’s in-house lawyer and RJL personnel.

What about the Allied-Litigant Doctrine?

Citing a 2012 Texas Supreme Court case, In re XL Specialty, 373 S.W.3d 46 (Tex. 2012), the plaintiff argued that Texas’s allied–litigant doctrine precluded the privilege finding.  In XL Specialty, a case that PoP profiled in this post, the Texas Supreme Court held that the common-interest privilege applies only to communications made by two parties during ongoing litigation.

Arguably, the allied–client doctrine would not apply to the communications sought from Textron/RJL because they pre-dated the litigation.  The Nester court, however, found this argument moot because XL Specialty “expressly does not change the long-standing Texas law that one attorney may simultaneously represent two or more clients on the same matter.”

PoP Analysis

Textron’s handling of this privilege issue provides guidance for in-house lawyers supplying legal advice to direct or indirect subsidiaries.  In-house counsel should document the subsidiary’s engagement of her services and request for legal advice. And after the attorney–client relationship exists, the lawyer must establish that the privilege covers the client communications by ensuring they were confidential when made, remained confidential thereafter, and were made for the purposes of securing legal advice.

No Privilege or Work-Product Protections for Communications between Insured and its Broker Reply

Author’s note: I apologize for the recent absence of blog posts.  Over the last three months I have tried two cases, one of which lasted seven weeks.  These trials prevented me from posting on recent privilege developments, but I resume today with this interesting opinion.

In an insured’s bad-faith claim against its insurer, the USDC for the Western District of Kentucky (Louisville) rejected attorney–client privilege and work-product assertionBrokers over communications between the insured and its broker.  In doing so, the court ruled that the communications did not pertain to legal advice even though the broker “shepherded the insured through the claims process.”  Cardinal Aluminum Co. v. Cont’l Cas. Co., 2015 WL 4483991 (WD Ky. July 22, 2015).  You may read the decision here.

Third-Party Subpoena to Broker

Cardinal Aluminum Co. sued Continental Casualty Co. claiming breach-of-contract and bad faith after Continental rejected Cardinal’s coverage claim for a crack in a piece of industrial equipment.  Continental subpoenaed Cardinal’s insurance broker seeking opinions, reports, and examinations related to the equipment and all documents related to the case.

Cardinal filed a motion to quash and filed in support its CFO’s affidavit.  The CFO stated that the broker “shepherded Cardinal through the eleven-month claims process,” negotiated with Continental on Cardinal’s behalf, met with Cardinal’s lawyer “to develop strategies,” and “acted to protect and advance Cardinal’s legal interests.”  You may read the affidavit here.

The broker was clearly involved with Cardinal’s counsel, and it is easy to see why Cardinal fought so hard to protect these communications.

Court Rejects Attorney–Client Privilege

In this diversity case, the federal court correctly applied Kentucky state privilege law to Cardinal’s privilege assertions over its broker communications.  Kentucky Rule of Evidence 503 requires the privilege proponent to prove that the communication was confidential, for purposes of legal advice, and made between two of these four parties: client, client’s representatives, the lawyer, or the lawyer’s representatives.

Cardinal argued that its broker was a “client representative” under Kentucky’s privilege rule.  After reading the CFO’s affidavit, however, the court ruled that the broker’s actions “do not amount to legal advice.”  And the broker’s negotiations with Continental over the policy “were not undertaken to obtain legal advice, but rather to secure insurance coverage.”  In short, the court found that, contrary to an attorney–client relationship, “the broker–insured relationship arises simply from a commercial transaction for the sale of insurance.”

Court Rejects Work-Product Doctrine

Contrary to the privilege conflict-of-law result, federal law governs work-product claims in federal court.  Cardinal claimed that the work-product doctrine protected communications with its broker arising after the date it submitted its claim to Continental.

The court rejected this assertion, however, stating that Cardinal failed to prove that the broker prepared the documents in anticipation of litigation.  Indeed, the CFO’s affidavit was silent in this regard.  The court further noted:

Documents prepared as part of the ordinary business functions of an insurance broker are not prepared as a result of anticipated litigation.

Small Hope

Although rejecting Cardinal’s privilege and work-product claims and ordering the broker’s deposition to move forward, the court provided Cardinal some hope.  The court permitted Cardinal to review the broker’s documents and submit a specific privilege log and to re-assert any privilege or work-product claims.  The court’s rulings, however, create a high hurdle for any future argument.

