Court Adopts “Primary Purpose” Test for In-House Counsel’s Dual-Purpose Emails
In a matter not previously addressed by the 7th Circuit, the USDC NDILL followed then-Judge Kavanaugh’s standard for assessing whether the attorney–client privilege protects an in-house lawyer’s emails that pertain to legal and non-legal matters. The district court ruled that the privilege applies when “one” of the communication’s “significant purposes” was to obtain or provide legal advice. Smith–Brown v. Ulta Beauty, Inc., 2019 WL 
2644243 (NDILL June 27, 2019). You may read the opinion here.
Used Cosmetics?
Ulta Beauty, one of the country’s fastest growing retail stores, suffered a PR hit—and later lawsuits—after alleged former employees took to Twitter and other social-media outlets claiming that UB resells returned cosmetic products as “new.” You may read about the allegations, complete with copies of various tweets, in the Complaint or in this ABC news story.
UB’s General Counsel immediately began an investigation, and communicated with various UB departments and employees to accomplish the task. In a class-action lawsuit that predictably followed, the plaintiffs sought production of several emails related to the investigation, claiming they were for public-relations, not legal, purposes.
The GC’s Declaration
UB did not, as other companies have unsuccessfully tried, simply submit the emails for in camera review with conclusory statements that the privilege clearly applies. Rather, UB’s General Counsel submitted a detailed declaration explaining the origins and reasons for the investigation and why each challenged email or document related to legal advice. You may read—and learn from—the declaration here.
Dual-Purpose Standard
Claiming that the investigation-related emails pertained to marketing or PR concerns, the class plaintiff argued that UB must prove that “the primary purpose” (with an emphasis on “the”) of each email was to render or solicit legal advice. The problem was that neither the plaintiff nor the court could find a 7th Circuit case applying this somewhat narrow standard.
Looking elsewhere for guidance, the court landed on then-Judge Kavanaugh’s opinion in In re Kellogg Brown & Root, 756 F.3d 754 (DC Cir. 2014), which I discussed in this post and this one. The KBR Court eschewed a “the primary purpose” standard, noting that “trying to find the one primary purpose for a communication motivated by two sometimes overlapping purposes (one legal and one business, for example) can be an inherently impossible task.”
Instead, the more practical and precise test is this: “Was obtaining or providing legal advice a primary purpose of the communication, meaning one of the significant purposes of the communication?” Judge Kavanaugh reinforced this standard in his last D.C. Circuit opinion before joining the Supreme Court, which may read about here.
The Ulta Beauty court found this standard “persuasive,” and applied it to the challenged emails. Upon a review of the emails under this standard’s microscope, along with the UB GC’s well-written declaration, the court found that the privilege protected from disclosure UB’s internal-investigation emails.
Hold Your Horses: Privilege Protects Plaintiff–Lawyer’s “Cozy Agreement” with Plaintiff’s Treating Physician
Who knew? A personal-injury plaintiff’s firm apparently has a “cozy agreement” with certain treating physicians under which the lawyer refers 
injured clients to the doctors for evaluation and (almost certainly?) treatment, with the doctor receiving payment from the settlement proceeds.
And when a defense lawyer makes that coziness the focal point of trial, the question arises whether the privilege protects this financial relationship from discovery and admissibility. A Florida appellate court said yes, because the relationship’s disclosure would reveal client communications. Bellezza v. Menendez, 273 So. 3d 11 (Fla. App. Ct. 2019). You may read the decision here.
The Barn
A law firm’s long-time employee, driving the firm’s car, struck a pedestrian walking a bike. The pedestrian visited a plaintiff’s lawyer who referred him to an orthopedist. The doctor identified a need for neck surgery, operated, and charged the plaintiff $184K in medical expenses.
As it turns out, this isn’t the first referral relationship between this plaintiff’s lawyer and this orthopedist, and defense counsel sought to exploit it.
Out of the Barn?
The trial court allowed the defendant to obtain “information regarding the financial relationship between the plaintiff’s attorney and his treating physicians.” After that ruling, the Florida Supreme Court opined that the attorney–client privilege protects from discovery (1) whether the plaintiff’s lawyer referred the plaintiff to a particular physician and (2) agreements between a law firm and treating physicians. Worley v. Central Fla. Young Men’s Christian Ass’n, 228 So. 3d 18 (Fla. 2017). You may read that decision here.
At trial, plaintiff moved in limine to preclude evidence of his lawyer’s financial relationship with his orthopedist and other physicians, citing Worley. The trial court again refused to preclude the evidence and forced plaintiff’s counsel to testify, noting that the “horse has left the barn.”
Hold your horses, the appellate court said.
In the Barn
While the defendant argued that Worley’s holding is limited, the appellate court disagreed and applied Worley’s privilege language. The court permitted the discovery—and trial use—of the plaintiff’s lawyer’s letter of protection with the treating doctor to establish bias. Those letters—essentially liens on settlement and judgments—can demonstrate that the physician has an interest in the litigation’s outcome.
The privilege, however, protects all other questions “regarding the ‘cozy agreement’ between a law firm and a treating physician.” While the Bellezza court did not elaborate, one can surmise that, reading Worley, the information exchanged between plaintiff’s counsel and his lawyer reveals the client’s communications to the lawyer.
Epilogue
The defendant law firm filed a petition for review to the Florida Supreme Court. The appeal request focuses on forcing a plaintiff’s counsel to testify about her financial relationship with treating physicians. You may read the petitioner’s brief here, and the answering brief here.
But the privilege issue is the appeal’s heart, and we’ll see if the Supreme Court elects to review whether the privilege horse remains in the barn or gallops away.