Court Rejects Privilege for Chipotle Consultant’s Report to Outside Counsel 1

In a wage-and-hour case against Chipotle Mexican Grill, the USDC SDNY ruled that the attorney-client privilege did not protect a consultant’s report prepared for and delivered to Chipotle’s outside counsel.  In doing so, the court provided an instructive analysis of the Kovel doctrine.  Scott v. Chipotle Mexican Grill, Inc., 2015 WL 1424009 (SDNY Mar. 27, 2015).  You may read the Slide1decision here.

Counsel’s Retention of Consultant

Chipotle retained a law firm to assess whether the restaurant chain had properly classified its apprentices under the FLSA.  Chipotle, through the law firm, retained an HR consultant who conducted a “job function analysis” and provided its resulting report directly to the law firm.  Chipotle explained that the purpose of the consultant’s investigation was to gain an understanding of the apprentices day-to-day job and provide the law firm with this information so the firm could provide legal advice to Chipotle.

Plaintiffs’ counsel learned of the consultant’s report and moved to compel its production.  Chipotle, relying on the Kovel doctrine, argued that the attorney-client privilege protected the report from discovery.

The Kovel Doctrine

Arising from the court’s decision in United States v. Kovel, 296 F2d 918 (2d Cir. 1961), the Kovel doctrine extends the attorney-client privilege to experts, such as an accountant, that the attorney retains to assist her in understanding complex issues so that she can provide legal advice to the client.  The Kovel doctrine recognizes a “privilege derivative of the attorney-client privilege where a third party clarifies or facilitates communications between the attorney and client in confidence for the purpose of obtaining legal advice from the attorney.”

Under the Kovel doctrine, the privilege attaches to third-party reports made at the attorney’s or client’s request where the report’s purpose is to put complicated information received from the client into a form usable by the attorney.  In other words, the third-party takes a client’s complicated information and transforms it into a form that the attorney understands so that the attorney can render legal advice to the client.

Court’s Ruling

Applying Kovel, the court stated that Chipotle’s claim that its outside counsel needed an HR consultant to evaluate whether Chipotle properly classified its employees “strain[ed] credulity.”   Although the consultant drafted her report for and delivered it to Chipotle’s outside counsel, the court noted that “this formalism is insufficient to establish that it is a privileged communication.”

And the report did not state that the law firm retained her to assist in providing legal advice; nor did the consultant label the report “confidential” or “privileged.”  Moreover, the consultant set up interviews with Chipotle employees without mentioning that the interviews were privileged, confidential, or conducted to assist Chipotle in receiving legal advice.

The court found that Chiplotle failed to present evidence that the consultant was taking information that was incomprehensible to its attorneys and putting it into a “usable form.”  Rather, the consultant simply combined employee interviews and provided the attorney with a report of her factual analysis.

For these reasons, the court found that Chipotle failed to prove the consultant’s report fell under the Kovel doctrine and ordered its production.

PoP Analysis

The Kovel doctrine is a narrow exception to the rule that the attorney-client privilege does not protect communications from a non-client to the attorney.  The Scott decision should remind lawyers needing expert assistance to understand complicated factual issues to take certain steps to ensure the privilege applies.  Some practice tips include:

  • The attorney should retain the specialist;
  • Ensure the engagement letter expressly states that the specialist’s services are for the purpose of understanding the client’s information so the attorney can provide the client with legal advice;
  • The engagement letter should describe the reasons why the information the attorney needs from the specialist is complicated and in need of interpretation into a format the attorney can understand;
  • The specialist should receive and gather information in a confidential manner and take steps to ensure its continued confidentiality;
  • The specialist should inform any interviewees that the meetings are confidential and conducted so that the company’s attorney can render legal advice, and consider obtaining a written acknowledgement from the interviewee on these points; and
  • All communications between the specialist and the attorney should be confidential and labeled “Confidential & Privileged.”

Court Permits In-House Lawyer Deposition—But With Instructions to Preserve the Privilege Reply

Lawyers are increasingly seeking depositions of companies’ in-house lawyers, and this phenomenon likely corresponds with in-house counsel increasingly assuming business-related roles or tasks within the company.  In Sand Storage, LLC v. Trican Well Serv., L.P., 2015 WL 1527608 (S.D. Tex. Apr. 2, 2015), the Depositioncourt ordered an in-house lawyer’s deposition—albeit with privilege protections—and provided a good overview of the law on this subject.  You may read the decision here.

Background

Sand Storage and Trican entered into a sand-storage contract.  Trican later sent Sand Storage formal notice of its failure to perform its contractual obligations.  Trican’s in-house lawyer signed the letter, a copy of which you may read here.

Sand Storage sought the in-house lawyer’s deposition, arguing that it is entitled to discover the bases for the alleged failed performance from the person who authored the letter identifying the performance issues, regardless whether he is a lawyer.

Lawyer’s Affidavit

Trican’s in-house lawyer filed an affidavit, available here, stating that he did not make the decision to terminate the contract.  Although he consulted with a Trican businessperson “for the purpose of facilitating the rendition of professional legal services” regarding the Sand Storage agreement, he did not expressly identify the decision-maker.

And after this consultation, he determined that Trican needed to notify Sand Storage of the deficiencies and then drafted the notice letter.  He disavowed any personal knowledge of the statements in the notice letter.

Deposition Ordered

The court noted that depositions of opposing counsel are “disfavored” and that it should permit these depositions in “limited circumstances.”  Relying upon Nguyen v. Excel Corp., 197 F3d 200 (CTA5 1999) and Shelton v. American Motors Corp., 805 F2d 1323 (CTA8 1986), the court required Sand Storage to prove these three factors in order to depose Trican’s in-house lawyer:

  1. No other means exist to obtain the information than to depose opposing counsel;
  2. The information sought is relevant and non-privileged; and
  3. The information is crucial to the preparation of the case.

Based on the facts before it, the court found that the source of the notice letter’s statements regarding Sand Storage’s alleged non-performance was crucial and relevant to the case, and that Sand Storage had no other means to determine Trican’s decision-maker without deposing the in-house lawyer.  The court therefore allowed the in-house lawyer’s deposition.

Privilege Protections

The court, however, implemented privilege-protection measures.  Although ruling that the source of information contained in the notice letter and Trican’s decision-maker were facts and not privileged, it also ruled that Sand Storage’s counsel could not inquire into communications between Trican’s in-house lawyer and Trican employees, which are privileged.

The court therefore limited the deposition’s scope to factual matters underlying the notice letter and instructed Sand Storage’s counsel to “not intentionally solicit information that is privileged.”  And the court ruled that the in-house lawyer’s deposition did not constitute waiver of the privilege on any other matter.

PoP Analysis

One wonders whether this issue ever arises if Trican’s in-house lawyer had not authored the letter and simply provided legal advice to Trican businesspersons regarding the contractual issues.  If a Trican businessperson signed and sent the letter, then the in-house lawyer’s deposition likely never becomes an issue.

Even so, Trican successfully limited the deposition’s scope and preserved its privilege, a navigation that provides guidance for other in-house lawyers faced with this issue.  And for a detailed review of the legal issues surrounding in-house lawyers’ depositions, see my article titled Protecting the Attorney-Client Privilege–Depositions of In-House Counsel, available here.  You may also find my post, Tips for Preventing or Limiting In-House Counsel Depositions, helpful.

Illinois Rejects Self-Critical Analysis Privilege—Will Other States Follow? Reply

In a long-awaited ruling, the Illinois Supreme Court refused to recognize a common law self-critical analysis privilege and ordered production of a company’s quality-review report generated in response to an infant’s death.  Although arguably a narrow ruling, this decision will likely influence other state courts faced with a similar issue—do public-policy considerations warrant recognition of a common law self-critical analysis privilege.  Harris v. One Hope United, Inc., 2015 IL 117200 (Ill. Mar. 19, 2015).  You may read the decision here.

Illinois Supreme Court

Illinois Supreme Court

The Case

An infant died while in her mother’s care and in One Hope United’s family services program. The public guardian, acting as the infant’s estate administrator, filed a wrongful death suit against the mother and One Hope. Discovery revealed that One Hope investigated the death and prepared a post-death “Priority Review” report that evaluated its services.

One Hope refused to produce the Priority Review report on grounds that the self-critical analysis privilege protected its disclosure. The trial court refused to recognize the privilege, held One Hope in “friendly contempt,” and set the stage for appeal. In a decision profiled in this post, the appellate court also refused to adopt the privilege.

Pertinent Issues

As noted in my prior post, a threshold issue was whether the Illinois evidence rules permitted courts to adopt new common-law evidentiary privileges and modify existing privileges, or whether that role fell exclusively within the legislature’s domain.  And if the evidence rules permitted common-law privileges development, did public policy considerations compel adoption of a self-critical-analysis privilege.

The Ruling

The Supreme Court assumed, without directly addressing, that it could adopt new common-law privileges, but only in “rare instances.”  Those instances arise where the privilege proponent sufficiently proves each of four elements: (1) the communications originated in a confidence that they would not be disclosed; (2) confidentiality is essential to the maintenance of the parties’ relationship; (3) the relation at issue is one which “in the opinion of the community ought to be sedulously fostered”; and (4) the injury to the relation produced by disclosure outweighs the benefit of the truth-finding process and “the correct disposal of litigation.”

As to the 4th element, which focuses on public-policy considerations, the Supreme Court noted that adopting new privileges “involves a balancing of public policies which should be left to the legislature” and that the judiciary’s function was not “to promote policies aimed at broader social goals.”

So, the court looked for any legislative evidence to inform whether it should adopt a self-critical analysis privilege in this instance.  Reviewing the Child Death Review Team Act, which governs governmental panels reviewing minors’ deaths, and the Medical Studies Act, which creates a medial peer-review privilege, the court determined that these acts did not favor adoption of a self-critical analysis privilege.  The court reasoned that the Illinois legislature could have extended the peer-review privilege to entities such as One Hope, but did not; and the Child Death Review Team Act arguably encouraged rather than discouraged disclosure.

In sum, the court refused to recognize a common law self-critical analysis privilege because it is a “matter more appropriately a subject for legislative action.”  The court avoided “judicial infringement upon what is principally a policymaking decision for the legislature,” and reviewed whether public-policy expressions in existing legislation “warrant[ed] a ‘rare’ exercise of judicial authority” in recognizing new privileges.  Finding no legislative support, the court rejected the privilege.

PoP Analysis

The court focused on existing legislation relevant to One Hope’s activities and concluded that “the type of information sought in discovery here is not subject to a self-critical analysis privilege.” This limitation indicates that Illinois courts may re-consider a self-critical analysis privilege in other contexts; however, the Harris ruling tells us that adoption of new common law privileges is “rare” and existing legislation must clearly point toward the privilege’s adoption in a particular set of circumstances.

So, how will other states react to Harris when determining whether to adopt a self-critical analysis privilege? The self-critical analysis privilege, a product of the medical peer-review privilege first adopted in Bredice v. Doctors Hosp., Inc. 50 FRD 249 (D.D.C. 1970), encourages entities to undertake candid and unrestrained self-examinations for quality-improvement purposes by promising protection from discovery.  The theory is that entities will not be forthcoming and candid in their self-analyses without confidentiality assurances, and the lack of candidness will thwart improvement.

The Harris court effectively declined to assess whether Illinois common law should encourage self-examinations by adopting the privilege, instead scanning statutes to discern whether the legislature had already made this public-policy determination.  Courts in other states, however, may not feel constrained by existing legislation, particularly when legislatively approved state evidence rules, like FRE 501, permit common-law development of evidentiary privileges.

Illinois interprets this development opportunity narrowly, but other states may not.

My thanks to Jeff Bergman of the Chicago litigation firm of Mandell Menkes for informing me of the court’s release of this opinion.

Joint Clients and the Privilege—A New Wrinkle Reply

The joint-client doctrine, which applies when one lawyer represents two or more clients, holds that the attorney–client privilege protects lawyer–client communications against all others but not when the clients become adverse to each other.  Separately, the at-issue waiver doctrine provides that a client waives the attorney–client privilege when he claims that the attorney breached a Joint Clientduty arising from the attorney–client relationship.

But what happens to the privilege when one, but not the other, of the lawyer’s joint clients sues the lawyer for malpractice—can the nonsuing client assert the privilege to prevent disclosure of attorney–client communications made in the course of joint representation?

In what appears to be a matter of first impression, a California appellate court answered in the negative, ruling that one joint client waives the privilege for all joint clients when he charges the attorney with malpractice.  Anten v. Superior Court, 183 Cal. Rptr. 3d 422 (Ct. App. 2015).  You may read the decision here.

In Anten, Lewis Anten and Arnold and Lillian Rubin retained a law firm to represent them on a matter of common interest.  Anten later sued the law firm for malpractice, but the Rubins did not.  Anten sought discovery of communications between the Rubins and the law firm, but the law firm asserted that the attorney–client privilege protected those communications and the Rubins had not waived it.

The court rejected the privilege and identified two bases for its ruling.  First, the court determined that, because the Anten and the Rubins were joint clients of the law firm, their communications were confidential and privileged as to strangers, but not between themselves.  In other words, the Rubins had no expectation of confidentiality with respect to Anten.  No confidentiality equals no privilege.

Second, the court held that considerations of “fundamental fairness” weighed in favor of vitiating the privilege.  It found unfair the situation where one joint client could prevent a lawyer from introducing communications in a suit to collect his fee.  And conversely, it found unfair the situation where a nonsuing client could prevent disclosure of communications in the other client’s suit against the lawyer.  The court also found “substantial” the risk of collusion between the joint clients in the former situation and the lawyer-nonsuing client in the latter situation.

PoP Analysis.  Given the joint-client doctrine, the court’s ruling on the first-impression issue is not surprising.  Joint clients must know and understand that communications with their lawyer, whether in separate or joint meetings, are not confidential between themselves.  And they must know that it is unlikely that they can raise the privilege to preclude disclosure of their communications in any subsequent suit involving the clients and lawyer as adversaries.

The Anten case provides lawyers with a take-away as well.  Lawyers representing multiple clients should ensure that their clients understand the lack of confidentiality between themselves of lawyer communications—in any situation. A best practice is to include these statements in the engagement agreement or otherwise having the client sign an acknowledgement.

Legal Analysis v. Conclusion: A Dividing Line for the Deliberative-Process Privilege Reply

The First Circuit joined the Second and D.C. Circuits in ruling that the deliberative-process privilege protects legal counsel’s conclusions and opinions in situations where the governmental agency based a particular decision on counsel’s opinion rather than her reasoning or analysis behind the opinion.  Governmental agencies at the federal, state, and local levels will likely use this reasoning/opinion dividing line in responding to FOIA or state public-records requests.  New Hampshire Right to Life v. U.S. Dep’t of Health & Human Servs., 2015 WL 467525 (CTA1 Feb. 4, 2015).  You may read the decision here.

New Hampshire Right to Life (NHRTL) submitted a FOIA request to and later filed suit against HHS seeking documents related to HHS’s grant award to Planned Parenthood of Northern New Englancrossinglined.  HHS withheld documents containing Office of General Counsel’s advice to HHS that it could legally issue the grant to Planned Parenthood.

FOIA’s Exemption 5 shields documents from disclosure that are normally non-discoverable in civil litigation, including documents protected by the deliberative-process privilege and the attorney–client privilege.  The deliberative-process privilege protects communications that are predecisional and deliberative.

NHRTL argued, however, that HHS waived the privilege because it adopted the OGC’s advice—that HHS could legally issue the grant—as “policy of the Agency.”  While it is true that an agency adoption of predecisional opinions as policy obviates the privilege, the court created a demarcation line between adoption of legal opinions and adoption of the reasoning and analysis behind those opinions.

The court said that it makes “no sense” to adopt a “categorical rule” that “every time an agency acts in accord with counsel’s view it necessarily adopts counsel’s view as ‘policy of the Agency.’”  This is especially true where counsel’s advice is simply that the agency has no legal barrier preventing it from making a particular position.

The court followed cases in the Second and D.C. Circuits in ruling that Exemption 5 does not protect legal opinions from disclosure only when the agency actually adopts the reasoning behind counsel’s opinions.  In other words, an agency’s reliance on a document’s conclusions in rendering a decision does not necessarily mean the agency relied on the document’s analysis.  It is only the agency’s adoption of counsel’s reasoning that destroys the privilege.

The court highlighted the instrumental reasoning behind the deliberative-process privilege by recognizing the chilling effect on agencies seeking counsel’s advice for any broader rule:

It is a good thing that Government officials on appropriate occasion confirm with legal counsel that what the officials wish to do is legal.  To hold that the Government must turn over its communications with counsel whenever it acts in this manner could well reduce the likelihood that advice will be sought.

The moral of the story is that, to keep the privilege, government agencies should carefully rely upon its counsel’s conclusions in their decision-making process and avoid expressly adopting counsel’s reasoning or analysis.  For other cases, see National Council of La Raza v. Dep’t of Justice, 411 F.3d 350 (CTA2 2005) and Electr. Frontier Found. v. U.S. Dep’t of Justice, 739 F3d 1 (CTADC 2014).